Basic Features of North Eastern Region Economy

Introduction:

The northeastern region of India comprises Assam, Nagaland, Manipur, Tripura, Meghalaya, Mizoram, Arunachal Pradesh, and Sikkim. Between Sikkim and Assam lie the Darjeeling, Jalpaiguri, and Cooch Behar Districts of West Bengal. A narrow corridor in Darjeeling District connects the Northeast to the rest of India, called 'chickens neck'. The region is surrounded by Bangladesh, Bhutan, China (Tibet), and Myanmar. The population of the Northeastern region consists of the original, indigenous inhabitants together with various ethnic groups, including people from Tibet, Burma, Thailand and Bengal, who migrated into the region at various periods of history.
The NER is home to extremely diverse ethnic groups with a distinctive social, cultural and economic identity. There are hundreds of races, tribes and their sub-groups, ethnic groups, cultures, religions, languages and dialects spoken in this region. Still, broadly these are categorized into three distinct groups of people - the hill tribes, the Plains tribes and the non-tribal population of the plains. The region's total population is about 38 million, 3.8 per cent of the country's total population, of which Assam contributes 68 per cent of the region's total population.

Basic Features of NER Economy:

1. Predominantly Agrarian Economy: The economy of NER is predominantly agriculturally based, with more than 65% population dependent on earning their livelihood from this sector. It accounts for a major share of the economies of all the North-Eastern states, from 48 per cent in Arunachal Pradesh to 26 per cent in Nagaland in 1993-94 (NER Vision 2020). There are places where the most primitive form of cultivation, i.e., slash and burn, is being practised, and there are places in the plains where modern techniques are increasingly being used in cultivation. The condition of agriculture, however, remains depressed in the region. Despite covering 7.7% of the country’s total geographical area, it produces only 2.37% of its total food grain production. Although the Net State Domestic Product (NSDP) share of the agriculture sector has declined to about 30 per cent, the population dependent upon this sector continued to remain high even in the post-reform period. The decline in the NSDP's share of the agriculture sector has been more or less compensated by the increase in the share of the service sector.
2. Industrially Backward region: In the field of industries, NER, in general, continues to be the most backward region in the country. In fact, the states of NER hardly have any industrial base, except perhaps Assam, because of its traditional tea, oil and wood-based industries. To some extent, Meghalaya has made some headway in setting up small and medium industries. However, several factors are contributing to the lack of industrial growth in the region. The main factors behind the region's poor industrialisation are isolated location, difficult terrain, lack of infrastructural facilities, and lack of capital and entrepreneurship.
Industry and services contribute over 25% and 50% respectively to the region’s GDP. The manufacturing sector registered an annual average growth of 6.9% during 2005-06 to 2011-12, against 9% average growth registered for India. Further, the contribution of the manufacturing output from the region to the country's total manufacturing output is low at around 1.2%. There has not been much growth in large-scale industries, and the industrial sector primarily consists of small and medium enterprises. Most of the large industries are based in Assam related to refining, cement, chemical and fertilizers, paper and paper products. Food processing is also one of the fastest-growing segments in the region.
3. Low Net State Domestic Product (NSDP): The state Assam is considered the queen of the North Eastern Region of India. She dominates the other states of the region in terms of NSDP. On average, the state Assam contributes 77 per cent of the total NSDP of NER. There is no denying that her dominance has fallen in the post-reform period, but still, she contributes as high as 68 per cent of the total NSDP of NER. On the other hand, the position of other states of this region has improved. On average, these other states have experienced a steady increase in their contribution to NSDP of NER, especially in the post-reform period. As of 2015-16, the NSDP at factor cost of NER was Rs. 27,447, 145 lakh and out of which Assam NSDP is Rs. 16,762,866 lakh, which is about 61%.
4. Low Per Capita Income: The people's standard of living in the region, as measured by Per Capita Net State Domestic Product (PCNSDP), has lagged significantly behind the rest of the country. Though there is an improvement in the level of per capita income in NE states in the post-reform period, this improvement is not uniform throughout the region. While this improvement is impressive for some states like Sikkim, Arunachal Pradesh, Mizoram, and Nagaland, others like Manipur and Assam, where this increase is only marginal. For example, in 2000-01, the PCNSDP of NER was Rs. 15,279 while the all India per capita income was Rs. 16,688. In this year, only Mizoram performed better, having PCNSDP higher than all India at Rs. 17,826. As of 2015-16, The PCNSDP of NER was Rs. 102,493, which was better than the all India of Rs. 94,731. However, from individual states perspective, only three states had PCNSDP higher than all India and these states are Arunachal Pradesh, Mizoram, and Sikkim. Interestingly, available information shows that at the time of independence, per capita income in the undivided state of Assam was higher than the national average by 4 per cent. Thus, even under British colonial rule, the region's economic performance was better than the rest, which shows its vast developmental potential.
