By Bhagirathi Panda
A country or state’s budget is basically a statement of accounts showing the income and expenditure details over a given period of time. However, over the years the Indian budget exercise had been analysed by various sections of the society to read off important policy thrusts and statements of the Government of the day. In a federal arrangement like ours it also shows the intent of the central government to overcome regional imbalance in development space by means of appropriate allocations of monetary resources and specifications of intended programmes and policies. Looked from this angle, the recent budget of the NDA Govt, has a thrust for the North Eastern Region (NER). The thrust is development of physical infrastructure so as to improve connectivity and reduce isolation. The intent of the central governemnt was clear from the day Railways budget earmarked Rs. 5116 crore for the NER. This allocation was a jump of 54% over the previous year. The same budget also provided six new trains to the region and also made a provision for commissioning of new lines in the Dudhnoi-Mendipathr, Lumding-Badarpur-Silchar, Harmati-Murkong-Selek and Balipara-Bhalukpong sectors. The general budget 2014-15 took this start a step further by proposing an additional allocation of Rs. 1000 crore(over and above the railway budget allocation). An amount of Rs, 47000 crore has been allocated to develop national highways in the region. In order to promote cultural integration with the rest of India, a 24×7 television channel has been provided. To give a fillip to sports and sports infrastructure, the budget has made a provision of Rs. 100 crore for establishment of a sports university in Manipur. A significant hike of 76% in sports budget for the region over the last year allocation has also been made. In addition to these NER specific provisions, other general provisions of the budget such as aligning MGNREGA with agriculture, the programme of skill up-gradation, allocation of Rs. 10000 crore to start up entrepreneurs etc. can be leveraged to develop the economy of the region. These are welcome steps. But the bigger question is can allocation of more and more money in the absence of accompanying conducive institutions bring in development to the region?
It is no secret that before partition of the country, the NER had substantial economic and cultural integration with countries of South Asia, South East Asia and East Asia. Came the partition in 1947, the political boundaries were redrawn. All on a sudden, the region was cut off from its natural continuum. The centuries old surface and sea trade routes were choked, and the region came to be connected to rest of liberated India in terms of the Siliguri corridor aptly known as ” Chicken neck corridor” . Post partition, people of this region in general and in the border areas in particular became prisoners- of the colonial confines, of Government of India’s security concerns and subsequently the cold war diplomacy and despondency. Their way of living, livelihood system and development were all held hostage to the unnaturally carved out political boundaries and the resultant underdevelopment perpetuated by foreign policy mandarins. Connectivity and market access to East Asia, Bangladesh and south East Asia was lost. Ethnic assertion and demand for separate statehood followed for a considerable period of time. This resulted in the formation of many new states. Post formation and reorganization of states, the newly emerging political elite in these states, to a great extent, eulogized this reclusive situation in the name of preservation of ethnic culture and identity. Conveniently they forgot that sustainable living and continuous development (thus growth) has much to do with land, natural resources, rivers and rivulets, climate, trade, cultural capital, honest labour, entrepreneurial capability and geographical proximity and got carried away by the notion that it would automatically come from Delhi with money being pumped in. Confusion and predicament on the meaning, avenues and strategy of development followed particularly in the minds of a good number of youths, excluded from the elitist development path followed by the ruling classes. This partly, led to the habit of perverse rent seeking behavior with the youth. Direct alienation from work on native land, resources, trade, honest labour etc. affected whatever native entrepreneurship spirit they had earlier.
This also led to a structural transformation of the NER economy of a perverse nature, where in the industrial sector has almost been bypassed. The economic divide became prominent. The large rural economy continued for a long period to be based on subsistence agriculture. It is a known theory that as agricultural productivity grows, the elasticity of job creation in agriculture gets reduced. With high rate of population growth during the last three decades, the cultivable land-man ratio too has reduced. This has led to substantial diversification in the employment and income space of the rural sector of the region. Rural farm employment has gradually decreased and rural non-farm employment has significantly increased. During 2009-10, the percentage of people engaged in non-farm activities in rural areas was 35% as against, the all India average of 32%. Analysis of the reasons for such comparatively high percentage of employment in non-agricultural sector shows that much of this diversification has happened not because of development factors but because of distress factors. Simply put, it meant that people had to undertake some kind of work to make a living and they had resorted to low end non-farm activities. A small but consumerist economy based partly on perverse rent seeking behavior has emerged in the urban sectors. The economy and society have become deficient in terms of food and other forms of securities like governance. Even in a laissez-faire regime, the basic function of the state was to (i) maintain law and order, (ii) secure the citizens from external aggression and (iii) dispense justice. Unfortunately, in the so called welfare regime today, the NER has a huge deficit in law and order and governance. From NC Hills to Garo Hills , from the hills of Imphal to Nagaland; extortion, rent seeking and lawlessness prevails. Thus, crisis in development continues, underdevelopment haunts and economic efficiency eludes NER.
Paul Krugman’s analysis of the present state of American society and economy in his famous book “The conscience of a Liberal: Reclaiming America from the Right” has some good lessons for the political economy of the North East. If Krugman advocate’s for radical reforms to reclaim American society and economy from the right and more particularly from its ever increasing incidence of inequality and economic instability; the north eastern political economy too urgently cries for a reform to reclaim it from elitism, insurgency and rent seeking. Flow of money through budgetary provisions cannot on its own emancipate the region from its deep evils of elitism, insurgency and rent seeking. This money is to be properly used to create alternative employment opportunities for the youth so that these alternatives are perceived to be more lucrative than the avenues of extortions and rent-seeking. Pursuing alternative gainful economic activities by the youth urgently and fundamentally requires maintenance of reasonably good law and order and an enabling government. The other ‘establishments’ of development like market, community and civil society have their obvious limitations when it comes to speedy development of the region. These establishments at best can and should play a supporting role. There is no respite from government when it comes to economic development in NER. Critical government and effective governance is thus the need of the hour. Budget is one of the means to an end. The end is ‘Development’ of the people which to happen successfully, requires serious institutional reforms in the fields of governance, values and practices of the people.
(The author teaches in the department of economics, NEHU, Shillong)