IMPACT OF ECONOMIC POLICIES ON DRUG TRAFFICKING AND THE NDPS ACT, 1985

ABSTRACT

“The fight against drug trafficking is a wildfire that threatens to consume those fundamental rights of the individual deliberately enshrined in our Constitution”

This is one of the most powerful statements about drug trafficking attributed to Juan Guerrero Burciaga, a United States Judge of the District Court, in New Mexico.

Drug trafficking has been one of the pressing concerns in contemporary society. Over the decades the demand for drugs has been increasing moderately. Chronic substance abusers regrettably become a burden on society impacting its economy and morally corrupting the community. As such, curbing the menace of illicit substance use becomes one of the countries’ top priorities. While numerous countries have evolved legislation to deal with the issue, governments are also focusing on their socio-economic policies to handle the problems of drug trafficking and substance abuse. India being a country that has a sensitive location respective to the drug production zones of Asia, it becomes pertinent for the country to develop robust mechanisms for regulating the production, transportation, and consumption of drugs. For the same reason, the Narcotics and Psychotropic Substances Act 1985 has been evolved. The economic policies of the country also influence the drug trafficking mechanisms. This article focuses on the impact of economic policies on drug trafficking and the NDPS Act.

Keywords

Trafficking, NDPS, Economic Policies, Cannabis, Narcotics, Border Security, Maritime, Drug Lords, Smuggling Networks, Liberalization, Anti-Narcotic Framework, Money Laundering.

INTRODUCTION

According to the World Drug Report 2024, at the global level drug use has increased moderately over the past decade. The estimates have reached around 292 million worldwide as of 2022 showing a 20 percent increase than the previous decade. In India, according to the Ministry of Social Justice and Empowerment’s recently released report on the “National Survey on Extent and Pattern of Substance Use in India” (2019) about 3.1 crore individuals (2.8%) are cannabis users, 2.06% are opioid users and nearly 0.55% (60 lakh) require treatment services. Moreover, 1.18 crore (1.08%) are current users of sedatives (non-medical use). Nearly 18 lakh children need help with inhalant use and about 8.5 lakh people are injecting drugs (PWID – people who inject drugs)[1].

The statistics about drug use show that there is a constant trafficking of drugs into the territory as drug use directly fuels drug trafficking. An increased demand for narcotics encourages traffickers to supply these substances and the rise in drug consumption, particularly among youth and in urban areas, creates lucrative markets for traffickers. The use of drugs incentivizes its production and distribution, both domestically and through international smuggling networks, perpetuating a cycle of supply and demand. Additionally, drug trafficking networks often target vulnerable populations, exacerbating the drug abuse problem and creating a persistent challenge for law enforcement and public health agencies. Henceforth drug trafficking comes with its own socioeconomic and psychological consequences.

While the demand for drugs remains a potent factor that induces drug trafficking, economic policies also play a significant role in it and influence its dynamics in complex ways.

ECONOMIC POLICIES AND DRUG TRAFFICKING

A country’s economic policies have implications for all the socio-economic and financial aspects of society. From trade to borders to education, it influences all the dynamics of the state. The legislations enacted also need backing in the country’s economic policies to ensure their proper implementation. Likewise, economic policies impact the dynamics of drug trafficking in a significant way. Economic policies related to trade liberalization, border security, employment, social welfare, etc. all play their role in influencing the trafficking of drugs. Liberalized economic policies for instance with reduced trade barriers often lead to an increase in the volume of goods and capital crossing borders, providing cover for smuggling. On the other hand, under stringent economic policies and cooperative international collaborations, it is easy to curb drug trafficking by improving the detection and interception of illicit drugs. While these impacts may not be immediately apparent, collectively they play a significant role in shaping the dynamics of drug trafficking.

