By: M.P. Bezbaruah

The government of India’s “Northeast Vision 2020” terms the economic situation as “anarchic”. The government of India’s “Northeast Vision 2020” terms the economic situation as “anarchic”.

Recent initiatives reflecting the prime minister’s focus on the Northeast have created great expectations. The home minister’s bold New Year resolve to remove the sense of alienation among the people of the Northeast and make them feel safe and secure in any part of the country has brought hope to many who lament a history of discrimination.

Nevertheless, a nagging question remains: Why are so many people from the region coming out in search of low-paying jobs, leaving the traditional comforts of a close-knit community life? Internal conflicts, instability and security problems are often cited. More pertinently, job- and income-creating activities have been stagnant. The government has been the primary job provider, putting a strain on the states’ finances.

Each ministry of the Union government is required to spend at least 10 per cent of its budget in the Northeast. The Central sector fund for the year 2014-15 is Rs 4,84,532 crore. Therefore, about Rs 48,000 crore is available to the region, in addition to the eight northeastern states’ own plan allocations. But so far, the pool of unspent funds has accumulated to Rs 15,000 crore. Any development strategy for the Northeast should start with an incisive inquiry into why the region could not spend even the earmarked money.

Is it because of a lack of capacity to formulate fundable proposals? If so, and if government departments in the Northeast are unable to prepare projects to meet Central ministry requirements, it may be prudent to use expertise in institutions like the IITs and IIMs in the region to prepare a shelf of projects.

The government of India’s “Northeast Vision 2020” terms the economic situation as “anarchic”. Partition in 1947, it says, put the region in “economic imprisonment”. A “chicken’s neck” corridor of 22 km links it to the rest of India, whereas its international boundary is 5,000 km long. A wealth of natural resources had given the region a sound economic foundation when the planning process started. Most Northeast states were above the national average in terms of SDP and per capita income. After 50 years of planning, the region laments that most of its states are almost at the bottom of the ladder, though there has been some positive movement in the past few years.

The region boasts fertile land and water resources, an ideal habitat for horticulture, and a rich cultural and natural heritage that could make it a prime tourist destination. Yet, a few years ago, a report pointed out that the region imported about Rs 3,000 crore worth of basic requirements each year, including items like fish and eggs.

The task of development is urgent, but daunting. “Vision 2020” estimates that to catch up with the rest of the country, the region would require investment of a staggering Rs 1,330,000 crore and will have to grow at 13 per cent per annum (these estimates were made for the 2006-07 to 2019-20 timeframe). Various studies have advocated an economy based on exploiting comparative advantage. This makes sense for a mostly landlocked region, with both the market and raw materials far away. For example, the cost of transportation from Mumbai to Kolkata is reportedly cheaper than from Kolkata to Agartala. No wonder, Agartala is hoping that the implementation of the Look East policy and regional cooperation will reduce the distance to Kolkata from the present 1,700 km to the 700 km it used to be before 1947.

Emphasis on comparative advantage — horticulture, handlooms and handicrafts, rural industries — should not distract from the need to boost manufacturing and create urban jobs. In fact, “Make in the Northeast” and the development of an industrial corridor can be launched with polymer from the Assam Gas Cracker project, which will be in the market soon. The plastics industry, based on polymer, can provide employment. However, local production capacity is reportedly not ready. Unless it is organised quickly, the polymer will be sold outside. The Northeast will then miss the opportunity to produce high-value sophisticated plastic components for the international markets it hopes will be opened up by the Look East policy.

Much remains to be done to transform the “communication” corridors created by the Look East policy into “development” corridors. The Northeast’s trade with Southeast Asia is insignificant. Raw materials form a major part of its trade with Myanmar and Bangladesh. Meghalaya, for example, exports stone boulders, limestone and horticulture products to Bangladesh. These are processed and re-imported to India as stone chips, cement and canned foods, respectively. There is much scope for value addition and cross-border collaboration.

The horticulture potential is immense. The region produces quality turmeric and ginger. Exotic fruits like kiwi and passion fruit grow easily. But it is languishing because marketing arrangements are inadequate. The absence of efficient cold storage chains exposes cultivators to market fluctuations.

Tourism, too, has not made much headway due to poor infrastructure development. There are uncoordinated and fragmented efforts by individual states. The concept of wayside facilities is non-existent. The long tourism journey can start with simple, doable steps — creating a Northeast platform for coordinated action, developing destinations, creating tourism zones, involving common people and the private sector.

Finally, the region has the talent to support IT-enabled services and BPOs that can be part of the Look East policy, provided unsatisfactory telecom links can be improved. In the end, development comes down to implementation. The latest initiatives of the ministry for development of northeastern region could energise the process. Much will depend, as well, on the proactive role of the states.

The writer is member, Northeastern Council.

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