N-E Suffers From Poor Company

Updated: Feb 19 2004, 05:30am hrs
Development of the North-eastern (N-E) states continues to be a top priority of the government. This is largely due to strategic reasons and the fact that economic development plays a significant role in reducing societal unrest. India is looking more and more towards Asian markets in general, and its immediate Eastern neighbours in particular. An economically vibrant N-E is a prerequisite for Indias trade and commerce with our Eastern neighbours.

Many argue that these states already have strong, though unofficial, economic relations with other countries in the region. This is not surprising given the physical isolation many of these states experience from the rest of India. But perhaps, a more important issue is their economic isolation. The adjoining state of Bihar has been one of the worst performing Indian states while a passage to West Bengal is easier through Bangladesh, one of the poorer countries in the world. Myanmar is a tightly closed economy and quite shy of free markets and trade. It is difficult to be prosperous in a poor neighbourhood.

A first step for achieving economic development of the N-E is the integration of its markets with the more vibrant regions of the country. This is imperative because these are small states with dispersed populations and, hence, incapable of achieving efficient scales of economic activity and division of labour unless they have easy access to larger markets outside the region. The relative inaction of the eastern states of Bihar (including Jharkhand) and West Bengal, along with eastern UP and Orissa, has not helped the N-E either. It may, therefore, be worthwhile to keep this entire region in mind when trying to develop the N-E.

This larger region has a huge potential in tourism; coal, oil and natural gas; organic farming, horticulture and floriculture; food processing; bamboo and forest products; livestock and animal husbandry; tea plantation; hydel power generation; and handicraft. Take power generation, for instance. The power consumption per capita in this entire region is well below the national average. If the eastern states start developing at pace with the rest of the country, electricity consumption is expected to grow. We know from the power ministry that the hydropower potential in the N-E region is estimated at 48,000 MW.

Although this constitutes 30 per cent of total reserves of India, less than 3 per cent of this has so far been harnessed. A pre-feasibility study reckons that 35,000 MW of this potential will be harnessed in the next 20 years or so. Every 10,000 MW project generates about 10 million direct and indirect jobs. This implies a total of 35 million new jobs in the next two decades. It is further estimated that seven out of 10 jobs will be going to locals, creating 25 million new jobs in the N-E. With the privatisation of the power sector and the general move to a market economy, such calculations of where the demand will come from is essential in any developmental plan for the N-E.

What is interesting is that the N-E continues to be underdeveloped in spite of the resources spent on the region by the Centre. Such spending will not result in sustainable development unless the states around the N-E start growing. The 12 states in this entire region (eight N-E states plus Bengal, Bihar, Jharkhand and Orissa) house 26 per cent of the Indian population but contribute only 18 per cent to the total GDP. A nearby Andhra Pradesh, or Karnataka, would have been very helpful. For instance, the percentage of state development expenditure on the capital account in the states of Bihar, Bengal and Orissa is much lower than the national average. This has persisted throughout the 90s.

For the eight N-E states, on the other hand, these figures are two-three times the national average. The average state development expenditure per household in India is about Rs 9,100. Bengal, Bihar and Orissa are below this average while the N-E states, including Assam, are above the national average. This is something the Centre can do little to correct.

A concerted effort by the Centre in the N-E states with the local governments of these states, is necessary. The eastern states have to act as the engine that drives growth in the entire region.

The author is Director, India Development Foundation