TRADE LIBERALIZATION

Trade liberalization is one of the important economic policies of the majority of the countries in the world. It refers to the removal or reduction of restrictions or barriers on the free exchange of goods between nations. These barriers include tariffs, such as duties and surcharges, and nontariff barriers, such as licensing rules and quotas[2]. Trade liberalization policies can have a direct bearing on drug trafficking. Itoften results in a higher volume of goods crossing borders due to reduced tariffs and fewer trade barriers. This increased flow of goods can provide cover for drug traffickers to conceal illegal substances within legitimate shipments. Moreover, trade liberalization often leads to more porous borders with less stringent checks to facilitate the smooth flow of commerce which can create opportunities for drug traffickers to exploit these weaknesses. For instance, the North American Free Trade Agreement (NAFTA) significantly increased trade between the U.S., Canada, and Mexico, but it also made it easier for drug traffickers to smuggle narcotics across these borders by hiding them within the larger volume of legal goods.

India and Trade Liberalization

India initiated its era of liberalization in 1990. Since liberalization, a surge in drug trafficking has been witnessed across the borders of the country. Less stringent border controls were adopted to encourage trade which in turn resulted in the illicit supply of drugs along with legal goods. It is for the same reason that the northeastern states today have become the hotspots of drug trafficking as they share borders with drug production zones of Myanmar and are close to other zones like Laos, Thailand, etc. referred to as the Golden Triangle. Heroin was introduced in the mid-seventies in the Northeast. Its availability in the region after 1984 was optimum and by 1990 heroin consumption increased tremendously in the region[3].

However, it is pertinent to note that the liberalization policies did not bring such an impact along the northwest borders. There was a decline in drug trafficking in the 1990’s. The share of heroin sourced from the ‘Golden Crescent’ share of South West Asia origin came down from 74 percent in 1992 to 21 percent in 2009. The sharp decline in the quantity of South West Asian heroin seized was because of the military build-up along the Indo-Pakistan border in 2002 following the December 2001 parliament attack. Similarly, seizure figures for hashish also displayed a declining trend as far as its origin is concerned. For instance, 84.8 percent in 1988 dipped to 70 percent in 1990 and further to 52.5 percent in 1991[4].

ANTI-MONEY LAUNDERING POLICIES AND FINANCIAL REGULATIONS

Anti-Money Laundering (AML) policies and financial regulations play a crucial role in combating drug trafficking. These policies disrupt the financial networks used by traffickers to launder their proceeds. They have a significant impact on drug trafficking by monitoring and tracking financial transactions to detect and prevent money laundering which is an essential part of the process.

Anti-money laundering policies and its implications

The anti-money laundering policies require financial institutions to report suspicious activities, which can help law enforcement identify and disrupt drug trafficking operations. AML policies also empower authorities to seize and forfeit assets acquired through illicit activities, including drug trafficking. This financial disruption can significantly impact the operations of drug trafficking networks by depriving them of their illicit gains. In India for instance, the Prevention of Money Laundering Act (PMLA) mandates financial institutions to maintain records of all transactions and report suspicious ones to the Financial Intelligence Unit-India (FIU-IND). This helps track the flow of illicit funds and identify drug trafficking networks. It also empowers Indian authorities to seize and confiscate properties and assets linked to money laundering activities. In several high-profile cases, assets worth millions have been seized from individuals and entities involved in drug trafficking.

Financial regulations and its implications

Financial regulations often include requirements for reporting large cash transactions, which can be indicative of money laundering activities. These reports help authorities monitor and investigate unusual financial activities that could be linked to drug trafficking. Under the financial regulations, the Reserve Bank of India (RBI) requires banks to report all cash transactions exceeding INR 1 million to FIU-IND. This helps in identifying and investigating large cash movements that may be associated with drug trafficking.

Know Your Customer Policies

Know Your Customer (KYC) policies are also in place which impact activities related to drug trafficking. These policies require financial institutions to verify the identity of their clients, making it harder for traffickers to use fake identities to open bank accounts or transfer money. This transparency helps prevent the anonymous movement of large sums of money that could be linked to drug trafficking. Indian banks henceforth under the KYC direction 2016 are required to comply with KYC norms, including obtaining and verifying customers’ details. This has made it more difficult for traffickers to use banks for laundering drug money.

Case Study

D-Company is a name coined by the Indian media for one of Mumbai underworld’s organized crime syndicates founded and controlled by Dawood Ibrahim, an Indian crime boss and drug dealer[5]. It is known for being a notorious criminal organization involved in drug trafficking.

