Extremely low rate of urbanisation keeping Assam underdeveloped: Arvind Panagariya

The “extremely” low rate of transformation is keeping Assam an underdeveloped state, said Niti Aayog’s deputy chairman Arvind Panagariya here on Tuesday.

“Assam today has a rate of urbanisation which is only 14% while India in 1951 had a rate of urbanisation of 17%. So in terms of urbanisation, Assam is not even where India was in 1951. India today is 31% urbanised. The rate in India has been around 2 percentage points per decade, which itself is again low,” Panagariya said.

According to him, when the transformation comes, wages rise which in turn motivates workers to move from agriculture to industry. Panagariya was speaking at an Indian Chamber of Commerce (ICC) organised interactive session.

As per National Sample Survey Organisation (NSSO) figures, 56% workforce in Assam in 2011-12 were in agriculture and only 6.5% in industry and the remaining 37.5% in services. “The transition that’s happening is very slow. In Assam in 2011-12, the share of agriculture to state GDP was 32% while the same in 1980-81 was around 44%. Though the output of agriculture has halved in three decades times, the share of employment hasn’t,” said Panagariya.  

He said the growth of industry provides the “pull” for workers to come out of agriculture and it is not happening in Assam.

Panagariya strongly attributes this low rate of industrialisation to the very tendency of Indians to look down upon industry. “Industry is not a part of our thinking process. But if we want the transformation, we have to make conditions conducive for the growth of industry of all sizes, large, small land medium,” said the Indian-American economist.

He felt agriculture in Assam too required reorientation in line with what Andhra Pradesh and Gujarat. The farm sector in the two states focus on increasing the growth of high value commodities like fruits and vegetables. Assam can also eye for exports and carving out a share for itself in the world market. He cited the example of tea and how the commodity has made its mark in the international market.

The Niti Aayog vice-chairman, however, sounded optimistic with the present economic growth story of India. “Overall I see great future for India. We are growing at a rate of 7.5%. We have so many reforms to be done and now we are back into doing the reforms which we had discontinued for last 10 years or so during the previous government,” Panagariya said.

He added that the chances of being able to sustain this growth of 8-10% were pretty good over next two to three decades and that would in all certainty help India become a $6-8 trillion economy in next 15 years.

“Even if we grow at 8%, we will surely go from present $2.1 trillion economy to around $6-8 trillion economy in next 15 years’ time,” he said.  

A growth in the economy, said Panagariya, would give the country a “handsome” per capita income and help it get out of extreme poverty. “High income not only empowers the people but also gives higher revenues to the state and central governments. Higher revenues give the government much room to increase public expenditure on social welfare schemes,” he said.