A good argument, but that addresses only part of the picture.
The money is spent on organising demonstrations; so many rupees per head (the leaders get a lump sum rate, retain some of it, and pass on the rest of the money in a chain, ending with local organisers, sufficient for their personal consumption and for doling out). The rate is higher or lower depending on the action sought. Even the children at the head of a crowd, running up and shying a stone. That is one part of it: it isn't the heads of the factions who take money alone.
Now please watch videos, plentifully available on the 'net, especially on YouTube. You will see the utmost restraint observed by security forces. The breaking moment comes either when individual security men (please note that these are never the Army, these mob control weapons are handed out to policemen, either local policemen - rare - or central policemen) are isolated by a mob, or are trapped in the lanes and byways of a densely built-up locality. That is when the damage is done; used against a crowd, the spread of shot ensures that a broad lens of targets is affected, including people standing at the edges. Used in a crowded dwelling place, again, the spread may go where not intended, harming uninvolved people.
Pellet guns are used only in J&K because nowhere else is there such organised and very heavily funded unrest. You will be shocked at the estimates of money being spent on subsidising 'dissent' in J&K.
In other restless areas, these central policemen are fully armed and shoot to kill. And, in turn, they are attacked and killed. Those are Naxals, who want to impose an autocratic rule on the entire country, overthrowing the constitution. I am against human rights violations, but I am against them when committed by so-called dissidents as much as I oppose them when committed by the agents of the state. As for the armed micro-rebellions in the north-east, those have to be resolved by patient, accommodative actions by both the local state government and the centre; these are individual tribes that fear loss of territory and marginalisation, and have taken the example of the Nagas and the Mizos too seriously.
<sigh!> Tell me about it. I hope you are keeping up with the increasing irritation of the bench with the administration and its weird ways.
Next is the packing of the bench with Sanghis. It's coming, as sure as God made little green apples.