The crackdown on the D-Company in recent years illustrates the impact of robust financial regulations and AML policies. Indian authorities, in cooperation with international agencies, tracked the financial transactions and assets of the network, leading to significant asset seizures and disruption of their operations. In 2019, the Enforcement Directorate (ED) attached properties worth INR 600 million linked to the D-Company under the PMLA. This action was part of a broader effort to dismantle the financial network supporting drug trafficking and other criminal activities.

ECONOMIC DEVELOPMENT AND EMPLOYMENT POLICIES

Economic development and employment policies play a significant role in influencing drug trafficking by addressing some of the root causes that drive individuals toward illicit activities. Economic hardship and lack of legitimate employment opportunities often push individuals towards drug trafficking as a means of livelihood. By improving economic conditions and creating job opportunities, these policies can reduce the allure of drug trafficking.

Job Creation and Poverty Alleviation

Various economic policies aim to provide employment opportunities to the young and unemployed populations. These policies also aim at reducing poverty and can have a direct impact on drug trafficking as when people have stable employment and income, they are less likely to resort to illegal activities. An example can be given of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in India provides rural households with at least 100 days of guaranteed wage employment per year. This scheme has been instrumental in reducing poverty and providing alternative livelihoods in rural areas, which can help deter people from engaging in drug trafficking. As of 2020, MGNREGA employed over 123 million workers across 28 states and 8 Union territories, significantly contributing to rural income and reducing economic vulnerability[6].

Skill Development and Education

Policies that focus on skill development and education can enhance employability and reduce the socioeconomic drivers of drug trafficking. Education and vocational training programs equip individuals with skills needed for legitimate employment, reducing the likelihood of them turning to drug trafficking. The Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is an initiative aimed at skill development in India. It provides short-term training and certification to youth, improving their employability in various sectors. By 2021, PMKVY had trained over 10 million candidates, enhancing their job prospects and reducing economic vulnerability. Such policies can provide opportunities for employment to people preventing them from being part of drug mafias and syndicates.

Alternative Development Programs

Alternative development programs provide farmers with incentives to switch to legal crops. These programs offer financial and technical support to encourage the cultivation of alternative crops. In Himachal Pradesh and Uttarakhand, the government has implemented programs to promote horticulture and other high-value crops as alternatives in the regions known for cannabis cultivation. The Himachal Pradesh Horticulture Development Project aims to increase the productivity, quality, and market access of horticulture commodities, benefiting over 100,000 farmers by 2025.

Economic Growth – A Dual Aspect

Economic policies promoting urbanization and industrial growth can create employment opportunities in urban areas, reducing the economic incentives for engaging in drug trafficking. However, there is another aspect to it. Economic growth often leads to higher disposable incomes, especially among urban populations and celebrities. With more financial resources, individuals may have greater access to recreational drugs, fueling demand. As the demand fuels up, it can lead to smuggling of drugs at local levels. In cities like Mumbai and Delhi, economic prosperity has led to an increase in the nightlife culture, where drugs are often part of the party scenes. Celebrities, with their substantial disposable incomes, are more likely to indulge in these high-end party environments. Besides celebrities, are under constant public scrutiny and pressure to maintain certain social standards, which can lead to drug use as a coping mechanism. A 2018 survey by the All-India Institute of Medical Sciences (AIIMS) found that drug use is more prevalent in urban areas, particularly among young adults.

Economic policies that lead to rapid growth and urbanization thus can have a dual impact on drug trafficking. While they can provide opportunities to one section of society to resort to legal means of subsistence; on the other hand, they can increase the demand for drugs among affluent individuals and celebrities by providing them with higher disposable incomes and changing lifestyles, and can also facilitate trafficking through improved trade and connectivity, sophisticated distribution networks, and the involvement of organized crime.

MARITIME AND TRADE POLICIES

Efficient maritime and trade policies are one of the notable tools of any economic policy aiming at growth and development. While they play a crucial role in the development of the country, especially with a vast coastline, they also significantly impact drug trafficking routes and operations.

