[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...

Nilanjan Banik,
Associate Professor, Institute for
Financial Management and
Research (IFMR),Chennai
The Economics Of Social Unrest –
Its Causes And Cure
"Injustice anywhere is a threat
to justice everywhere."
-Martin Luther King Jr.
"Naxalite faction vows to avenge Nandigram
killings"
26 May 2007, Times of India.
Newspaper headlines, such as these,
are not hard to find these days.
The Naxalite movement takes its
name from a peasant uprising which took
place in May 1967 at Naxalbari – a place on
the north-eastern tip of India situated in the
state of West Bengal. Many believe that
these fearsome Naxals are now in Nandigram.
Although to a layman what is happening
in Nandigram carries more political
connotation there are some economics behind
it. The purpose of this article is to examine
the economics of social unrest.
Nandigram is a case in point but the following
arguments in general will have a broader
implication for India as a whole. As is
known, recently the Naxals have also expanded
their area of operations (from their
old pockets in West Bengal, Bihar and Andhra
Pradesh in the 1970s) to new guerilla
zones in other states like Orissa, Maharashtra,
Chhattisgarh, Jharkhand, Madhya
Pradesh and Uttar Pradesh. So what goes
into making a militant? Actually, it is the
socially deprived group of people who takes
arm against the administration. Does the
people are more socially deprived now than
what they were before? We are considering
the period before and after reforms. This
benchmark is because of less militant activities
during the period before reforms.
Although there were few reforms during
early 1980s, the all encompassing process
of reforms started during 1991. We are defining
reforms in terms of globalization and
liberalization. Surprisingly, incidence of
anti-government activities was less during
the period before reforms. Surprising because
then the average Indian in terms of
economic well-being was worse off compared
to what the people are now. For example,
India’s GDP grew at an average rate
of 3.5 percent until mid-1970s; it increased
to 5.5 percent during the 1980s; and further
to around six percent during the 1990s.
During the last three years, Indian economy
has recorded a growth rate of around nine
percent per annum.
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