By Manas Chaudhuri
It is a stark reality that even after six and half decades of planned economic strategy, the country has not succeeded in providing basic infrastructure and resource base to the North-East of India. The compelling issues of regional imbalances have not been tackled with effective policy framework. Look at it from any indicator, the answer will be the same—the Region is not only way behind the rest of the hinterland but also not ready for adding significantly to the national export basket. It is a telling commentary that forty four years after the Reorganisation of the erstwhile Assam, which gave political and economic power to the peoples of the NE States, the scenario has not changed a great deal.
This paper will try to take a closer look at the export potentials of the Region and examine the effect of some of the inconsistent strategies of the Government of India to bring about an accelerated pace of development and also pin point some of the built-in deficiencies of the Region itself.
State of backwardness
The Northeastern States account for only 8% of India’s geographical spread and a mere 4% of its 1.25 billion population. The importance of the Region obviously lies in its strategic location surrounded as it is by Bangladesh, Myanmar, China and Bhutan. In fact, 98% of Northeast share borders with these neighbouring countries. Owing to historical, political and social reasons, the Northeast has been in the backwaters of India when it comes to economic development. It is an admitted fact that due to inadequate attention from the Government of India coupled with lack of initiative of the States, the Region finds itself at the lower rungs of development ladder.
Let’s look at some of the comparative basic indicators:
Per Capita Income ( As in 2013-14):
All-India average : Rs 33,731
North-east average : Rs 77,949
Arunachal Pradesh : Rs 76,370
Assam : Rs 44,263
Nagaland : Rs 77,529
Manipur : Rs 41,573
Meghalaya : Rs 61,458
Mizoram : Rs 76,210
Sikkim : Rs 1,76,491
Tripura : Rs 69,705
( Source: Lok Sabha)
The figures may look flattering for The NE States but the reality is that low population density has made it considerably bloated.
Below Poverty Level:
All-India : 26.1%
North-east: 34.28%
Road Density per 1000 sq km : Road Density per 1000 population:
All India : 965.73 2.77
Arunachal Pradesh: 196.96 13.77
Assam : 2936.51 7.38
Nagaland : 1345.32 10.27
Manipur : 739.11 6.98
Mizoram : 292.11 6.35
Meghalaya : 436.67 3.89
Tripura : 3026.23 9.09
Sikkim : 263.95 3.17
(Source : Ministry of Road Transport & Highways, 2008)
( NB: Road length per unit area is higher than National average in Nagaland, Assam and Tripura. Road density per 1000 population in all the NE States is higher than the national average. Given the low density of population and hilly terrain of the Region, this is an expected outcome.)
Railway Network: All-India : 64014.88 route kms NE Region : 2452.07 kms
(Assam alone accounts for 2283.71 kms, while Sikkim has no rail connection )
Airports: Of the 24 Airports in the North-east, only 12 are fully or partly operational. Arunachal Pradesh and Sikkim have no airport.
No Export Hotspot
By no means Northeast can be termed as hotspot for export of her produce to the neighbouring countries. The current export value from India is $ 254.4 billion and the Northeast contributes a negligible $0.01 billion. Nearly 94% of exports from the NER comprises tea and coal. Remaining 6% is accounted for by boulder stones, limestone and fruits.
The Northeastern Region which is regarded as a biodiversity hotspot of the world, is endowed with huge natural resource wealth. Aside from coal, oil and natural gas, this Region has immense potentiality to economically prosper through planned cultivation of Bamboo, Rubber, agri-horticulture and Hydel Power. These four categories should be the bedrock of export from the region.
Bamboo: According to a study conducted by Indian Chamber of Commerce, Northeast has 65% of the national bamboo production value and 20% of the world. Mizoram alone accounts for 40% of the country’s bamboo production value. UN’s Industrial Development estimates that bamboo production in the Northeast will grow to $ 5.5. billion. Regrettably, bamboo cultivation and its export still remains as an idea.
Rubber: According to Rubber Board, India ranks thrid in rubber cultivation globally, but stands 19th when it comes to exporting rubber with a meagre 1.48% share of the world market. China tops the list with 11% share globally.
