Sunday, September 17, 2006

Why is the NCB making such large seizures?

This is in response to Mukunda's question on the earlier thread.

The liberalization of the economy in the 1990s has seen a growth in the wealth of Indians. Indians today have more disposable income and consumerism is rising in society. A large number of Indians today are young, and employed (unlike the past). Social mores are changing and the family value system entrenched in the joint family is eroding. The ultra compact nuclear family system creates more opportunity and encouragement for young people to leave the house and live independently. This is creating new social fora where ever increasing numbers of young people are interacting.

The rise in disposable incomes and the creation of new social fora are contributing to a rise in narcotics consumption in India. We are seeing a major rise in the consumption of cocaine, No. 4 grade heroin, and "party" drugs. There are few mechanisms in place to control the consumption of this drugs. There are few treatment options for health problems rising from this. There is a lack of awareness of the extent of the problem of abuse and of related health risks - eg. HIV infection etc... In short we are sitting on a major public health crisis.

This is the tip of the iceberg. Lurking below the surface is the possibilty of a crack cocaine epidemic among India's poor, a proliferation of narcotics suppliers, the high probability of the appearance of "kiddie" cocaine or heroin (formulations targetted at school children). There is also the problem of drug cocktails and other adulteration issues, in general there is no mechanism to ensure that the quality of the product is good.

Another problem which is easy to miss, is the issue of wealth recycling. When someone buys drugs from the local peddler, a large fraction of that money is remitted via Hawala channels to the drug suppliers abroad. The suppliers then usually launder the money and reinvest it elsewhere. This is a problem for the Indian economy because we are hemorraging wealth, money that could have been spent developing the Indian economy is leaving the country. A relatively simple sounding solution to this problem is to ensure that the money laundering chain leads back to investments in India, eg. get the drug lords to invest in real estate or the film industry 0r even to buy things made in India - like medicines. That way the capital lost from drug purchases is re-channeled back into the Indian economy. It is extremely bad if the money going out of the country is used to make trouble eg. fund terrorist groups, or separatist movements. I call this kind of flow of money, a wealth loop. In my opinion, the wealth loops have to be kept "balanced", whatever goes out of the economy has to be brought back in.

In order to achieve a semblance of sanity in the functioning of this trade, one has to create the conditions that permit an extremely effective regime of price control. Price control over narcotics can be achieved most effectively by ensuring that local supply of the drug is constant. This can usually be implemented by limiting the number of trafficers and ensuring that no major shipments of size suddenly appear or disappear from the market (i.e. no major cartels make sudden moves to seize the market. Keep speculators out!). Remember that if the price of the drug becomes too high, then you will end up encouraging poor addicts to commit crimes in order to purchase drugs. Alternatively if the price becomes too low, then the number of addicts will rise sharply and that will destroy social order and economic growth. So the price has to be not-too-high and not-too-low.

This regime of control has to be aggressively kept in place until awareness and public health systems reach a level of preparedness necessary to stamp out addiction and minimize other health risks. Once this state is reached, it is possible to imagine a land where recreational use can be tolerated. However given the complex demographics of India, this means we have to have control measures in place for the foreseeable future.

In practice this is all terribly complicated, but at the superficial level - simply put - you have to keep large quantities of drugs from entering the Indian market through unknown players. You can't allow a vast quantity of drugs to become suddenly available to Indian drug users without putting into place mechanisms to slowing reduce the addiction problem. This is am unspoken, unwritten yet non-negotiable element of our national security policy irrespective of who is in power. No political party can allow this aspect to go unmanaged - the sums of money changing hands are simply too large.

What we are seeing today is similar to the 80s when there was a rise in drug consumption due to an American and Pakistani backed spurt in heroin production in Afghania, and with a lot of blood toil and tears the after effects of that mess were brought under control. So expect more of the same.

And as long as we have to keep tweaking this trade, terrorism as a phenomenon will remain.


At 10:04 PM, Blogger mukunda said...

hi maverick,
1)excellent post as usual. I suspect
that NCB went into overdrive mode after the case of Rahul Mahajan came into limelight.The young kids of delhi were exposed.There was pressure to act.This suddeness of seizure is also a spike that i suspect will recede with time once matters die down.

At 6:43 AM, Blogger maverick said...

Hi Mukunda,

I think the Rahul Mahajan case only caught the media's attention. The NCB has been aware of a problem for a really long time.

Drug abuse among the super-rich is common in India. The NCB is trying to arrest the trend towards a major increase in the number of addicts in *other* social segments.

At 11:08 AM, Anonymous IndraSen said...

I think unlike 80s this time there isn't much to do or can be done. Richer, exposed and independent young generation can't be really tamed. I suggest taking a very covert approach to drugs and its linked terror funding posing threat to India’s security . First destroy the east-north and west routes. How difficult is this? Make few public executions of cartel bosses and destroy big hauls. And allow drugs being made in India and literally export drugs to Pakistan and pacific rim. Don't you think we Indians should make money out of it? I don't mind even saying export arms to pacific rim and make lots of money out of the underground arms trade. Finally we can all blame it on china, Maoists, Indian under-world and their pakistan links strengthening case for slaughtering them. Win-win situation but needs a bit of heart-less and immoral mindset. When will we Indians learn that?

At 7:54 AM, Blogger maverick said...


I feel any attempt to re-engineer the drug trade will result in terrorist attacks.

The Pakistani state is now effectively disowning the terrorist groups. The groups can now do freelancing.

We will have to put other mechanisms in place before we move against any part of this network of people.

At 12:11 PM, Anonymous Anonymous said...

You seem to be active on the disreputable forum. Cheers.

At 6:40 AM, Blogger maverick said...

whoever is active there is bringing disrepute to my name.

At 8:59 PM, Anonymous Anonymous said...

What else would you expect from a disreputable forumers?

At 10:43 PM, Blogger mukunda said...

hi maverick,
what is the url of the disreputable forum

At 12:52 PM, Blogger maverick said...


Yes, I am going to have to write my memoirs to wash of this stain of disrepute.


it all starts with the word bharat on google.

At 11:53 PM, Blogger mukunda said...

hi maverick,
Never imagined that Bharat* is a disreputable forum!!! What happened? I have also left that forum. What did you do that you have wash your stains?

At 11:41 AM, Blogger maverick said...


It has always been a disreputable forum filled with disreputable people of disreputable views.

When I was there I was disreputable too, and if I am there then I am disreputable too. Whoever is there in place of me, is bringing disrepute to me.

And who can take such disreputable views so seriously?


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