Maritime trade and its impact

Economic policies that promote maritime trade and increase port activity can create opportunities for drug traffickers to conceal and transport illicit drugs within legitimate cargo. The rise in container shipping, for instance, has provided traffickers with opportunities to hide drugs in commercial shipments. For instance, in 2019, Indian authorities seized 500 kg of heroin concealed in a container of talc powder at the Mundra Port, one of India’s busiest ports. According to the Directorate of Revenue Intelligence (DRI), maritime seizures accounted for a significant proportion of total drug seizures in India, with several high-value interceptions at major ports[7].

Trade policies

Trade policies that reduce tariffs and foster free trade agreements can lead to an increase in the volume of goods crossing borders, which traffickers can exploit to smuggle drugs. An example can be given of SAFTA. The South Asian Free Trade Area (SAFTA) agreement has facilitated greater trade between India and neighbouring countries. However, it has also been exploited for drug trafficking, as seen in increased smuggling activities along the India-Nepal and India-Bangladesh borders. The Narcotics Control Bureau reported a 30% increase in drug seizures at border checkpoints following the implementation of SAFTA.

Economic Corridors and Infrastructure

Infrastructure projects aimed at boosting trade, such as the development of economic corridors, can be exploited by traffickers. Improved transportation networks make it easier for traffickers to move drugs quickly and efficiently. The Bangladesh-China-India-Myanmar (BCIM) Economic Corridor is one such example. It aims to improve trade routes and connectivity. While this project is intended to enhance economic cooperation, it has also been used by drug traffickers to smuggle narcotics into India from Myanmar. The increase in infrastructure development has been correlated with a rise in drug seizures along the proposed corridor routes, with a reported 25% increase in trafficking incidents.

Real World Impact

The development of the Jawaharlal Nehru Port Trust (JNPT) in Mumbai is India’s largest container port. It illustrates the dual impact of maritime and trade policies. While the port has boosted trade and economic growth, it has also become a focal point for drug trafficking. Authorities have had to implement stringent security measures, including advanced scanning technologies and increased surveillance, to combat the smuggling of narcotics concealed within legitimate cargo. In 2020, JNPT authorities seized a shipment containing 200 kg of methamphetamine concealed in machinery parts. The port has seen a 40% increase in drug seizures over the past five years, highlighting the ongoing challenge of balancing trade facilitation with security[8].

ROUTES OF DRUG TRAFFICKING IN INDIA

India’s geographical location along with its porous borders makes it one of the easy targets of trafficking drugs into the territory. Besides having a large population of youngsters, it provides a lucrative market for drug lords. India is sandwiched between the most strategic zones of drug production i.e. the Golden Crescent and Golden Triangle from where a huge influx of drugs, especially heroin and methamphetamine is observed. A brief description of various routes can be given as follows:

Golden Crescent Route: The Golden Crescent Route popularly known as the Death Crescent among the anti-narcotics agencies is one of the major narcotics supply routes in the region. It includes the areas of Afghanistan and Iran. Drugs like Heroin and Opium from this route enter India through Pakistan, often into the states of Punjab, Jammu and Kashmir, and Rajasthan.
Golden Triangle Route: Also known as the Death Triangle, this route includes the regions of Laos, Myanmar, and Thailand. Drugs enter India primarily through northeastern states such as Manipur, Mizoram, and Nagaland serving as entry points for heroin and methamphetamine.
Maritime Routes: India is gifted with a vast coastline which increases its prospects of maritime trade. However, these routes are also being exploited for trafficking drugs into the country. Drugs from Southeast Asia and the Middle East are smuggled into India via sea routes, with major ports like Mumbai, Chennai, and Kolkata serving as entry points.
Domestic Routes: Within India, there are also some areas of production from where drugs are supplied to other areas of consumption. Cannabis is often cultivated in states like Himachal Pradesh, Uttarakhand, and parts of Andhra Pradesh, and then distributed across the country. Similarly, synthetic drugs and pharmaceuticals are trafficked from manufacturing hubs to urban centers. Within the states, some small zones of production can also be identified that counter the local consumption demands.