5. Abundant Natural Resources: The North East region is well endowed with natural resources, like oil and gas, mineral deposits, immense hydro potential and significant forest resources. Owing to the topography and geographical characteristics of the region, a large part of the country's hydropower potential is concentrated in the North East Region, including Arunachal Pradesh, which has come to be known as the “future powerhouse of the country”. Large Mineral Resources include limestone reserves of around 5000 million tonnes and a forest cover of 25 per cent of the country’s forest area. Phenomenal bio-diversity – forest wealth, fruits and vegetables, herbs, aromatic plants, exotic flowers, other flora and fauna. However, despite the abundance of resources, the region has lagged behind the many Indian States in vital development indicators.
6. Huge Tourism Potential: A place renowned for its magical beauty and bewildering diversity. India’s North-East Region is endowed with huge untapped natural resources and is acknowledged as the country’s gateway to South East Asia. While unique in most respects, the NER states have similar economic and geographical attributes that merit special policy interventions. North East India offers many opportunities in almost all major tourist areas such as ecotourism, adventure, wildlife, wellness tourism, etc. However, at the same time, a lot needs to be done to tap these. While the total number of tourist visits in India amounted to 14,553 lakhs in 2015, the share of North Eastern States amounted to 80.59 lakhs. A huge chunk of tourism in the region comprises domestic tourists, with 79.40 lakhs of domestic tourists visited in 2015. The numbers are relatively small in the case of foreign tourists, which was only 1.18 lakhs. Some of the key issues and challenges hampering the region's tourism growth are accommodation facilities, tourism infrastructure, marketing and promotion, safety and security, accessibility, etc.
7. Poor Infrastructure, Connectivity and Power: The region lags behind the rest of the country in terms of per capita GSDP and several other development indicators. People do not have access to basic services. The standard development indicators such as road length, access to healthcare, and power consumption in the region are below the national average. The region generates less than 8 per cent of its 63,257 MW of hydroelectric power generation potential. Its per capita power consumption at 110 Kwh. is almost a fourth of the national average (411 Kwh.). In Assam, Manipur and Nagaland, the per capita power consumption is as low as 85 Kwh. 70 kWh. And 87 Kwh respectively.
8. Problems of High Unemployment and Low Employment Opportunities: One of the serious and burning problems of the northeastern region is the problem of unemployment. In the absence of major industrial establishments and other employment opportunities, the regional unemployment rate, particularly among urban educated youths, is high and increasing rapidly. Unemployment rates in rural India are always lower than in urban. However, unemployment in urban areas across all north-eastern states is higher than in rural areas and aligns with the national pattern. Tripura reported India’s highest unemployment rate, 25.2% in urban areas, followed closely by Nagaland with 23.8%, and Manipur with 7.1% in 2011-12. However, Meghalaya had India’s second-lowest unemployment rate, with 0.4% in rural areas and 2.8% in urban areas in 2011-12. The eight northeastern states are growing fast, educating their people much faster than the rest of India, reducing their dependence on agriculture, and generally prospering. Still, the growth is not creating enough jobs and livelihood opportunities.
9. Poverty: Poverty is one of the main issues that attracted sociologists and economists' attention. Though India boasts of high economic growth in the era of liberalisation, still the nation suffers from large scale poverty. The picture is even serious in NER. The percentage of the population living below the poverty line in the region continued to remain high. The northeast has widely varying rates of poverty, which largely reflect unrest and insurgency, in Manipur, where a cocktail of insurgent groups have crippled the economy, where 36.9% of people live below the poverty line. However, only 8.2% of the population is below the poverty line in Sikkim. Meghalaya and Sikkim have seen some of the largest falls in poverty in India. For instance, the population below the poverty line in Sikkim was 13.1% in 2009-10, and it fell to 8.2% in 2011-12. Similarly, in Meghalaya, the population below the poverty line was 17.1% in 2009-10 and fell to 11.9% in 2011-12.
10. High Human Development Index: According to this Human Development Report published by the Government of Tripura in 2001, human development performance across states in the region varied significantly. Mizoram and Arunachal Pradesh witnessed the highest and lowest HDI of 0.67 and 0.49, respectively, against the all India average of 0.56. Only three northeast states, namely, Arunachal Pradesh, Assam and Meghalaya, lagged behind all India average, whereas the performance of the other five northeastern states surpassed India. Most states had higher HDI than all of India. Similar situations prevailed in different components of human development, such as in education, health and income indices. Mizoram got the first rank in terms of HDI and the first rank in Gender Disparities Index (GDI), where the gender disparities are quite low compared to other Northeast states. Similarly, the performance of Arunachal Pradesh was worst among all the northeastern states both in HDI and GDI. It is to be noted that Meghalaya, despite having a matrilineal society, performed very poorly in terms of GDI and got 5th rank among all the northeastern states.

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