Lakshmi Mittal of Arcelor fame is finally about to deliver on his promise to invest in his home country. The plans he has unveiled are mind-boggling: Rs 1,00,000 crore ($24 billion) to be invested in two steel plants and iron ore mines in Jharkhand and Orissa that will produce 24 million tonnes of steel when they come on stream. Planning for the project is going well: all that remains is to identify a source of iron ore for its Orissa plant. Herein lies the rub. For, if the Maoist insurgency in central India continues to develop at its present speed, he may never find the iron ore he needs to operate his plants.

That would be tragedy for both the states, which are among the poorest in the country. At a conservative estimate, Mittal's investments will generate at least a hundred thousand jobs directly, in the two plants and associated mines, and anything between a million and three million jobs indirectly. But to get there, the government will first have to displace thousands of tribals from land and forests. And those thousands have decided that they will fight to defend their rights.

Twenty-nine months after the first 'swarm attack' by 500 Maoist cadres backed by local tribals on the jail, police station and armoury in Jehanabad, 'Naxalism' is no longer considered a fringe phenomenon. Prime Minister Manmohan Singh has candidly acknowledged that it is the most serious threat the country faces. But there is a huge gap between this realisation and the efforts that the government has made so far to meet it. Literally, all that it has done so far is to meet state governments' increasingly urgent demands for modern weapons, additional CRPF battalions, and the training and despatch of counter-insurgency forces. But New Delhi knows that repression alone is not the answer. The Approach Paper for the 11th Plan could not have put this better or more explicitly: "Our practices regarding rehabilitation of those displaced from their land because of development projects are seriously deficient and are responsible for a growing perception of exclusion and marginalisation. The costs of displacement borne by our tribal population have been unduly high, and compensation has been tardy and inadequate, leading to serious unrest in many tribal regions. This discontent is likely to grow exponentially if the benefits from enforced land acquisition are seen accruing to private interests, or even to the state, at the cost of those displaced. To prevent even greater conflict...it is necessary to frame a transparent set of policy rules that address compensation, and make the affected persons beneficiaries of the projects, and to give these rules a legal format."

Despite its clear perception of the problem, the Manmohan Singh government has done nothing to 'frame a transparent set of policy rules' and give them a 'legal format'. A part of the problem is that the power to acquire land for mines, in particular, was largely devolved to the state governments during the NDA regime, through an amendment of the 1957 Mines and Minerals Act. The NDA government also allowed foreign companies to enter this politically charged area of mineral development. These two enactments have given Naxalite leaders all the moral justification they need to mobilise armed resistance. With only a few exceptions, state leaders have used their powers of land acquisition to enrich themselves or fund their parties. It is no coincidence that the Communist Party (Maoist) came into being only two years after these amendments.

While India Inc dreams of overtaking China, the Maoist insurgency has intensified. Since '04, there have been more than 50 'swarm' attacks on jails, police stations and armouries. All have met with total success.In two attacks in Orissa last month, the Maoists captured 1,600 weapons, including machine guns and AK-47s.

In Orissa, 12,000 out of 30,000 posts in the police are vacant, and in three districts they have stopped wearing their uniforms. But Orissa pales into insignificance before the intensity of the uprising in Chhattisgarh, which recorded 531 incidents and 413 deaths in 2007. The Maoists have a single rallying cry: "Development projects are taking away our land and our traditional rights. We will not allow them to proceed." They are succeeding.

The only way to arrest the further development of this insurgency is to make the affected people its beneficiaries. Offering them a price for their land is often not possible because they have no recognisable property rights. But in addition to being resettled, both individuals and entire villages can and should get a royalty in perpetuity from the income generated on their land. Mittal's steel plants will, at present prices, generate Rs 70,000 crore of revenue a year. A half per cent royalty divided among the villages and individuals who lose their land and rights would make them rich beyond their dreams, enable them to send their children to schools, and lift them out of poverty forever. He can, of course, afford it. But what is preventing New Delhi from making this a part of the law and indeed the constitution of our land?

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