In the Northeast, rubber is cultivated in Tripura, Assam, Mizoram and Meghalaya. Tripura steals the show. The State which has 35,760 ha of rubber plantation area, is regarded as “second Rubber Capital of India”, after Kerala.
Although rubber has a huge market in the western countries, including USA, Northeast is yet to reap the bonanza.
Hydro Power: The Region has an identified potential for hydro power to the tune of 63,247 MW out of which only a small percent has been utilised till recently.
Identified Potential
Meghalaya : 2384 MW
Arunachal Pradesh : 50328 MW
Sikkim : 4286 MW
Others : 6249 MW
Total : 63,247 MW
Hydro Power Utilised
Meghalaya : 13.45%
Arunachal Pradesh : 9.77%
Sikkim : 60.85%
Others : 9.84%
With a view to harnessing the hydro power of the Region, in 2008 the Government of India announced “Hydro Policy 2008″ with a mission which was termed as ” 50,000 MW Hydro Initiative”. Several incentives were added to a package for attracting private invest in this sector. Till recently, projects of only 14,000 MW were allotted to private players. The status of these projects are not available. The combined installed capacity of the NER is3513.08 MW. As on August last year, the per capita consumption of power in NER was 249.65 KW per hour as against national average of 1010 KW per hour. The gap is yawning.
Agri-Horticulture: Current agricultural production of the Region is insufficient to meet its domestic consumption and a fair bit is being imported from the national pool. Vegetable production of NER is only 4.5% of the total national yield, according a study undertaken in 2005 by Agricultural and Processed Food Products Exports Development Authority (APEDA) . The study revealed that fruits production in the nE is 23.35 lakh tonnes which is only 5.1% of the national production. Mizoram accounts for 12% of the fruits produced in NE. The Region has excellent quality of turmeric, ginger, chilly, orange, pineapple, passiona fruit, mushroom, bamboo shoot, areca nut etc which have a huge export potential.
Efforts of Government of India
Truly speaking, the Central Government plans and policies for developing the NER can only be described as experimental, inconsistent and even muddled. Over the years the Government of India has taken a slew of initiatives and generously sanctioned monies to “help” the Northeast. Here are some of the highlights:
Creation of NEC: In 1971 by an Act of Parliament the Northeastern Council(NEC) was set up. Initially it was meant to be an “advisory” body and today its engaged in “regional planning”. During the last four and half decades the Centre has funneled a huge sum of money through the NEC. It is observed that NEC has turned out to be a wooden horse. It is taking Northeast nowhere. Some critics call NEC the “milch cow”. Indeed, if the first 44 years are anything to go by, NEC has not really lighted up the NE.
Incentives for industrailisation: Indian Chamber of Commerce describes NER as “industrial desert” bereft as it is of industrial climate. In spite of the fact that in 2007 Ministry of Commerce & Industry under the North Eastern Industrial and Investment Policy declared the entire region as Special Economic Zone (SEZ). Several incentives like 90% transport subsidy, Income Tax exemption for five years, Capital Investment Subsidy of 15% etc, there are few takers.
Export promotion: In 2000, Government of India announced “PM’s Action Plan for NE”. Commerce Ministry created Northeast Cell for giving more focussed attention to infrastructure development. Under this package Rs 55 crore was allotted under export development fund in 2005-07. In all 47 projects were put up by the States worth 40.75 crore. The status of these projects is not known.
Central Package: As Special Category States, the Central Government had a wide-ranging economic package for the Region, including 90:10 funding pattern for Plan development. Evidently, the packages failed to make the cut and in 1998 Non-Lapseable Pool was created out of the 10% mandatory contribution of various Ministries. According to figures provided in Parliament in 2003, only Rs 1318.66 crore of the Rs 5806.07 crore deposited in the pool between 1998 and 2002 had been released. Obviously owing to lack of proactive approach of the States, the funds are under-utilised.
Look East Policy: Quarter of century ago, i.e. in 1991, when India’s Look East Policy (since renamed as Act East Policy) was announced, experts hailed it as a “strategic move” that changed India’s approach for its own development and its vision of the evolving global economy. The essential philosophy behind this Policy was to forge a closer and deeper economic integration with its eastern neighbours. Hopes were raised that the Policy would do the trick for the Northeast which is destined to be the natural gateway to these “distant neighbours”.