The routes of drug trafficking are constantly evolving due to law enforcement efforts and changing market dynamics, making drug trafficking a persistent challenge for Indian authorities.

The policies of the government also affect the landscape of these routes. For instance, the expenditure of the government on its border security, policies regulating maritime trade, and expenditure on the intra-state agencies to curb the production and transportation of drugs go a long way in defining the complexities of drug trafficking.

Liberalized economic policies with reduced trade barriers often lead to an increase in the volume of goods and capital crossing borders, providing cover for smuggling. On the other hand, under stringent economic policies and cooperative international collaborations, it is easy to curb drug trafficking by improving the detection and interception of illicit drugs.

ECONOMIC POLICIES AND THE NDPS ACT

Economic policies in India have notably impacted the enforcement of the Narcotic Drugs and Psychotropic Substances (NDPS) Act. Economic policies, while essential for growth and development, pose significant challenges to the enforcement of the act. Increased trade, urbanization, and infrastructure development create opportunities for drug traffickers necessitating enhanced enforcement measures, technological advancements, and international cooperation. The increasing maritime trade highlights the liberalized economic policies of the state. As the trade is increasing so is the flow of narcotics in the country. The trafficking of drugs thus has necessitated the presence of robust and adaptive mechanisms and policy measures. The economic policies thus make the formulation and strict implementation of the NDPS Act a necessity. In the same manner, urbanization and higher disposable incomes have led to greater drug demand, particularly among affluent urban populations and celebrities, complicating the enforcement of the NDPS Act. Infrastructure improvements, like the development of highways, have facilitated drug trafficking routes, requiring heightened vigilance and technological advancements from enforcement agencies. High-profile drug cases also underscore the challenges and the need for the NDPS Act to adapt to the evolving economic landscape to effectively combat drug trafficking and consumption.

CONCLUSION

Economic policies highlight the major pillars important for the growth and development of a country. However, they also necessitate robust security measures to prevent exploitation by drug traffickers. Enhanced customs checks, better intelligence sharing, and coordinated law enforcement efforts are crucial to mitigating the risks emerging from drug trafficking. Addressing these challenges requires a balanced approach that enhances economic growth while simultaneously strengthening regulatory frameworks and law enforcement capabilities. Border security also plays its part in drug trafficking. The economic policies are to be framed in a manner that doesn’t undermine border security and grants free access to narco-terrorists across borders.

REFERENCES

Online World Drug Report 2024 – Drug market patterns and trends, United Nations Office on Drugs and https://www.unodc.org/ (Last visited July 27, 2024, 12:45 am)
Drug Trafficking and Threat to Security, Drishtiias, https://www.drishtiias.com/, (Last visited July 26, 2024, 01:45 am).
Aditya Sagar, Beyond Punishment: India’s Drug Policy Landscape, III, Ind. Jr. of Integd. Res. in Law 654-659 (2023)
Horace A. Bartilow, Kihong Eom, Free Traders, and Drug Smugglers: The Effects of Trade Openness on States’ Ability to Combat Drug Trafficking, 51 Lat. Amr. Pol. and Soc., 117-145, (Summer, 2009).
FATF Report on Money Laundering and Terrorist Financing Risks and Trends, Financial Action Task Force, (2018).

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[2] Caroline Banton, Trade Liberalization: Definition, How It Works, and Example, Investopedia (Last visited July 27, 2024, 01:04 pm) https://www.investopedia.com/

[3] Pushpita Das, Drug Trafficking In India: A Case For Border Security, 24 IDSA 5, 25 (2012)

[4] Pushpita Das, Drug Trafficking In India: A Case For Border Security, 24 IDSA 5, 25 (2012)

[5] D-Company, https://en.wikipedia.org/w/index.php?title=D-Company&oldid=1236635993 (last visited July 26, 2024).

[6] MGNREGA Annual Report 2019-20, Ministry of Rural Development, Government of India (Last visited July 27, 2024, 03:04 pm), https://rural.gov.in/

[7] Annual Report 2019-20, Directorate of Revenue Intelligence, (last visited July 28, 2024, 10:17 am)

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