In rural India, wealth just out of reach

Pailikhand's magnificent diamond wealth is held up by bewildering bureaucracy and lawsuits.

The broad course of the Indrawati River holds nothing but sand these days. Just beyond its parched banks, through reedy trees seared by 100-degree heat, little in the village of Pailikhand stirs: A woman picks through yellow mahua seeds, a police officer hangs his laundry.

Pailikhand is waiting for rain.

Throughout this corner of rural India, the monsoon rains are a meteorological alarm clock, rousing men and women to a season of work in the rice paddies. But here in Pailikhand, they mean something potentially more rewarding: diamonds.

The hills east of town are so saturated with diamonds that the stones wash away with a strong rain, settling along the banks of the Indrawati. Come the monsoons, many men can be found, not in the fields, but along the riverside, sifting through muddy soil with wicker baskets.

Pailikhand is the center of a new Indian diamond rush, and prospects here range from the promising to the fantastic. The state of Chhattisgarh could become one of the top 22 diamond-producing regions in the world – or better, according to a state report. Mining could bring $5.7 billion annually to the state, estimates Chief Minister Raman Singh, leader of the Chhattisgarh assembly.

Or, perhaps, it will bring nothing at all. The story of Pailikhand is more about frustration than fabulous riches – a classic Indian tale of how confusion and the inefficiencies of an overloaded court system can turn can't-miss millions into a long slog of legal motions.

Since a court order suspended all legal mining here six years ago, those seeking diamonds have had to skulk along the banks of the Indrawati in secret, selling their contraband for a pittance on the black market.

In tiny Pailikhand, where the police presence doubles to 12 in the monsoon season specifically to protect the state's treasure, no one will admit that he goes to the river. But despite the heightened security, many do. "It's a huge area, the police can't cover it all," says local Kesri Ram. "Everyone is waiting for the rains."

Diamonds: A lawyer's best friend

After all, they have given up waiting on the courts. In 2001, the state alleged that the B. Vijay Kumar mining company was sending more samples from Pailikhand abroad for analysis than was permitted under its contract. B. Vijay Kumar contested the charge, and the Chhattisgarh high court issued a stay – stopping all mining in the hills around Pailikhand until it reached a decision.

It still hasn't. In fact, it isn't even close, says a local lawyer. "Now, nobody is serious," says Vinod Chawada, who specializes in natural-resource law and is familiar with the case.

For its part, B. Vijay Kumar has refused to abandon its claims to the site. Meanwhile, the government has moved on to other areas of the state, where it is allowing companies like South African diamond giant DeBeers to search for new deposits, in hopes of beginning diamond production by 2010.

In Indian jurisprudence, the delay is hardly unusual. "The average time span for a dispute to be resolved through the court system is about 20 years," reported the investigative arm of the Indian government, the Chief Vigilance Commission, in 2000 – adding that many people use the courts simply to avoid justice.

Unlike the state or B. Vijay Kumar, however, the people of Pailikhand have no Plan B – other than to go back to the ancient practice of harvesting mahua seeds, which is processed into cooking oil, simply to survive the dry season.

"I am going to pick mahua, while there are diamonds in our village," says Balram Nagesh, a student. "I am very angry. It's in our backyard, but we can't use it for our own welfare."

In Pailikhand, another Koh-i-noor?

Before the arrival of B. Vijay Kumar in 2000, the area around Pailikhand had a touch of the Yukon about it, say residents. Some people dug up parts of their own farms. Others trekked into the highlands with the coming of the rains, digging ditches a few feet deep and using rainwater to sift the soil through their baskets.

"Wherever I went, I found something," says Mr. Ram, claiming that his partner once unearthed a 70-karat diamond that fetched more than $50,000 – then gave Ram only $2,500.

Even if Ram is overstating his lost treasure, experts say it hints at what riches may lie beneath the hills of Pailikhand. "It's a very promising area," says Fareeduddin, a member of the Geological Society of India in Bangalore, who uses only one name. "It is probably better than all the other areas in the country."

That is no small thing. The mines of India once unearthed the Koh-i-noor – the 105-karat diamond in the center of the British crown. Whether Pailikhand might have a similar trove remains a matter of guesswork. The state shut down B. Vijay Kumar before enough research could be done.

In Pailikhand, some are not waiting. Dhan Singh Natam knows people are still looking for diamonds. "Someone has nice new clothes, and there is no other way of getting that kind of money here," says Mr. Natam, the village chief. Others use the money to get drunk.

And those who have nothing get jealous. "Everybody is suspicious of each other," says Ram. "If one goes and digs, the other will tell the police."

Before people knew about diamonds here, "we were all unified," says Natam. He hopes the issue will be resolved soon. "If it is regularized, then people can make money in a legal way."

Mr. Sappenfield is the New Delhi correspondent for the Monitor and USA Today.

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