It took long 18 years for the Government of India to sign agreement on India-ASEAN Free Trade Area (FTA) in 2009. This agreement was hailed as the world’s largest FTA—a market of 1.8 billion people and combined GDP of $2.7 trillion.
A number of schemes were afoot to augment the communication links. To name a few:
1.East-West Corridor connecting Silchar and Surat
- India-Myanmar-Thailand Trilateral Highway.
- Mekong-India Economic Corridor
- Moreh-New Delhi-Hanoi rail link
- Kaladam Transport Corridor connecting NE with Sitwee port in Myanmar.
Over and above, under a Sub-Regional Group called Bangladesh, China, India and Myanmar Economic Corridor (BCIM-EC) which envisages to harness economic complementaries in trade and infrastructure, a road link was proposed connecting Northeast-Sylhet-Dhaka-Chittagong-Mandalay-Yangon-Kunming.
Precious little has happened on the ground so far.
The list is surely not exhaustive. There have been several other schemes and incentives in different sectors in Centre’s attempt at holding hands of the distant Northeast.
Why Northeast languishes?
Obviously, it takes two to tango. If despite all its efforts, Northeast still finds itself wanting, the reason will have to be found within. Clearly it is not a case of funds crunch that debilitates the Region. If anything, the States have not shown proactive approach and are unwilling to burn midnight oil. The States apparently are content with Central assistance which provides for their bare comfort. Since 1972 we haven’t seen a heightened commitment towards bringing economic emancipation for its peoples. We have to say that there is hardly any sense of urgency shown by the movers and shakers by most of the States of the Region.
Over-dependence on Central doles, comfort of reservation for the locals with little serious competition and clear lack of collective aspirations have added to the sluggish and laidback syndrome common in the Region. Generally speaking, there seems to be no history of entrepreneurship in the Region’s DNA. Lack of job opportunities, inequitable enforcement of law and order, ethnic assertions, identity crisis—all have their share of contribution to the festering problem of militancy in the region. Blood letting, intolerance for “outsiders”, frequent public agitations not only has compelled flight of precious capital from the region but also driven away the prospective investors.
Above all, there is the perennial problem of funds not reaching their intended recipients and the ubiquitious politico-contractor nexus that seems to have sucked the vitality out of the Region. The worrying gap between conceptualisation and actualisation of Plans and Policies will continue to widen unless there is a paradigm shift in our strategies for development.
Compare with Bangladesh
Bangladesh, our most important and immediate neighbour, was born a month before the Reorganisation of the Northeast in 1972 to pave the way for creation of new States in the Region. Although comparison is oddeous, one is tempted to look at the remarkable strides of development sweeping across Bangladesh, if only to serve as an eye-opener for the NER.
Bangladesh was born abject poor. The Liberation War of Bangladesh in 1971 had ravaged the nascent country’s infrastructure and economy. Add to it the political upheavals and nagging civil unrest that followed thereafter. The stagnant economy and political instability gave rise to general despondency and hopelessness. Economic reforms started in mid-80’s and was aided by World Bank and IMF. Even India chipped in with $ 1 billion as interest free loan!
During the last three decades Bangladesh has resurrected its economy and today it is classified by experts as “next eleven emerging markets” and “one of the frontier five”. The country has the second most pro-capitalist population in the developing countries. Its economy is increasingly led by export-oriented industrialisation. Pharmaceuticals, ship building, ceramics, leather goods, textiles and knit-wear, frozen shrimps and fish industries are notable. In 2014 Bangladesh had an export billing of $ 33 billion of which $ 24.5 billion was accounted for by textiles and garments. The country’s per capita income as in 2015 stood at $ 1314 (or Rs 85,410)—-nearly three times above our national average.
Bangladesh’s success story is not just about foreign remittances and export earnings. In the social sectors like agriculture (second largest in the world), fishery (fifth in the world), life expectancy (70 years), low infant mortality, education at door step (literacy 70%), women’s emancipation through self-help and literacy mission etc