By Bhogtoram Mawroh and Tarun Bhartiya
In Meghalaya, the 2011 Census reported 76% of the rural households to be landless. Because of such high inequality, the share from the total income for the majority of the population in the State is going to be very low– a very alarming situation.
The recent figures released by the Reserve Bank of India revealed that during the 2011-12 to 2017-2018 period Meghalaya’s economy was the slowest among all the State and Union territories in the country. This was based on the State’s Compound Annual Growth Rate (CAGR), i.e., an average measure of growth over a time period. While during the same period, the average national CAGR was over 4% it was just under 2% for Meghalaya. What made it more embarrassing was that all the seven states from the North East Region (NER) had a CAGR of more than 4% with Meghalaya being an anomaly in the entire region. A growing economy means that an increasing amount of goods and services is being created in the economy. When this is measured in monetary value it is known as Gross Domestic Product (GDP) or Gross State Domestic Product (GSDP) for states, like Meghalaya. If the GDP is slow or contracting it has negative consequences on the spending power of the Government (derived through taxes and other revenue extractive measures) and consequently on job creation in the economy (directly through government jobs or indirectly through creating favourable conditions, i.e., tax breaks, subsidies, infrastructure building, etc). In 2019 the whole controversy about the new GDP numbers consequent the change in the method of calculation demonstrated how critical the measure is both economically as well as politically. The very low CAGR figure for Meghalaya is, therefore, an issue of great concern for many reasons.
An increasing population means that there is a need to produce a greater number of goods and services, i.e., more value, to cater to the growing demand. The 2011 Census report revealed that during the 2001-2011 period India’s population grew at an annual rate of 1.77%. Meghalaya, on the other hand, was again on a group entirely of its own. It recorded the third highest annual growth rate, i.e., 2.99%, coming third in the rankings after Dadra and Nagar Haveli and Daman and Diu. Although the figures for the updated Census (i.e., 2021) are not yet available, it is clear that in order to keep up with the growing demand the CAGR has to at least keep pace or be higher than the population growth rate. If we assume that the rate of growth as given by CAGR is 2% and annual population growth rate as per 2011 Census is 2.99%, unless there is a decline of more than 1 percentage points (it was 0.7 percentage points during 2001-2011) the supply has not kept pace with the demand in the economy. Put other way, the economy has contracted instead of expanding. In such a situation, creating new jobs will become very difficult. In turn, this will have an impact on the production as well as consumption of goods and services making it ever more difficult to create jobs in the future as well. Although these are hypothetical scenarios and nothing can be said with absolute certainty unless the updated Census figures are available, it nonetheless highlights the precarious condition of the citizens in the State.
In fact, there are indicators that give an idea about the scale of difficulties the citizens are already facing because of a slow growing economy. The Reserve Bank of India also has data on the ‘Per Capita Net State Domestic Product’, i.e., value created in the economy distributed equally among all the people in the State. The data show that the average amount of money that would accrue to every individual in the State is Rs. 82,182/- or Rs. 6,848/- per month (again fourth from the bottom). Recently the Government of Meghalaya released the revised rates of minimum wages –for Unskilled it is Rs 381/-, for Semi-skilled Rs. 432/-, for Skilled Rs. 483/- and for Highly-skilled Rs 534/-. This means that assuming that the worker is able to work for 22 days in a month, the total potential income for an average worker ranges from Rs. 8382/- to Rs. 11,748/-, higher than the Per Capita Net State Domestic Product.
Comparing both the figures, i.e., the Per Capita Net State Domestic Product and total (potential) income earned through the revised rates of minimum wages, it is apparent that the amount of value produced in the economy is severely inadequate to provide the population with decent jobs. In such a situation, the employers will have an inordinate amount of power over their employees. It is not surprising that people are forced to work in underpaid jobs because they have no option. What makes the situation even more glaring is that figure of Rs. 82,182/- of 2020-2021 is lower than the 2018-2019 figure of Rs. 82,653/-, i.e., Per Capita Net State Domestic Product has actually gone down in Meghalaya. This, of course, could be because of the contraction of the economy due to COVID-19. It is, nonetheless, a sign of the highly distressing state of affairs in the State.
There is another concern which must figure prominently when the impacts of the flagging economy on the citizens of the State are being discussed. It is the issue of inequality. Recently, the ‘State of Inequality in India Report’ was released by Dr Bibek Debroy, Chairman, Economic Advisory Council to the Prime Minister (EAC-PM). It stated that in India the top 1% accounts for 6-7% of the total incomes earned, while the top 10% accounts for one-third of all incomes earned. Oxfam International has also claimed that the top 10% of the Indian population holds 77% of the total national wealth. In Meghalaya, the 2011 Census reported 76% of the rural households to be landless. Because of such high inequality, the share from the total income for the majority of the population in the State is going to be very low – a very alarming situation. There are already reports which highlight the problems aggravating the citizens of Meghalaya because of the poor performance of the economy. The most damning was the ‘North Eastern Region District SDG Index: Report & Dashboard 2021-22’. The report ranked the districts of all the states in the North East Region (NER) in terms of achievement of the Sustainable Development Goals (SDGs). The composite ranking showed that with a score between 56.87 and 66.27 Meghalaya is in the Performer category (just above the last category, i.e., Aspirant) and second from bottom among all the States. Among the SDGs the most relevant for this discussion is SDG 1: No Poverty. Here again, out of the 11 states, North Garo Hills and South West Khasi Hills are in the Aspirant category, i.e., the lowest, while the rest of the districts are in the Performer category, just above the Aspirant category; again last or second last from the bottom.
Among the indicators used for measuring SDG 1 ‘Head count ratio as per the Multi-Dimensional Poverty Index’ (MDPI) is very critical. It is an index, as stated by the World Bank, designed to capture the percentage of households in a country deprived along three dimensions of well-being – monetary poverty, education, and basic infrastructure services –adopted in order to provide a more complete picture of poverty. For India, 13.95% was kept as the threshold above which MDPI can be considered unfavourable. Only South Garo Hills with a figure of 12.19% was below the threshold. The rest had figures higher than 20% with the maximum reported from Ri Bhoi, 45%. In fact, the NITI Aayog’s First Multidimensional Poverty Index (MPI) report released in 2021 had already revealed Meghalaya to be the fifth poorest state in the country after Bihar, Jharkhand, Uttar Pradesh and Madhya Pradesh and poorest in the NER. Things are not going to be bad, they are already bad.
To conclude, the economy of Meghalaya is very bad state and it is a systemic issue going back at least a few decades if not more. The innumerable issues plaguing it require strong solutions in order to pull the State out of this quagmire. If nothing is done, very difficult and dark days lay ahead for all of us. The violence and disturbance experienced over the last few years may just be a prelude of more challenging times ahead.
N.B. This article is based on a report prepared by KAM Meghalaya on the economic crisis of Meghalaya
(The views expressed in the article are those of the authors and do not reflect in any way their affiliation to any organization or institution)