Rejuvenating The Seven Sisters

funding agency to a technical advisory body could benefit the states there, says Gulshan Sachdeva

At the end of his five day peace and development mission to the six north-eastern (NE) states, prime minister I K Gujral assured the region that his government would implement his predecessor H D Deve Gowdas Rs 6,100 crore economic package in toto. A separate industrial policy for the region would be announced soon. He also promised reconstituting the North Eastern Council (NEC), setting up a central university in Mizoram and 100 per cent exemption to Assam from payment of charges for the deployment of forces. In addition, he gave an offer of unconditional talks to all insurgent groups from the region.

 

The prime minister was right when he said that without peace, economic development of the region is very difficult. There has to be a two-pronged strategy for the region, dealing with insurgency on the one hand and working for development on the other. However, a close look at the economies of the north-eastern states reveals that it is not only insurgency but many other socio-political and economic factors that are equally responsible for the underdevelopment of this region.

First, we must honestly acknowledge that the development strategy for the region, implemented so far mainly through the Planning Commission and NEC, has failed miserably. The state and sectoral plans of the Planning Commission have not been able to provide enough impetus for local development, which would have led to self-sustained growth in the region. Instead, the almost total dependence on central funds and planned direction has cultivated a trait of passiveness towards development. It has encouraged patronage and massive corruption. In addition, it created government monopoly in employment and has destroyed the work culture. Besides, expectations rose very high, and they could not be fulfilled with centrally sponsored schemes.

Moreover, against popular perception, the lack of development in the past was not because of shortage of funds. In fact, sufficient resources were always provided to the region. But a substantial portion of these vast funds earmarked for various schemes has gone into the pockets of the bureaucracy and local oligarchy. Therefore, dependence on these very institutional mechanisms, particularly in a liberalised environment, will not be the best solution.

In the last few years, thinking has been to reappraise the role of the central government in developing the region with the right degree and intensity keeping in mind its role in a decentralised liberal economy. Fortunately, instead of promising major new schemes, the prime minister has promised the reorganisation of NEC.

In fact, most of the north-eastern states are unhappy with the functioning of the NEC and some were even think of walking out of it. So this is a positive step with long-term consequences for the region. But mere cosmetic changes like changing the chairman of NEC would not do much.

In the new economic environment, instead of becoming a funding agency, NEC should be providing technical advisory services to all north-eastern states, which they need badly. It should help in privatising most of the loss making public sector units in the region which have become a big burden in Assam, Meghalaya and Nagaland. It can help north-eastern states in preparing project reports for international financing of major infrastructural projects. In fact, it should act as a lobbying agency for the north-east both at the national as well as at the international level. For that, NEC should be equipped with technocrats with private sector experience rather than bureaucrats who are experts in making routine state and sectoral plans.

Second, it must be understood that private capital is a critical component for progr-ess. This is essential to generate productive employment, raise productivity and improve work culture. Luckily, the general perception that the industry is not keen to invest in the region is gradually changing. Recent initiatives taken by the Confederation of Indian Industry, BCCI and FICCI as well as Reliances commitment to the Tengakhat gas cracker plant and telecommunications in the region shows that the private sector is interested.

But to attract private capital in the region, some fundamental changes are necessary. Apart from the law and order problems, there is an urgent need to look into land and labour policies in the region. Except for Assam, it is difficult to get land in other north-eastern states either on ownership or on lease. All these economies are agrarian societies, with almost no industry outside Assam. So initially, private capital will have to be invited in commercial agriculture. There is tremendous scope for tea and rubber plantations, horticulture and sericulture. But for that the present confusing land tenure systems in Arunachal, Manipur, Meghalaya, Nagaland and Tripura must be amended. Otherwise the peasantry in these states will continue to be engaged in destru-ctive and unproductive slash and burn jhum cultivation.

Labour is another important issue related to economic development in the region. Despite all the talk of outsider invasion, there is a shortage of labour in the region. With any increase of economic activity, whether industrial or agricultural, the region is going to face the problem of labour shortage. So unless these areas are opened for outside labour, economic development is going to suffer. Even if local politicians are afraid of a repeat of the Tripura episode, where tribals have become a minority, they will have to find a way to tackle this issue through a tolerant labour policy.

Another major problem in the region is power. Despite very low consumption, all states in the region, except Meghalaya, are facing a shortage of power. On the other hand, Arunachal alone has the potential of about 30,000 mw, of which only 25 mw has been harnessed so far. Only the power sector can give a big push to the economy. But politicians in the state are not ready for big hydro power projects. Their main objection is based on the assumption that these projects would cause displacement and environmental degradation, which would result in political opposition. And they are not ready to take that risk.

Thirdly, the fact is that the north-eastern states were created mainly to fulfill the ethnic, political and cultural aspirations of the people. During the reorganisation, the usual criterion that the territory in question must have revenue resources to meet its administrative and other non-developmental expenditure was simply ignored.

Even later, not much effort has been made by these states to develop their internal financial resources, because central assistance has been assured. The main task of these states has been simply to utilise central funds in accordance with the Planning Commissions guidelines. There is no income tax for tribals in the region. Mizoram does not even have sales tax. So it would be desirable that these states also show some seriousness towards increasing their own resource base.

Fourthly, to transform this low economic area into an economic powerhouse in the next 15 to 20 years, there should be a strategy to link the north-east with the dynamic south east Asia. Since these economies are very close to south east economies, the earlier geographical disadvantage could be converted into a boon in an increasingly integrated economy. Although most of the policy makers in the region are very excited about this idea, there is not much coherent policy thinking on this aspect. This is an area where central government ministries, particularly home affairs, external affairs and commerce have to take bold initiatives.

But whatever the strategy we follow, it will be successful only when the region becomes a development friendly area and develops strong linkages with Indian industry. For that, the region will have to open up for outsiders. Otherwise the rigid barriers like inner line regulations and trading licenses for local tribals that aim at restricting outside penetration are contrary to the move to integrate these economies with the world economy.

Finally, Gujrals mission has proved useful as problems in the region are also emotional and the region suffers from a deep sense of neglect. But for a meaningful development strategy, there is a need to reappraise the role of the Centre in developing the north-east. The right degree and intensity of its role in the context of liberalisation has to be worked out. Just pumping money without accountability in the region has not worked in the past. Any new commitment has to be linked with a new strategy for the region. This would require radical changes in the thinking of the central ministries as well as that of the ruling elite. Perhaps Mr Gujral as a man of new ideas can also work out a new doctrine for this region.

(The author is in the faculty of Centre for Policy Research, New Delhi) Gujral's mission has proved useful as problems in the region are also emotional and the region suffers from a deep sense of neglect. But for a meaningful development strategy, there is a need to reappraise the role of the Centre in developing the north-east.