The north eastern region continues to be a net importer of food grains even for its own consumption.

By Sanjeev Rohilla

The Citizenship Amendment Act actually made many sit up and look at India’s map more closely to check out the North East Region (NER) for the first time ever. After all, this region with just about 4% of its total population has been on the social and political fringes of India’s consciousness for the longest time. It took over two decades for the ‘Look East Policy’ announced in 1991 to graduate to ‘Act East Policy’ in 2014.

The NER development story is indeed nothing less than a jigsaw puzzle with constantly shifting angles. And yet, a smooth economic take-off by NER is central to India’s moving closer to the $5-trillion-dream. Hydropower potential of nearly 50,000 MW, natural gas reserves of 190 billion cubic metres, coal reserves of over 900 million tonnes and oil reserves of over 500 million tonnes. Surrounded by five countries, NER shares a phenomenal international border of 5,182 kilometres, a rare proximity with a sky full of heady economic rewards. But this marathon has a more than fair share of handicaps to overcome.

The north eastern region continues to be a net importer of food grains even for its own consumption. Even with 33% of country’s water resources, the region reels from acute water distress. Infrastructure indices are at abysmal levels. The complicated system of land ownership and its transfer impedes growth of enterprise. On the credit front, the 40% CD ratio has confounded NER for decades and the real reasons are not simply limited to an indifferent banking sector. They lie elsewhere: in hamlets with sparse populations located in deep valleys and mountains, patchy road network, poor governance, faulty network connectivity and power deficit.

The RBI’s “Report on State Finances: A Study of Budgets 2017-18 And 2018-19” shows that visible fiscal pressures are emerging for NER states on the expenditure side, particularly on account of pay revisions and interest payments. Limited borrowing capacities and a limited supply of central funds raises bigger challenges. Revenue mobilisation remains the key to attaining the budgeted targets; but limited credit off-take and business opportunities mean that this is going to continue to haunt NER states for some time.

Thousands of farmers still can’t access small ticket loans for poultry, dairy and piggery projects. With a less than 1% share of the total credit flow in India, sustained gaps in credit to lakhs of small and marginal farmers has haunted the entire region for decades. Of about 5,23,000 SHGs here just about 27,000 (5%) have been credit linked! The NABARD All India Rural Financial Inclusion Survey 2016-17 (NAFIS) revealed that all NER states except Arunachal Pradesh and Manipur have lower indebtedness against a national average indebtedness of 47% reflecting high financial exclusion.

The private sector driven growth model does not fit into the NER canvas because the Sixth Schedule makes it well-nigh impossible for ‘outsiders’ to come in and take a long-term position. Innovative PPP models may be the solution with the state governments facilitating access to land on a long-term basis to the private sector, and village councils becoming a part of the partnerships from the very inception. Big industry is not the solution, but small localised solutions leveraging the core unique strengths of NER can be viable options.

The entire region with rich soil types, sufficient rainfall and diverse agro-climatic conditions is home to unique organic agri-produce with untapped export potential. This produce, its grading, packing, processing and marketing will be the dynamic key differentiators for NER someday.

Then there is the immense potential of tourism. Most footfalls are restricted to Sikkim.Mizoram, Meghalaya and Nagaland are virtually untapped destinations. For these states, with limited financial resources to launch aggressive marketing campaigns, social media-based advertising campaigns and strategic tie-ups under CSR may just be the answer.

On the credit front, banks need to partner with other service providers to expand their reach through innovative tie-ups in this difficult region. Small finance banks with their entire business model centred around financial technology can prove to be the connecting links. It is imperative for state governments to use funds judiciously and build adequate road infrastructure to further the agenda of both bank credit, as well as, network connectivity.

Mainstreaming NER into the $5 trillion economy and doing it all in an equitable manner will need not just political will but serious coordinated action by multiple stakeholders. The centre can only cover this much ground with policy framework and funds allocation. The state machinery, banks, corporates, civil society organisations, agriculture universities and extension agencies will all need to step in to drive the NER growth engine.

The Author is CEO, NabFoundation, a Section 8 company floated by NABARD. Views are personal.

Article is an academic comment and should be not construed as an appreciation or criticism of the judgment.