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OBJECTIVE :-

The objective of this presentation is to provide the possible solutions for the issue regarding the growth potential of States in north east India , briefly analyse the performance of the State in terms of economic growth, focusing more on constraints and opportunities in the forestry, agricultural and other natural resource sector and its implications to rural poverty; and based on the above analyses make suitable recommendations for improving the present scenario in north eastern states.

Northeast India is the eastern-most region of India connected to East India via a narrow corridor squeezed between Nepal and Bangladesh. It comprises the contiguous Seven Sister States-Arunachal pradesh , Assam , Meghalaya , Manipur, Mizoram , Nagaland , Tripura — and the Himalayan state of Sikkim. These states are grouped under the MDONER ministry of the Government of India. Except for the Goalpara region of Assam, the rest were late entrants to political India— the Brahmaputra valley of Assam became a part of British India 1824, and the hilly regions even later. Due to cultural and historical reasons parts of North Bengal in West Bengal (districts of Darjeeling, Jalpaiguri, and Koch Bihar) are often included in Northeast India. Sikkim was recognised as a part of North-East states in the 1990s.

I D E N T I T Y C R I S I S

North-East India refers to the easternmost region of the Republic of India. Geographically and culturally, the region now called north-east India is situated between the two traditions of Indic Asia and Mongoloid Asia and is regarded as part of Southeast Asia. This geographical-cultural condition of "in-between ness" is an important factor in the area’s crisis of identity. The leaders of the present-day "underground outfits" continue to struggle for independence, as the political integration of the northeast to India was brought about without the approval of its people. The people of northeast India, who are culturally Mongoloid, refuse to accept the caste-ridden social system advocated by ‘Indian’ culture. Similar struggles for independence are also going on in other northeastern subdivisions or sister regions, such as Assam, Manipur, Mizoram, Meghalaya and Nagaland. However, the heavy and privileged status of the security forces in Northeast India, as well as seeming discriminatory treatment against Northeast Indians (see Ethnic relations in India) remain factors that contribute to tensions in the region. For example, the hunger strike by Irom Chanu Sharmila following the "Malom Massacre" has not received widespread coverage in India .

POLITICAL UNREST The northeastern states, having a comparatively small electorate (3.8% of India's total population) are alloted 25 out of a total of 543 seats in the Lok Sabha (Which is 4.6% of the total number of seats). Thought during the British Raj, the North-eastern states were isolated from their traditional trading partners like (Bhutan, Myanmar and Indo-China). In 1947 Indian independence and partition made this a landlocked region, exacerbating the isolation that is being recognized lately, but not studied yet. Soon it became a captive market for mainstream India. The northeastern states are home to many ethnic groups that are engaged in self-preservation. Of late there is a wide recognition among policy makers and economists of the region that the main stumbling block for economic development of the Northeastern region is the disadvantageous geographical location. It is argued that the coming of globalization propagates deterritorialisation and a borderless world which is often associated with economic integration. With 98 percent of its borders with China, Myanmar, Bhutan, Bangladesh and Nepal, Northeast India has better scope for development in the era of globalization. As a result, a new policy developed among intellectuals and politicians that one direction the Northeastern region must be looking to as a new way of development lies with political integration with the rest of India and economic integration with the rest of Asia, with East and Southeast Asia in particular, as the policy of economic integration with the rest of India did not yield much dividends. With the development of this new policy the Government of India directed its Look East policy towards developing the Northeastern region. This policy is reflected in the Year End Review 2004 of the Ministry of External Affairs, which stated that: “India’s Look East Policy has now been given a new dimension by the UPA Government. India is now looking towards a partnership with the ASEAN countries, both within BIMSTEC and the India-ASEAN Summit dialogue as integrally linked to economic and security interests, particularly for India’s East and North East region.

NORTH EAST AN EMERGING INDUSTRIAL CENTRE

North East India offers huge opportunities in sectors of strategic

importance like energy and infrastructure; oil, natural gas and hydrocarbons; agro, food processing and horticulture; floriculture; IT and ITeS; cement; defence, etc. Tourism is another potential high growth industry.

North-East India is often described as the Gateway to South-East Asia. India’s ‘Look East’ Policy aims at transforming the North-East into a

dynamic center of a thriving and integrated economic space, linking the two

high-potential regions with a network of highways, railways, pipelines, and

transmission lines crisscrossing the region. The huge complementarity

arising out of India’s ‘Look East’ Policy and our South-East Asia focus and the ‘Look West’ Policy of South-East Asian nations like Thailand, gives rise

to immense opportunities for India and ASEAN countries to develop their

trade and investment relations, using the North-East as a primary focal

point.

Manipur has huge potential in sectors like power, agro-based

industries, etc.; a greater private sector involvement in the state economy will ensure local job creation and entrepreneurship development. The State Government of Manipur lays a major thrust on Agro and Food Processing; an Agri Export Zone for Passion Fruit is being developed in the state.

The literacy rate in Mizoram is above 90%, which is the 2nd highest in India. A well-educated and hardworking young population is an advantage for Foreign and also domestic corporates ; sectors like IT and ITeS, agro processing, floriculture and bamboo are some areas that offer huge opportunities to investors. The state also grows fine quality of grapes, which can be utilised for large-scale wine production. The State Government of Manipur is pro-active and industry-friendly, and investors can be assured of single-window clearances.

Assam provides huge investment opportunities in sectors like hydrocarbons, oil and natural gas, bamboo, handicrafts and tea. Assam tea is well known for its distinctive quality, and exported to the developed markets of Europe. Sectors like IT, hospitality and tourism, power, agro and food processing are poised for impressive future growth - companies like Infosys and Reliance have already shown interest in investing in Assam, with Tata Consultancy Services even having a BPO unit in Guwahati.

However, as indicated earlier, despite these great advantages, the North-East has not grown at par with the rest of the country, and the region’ s potential has not been tapped properly. While the significant initiatives taken by the Government to promote economic growth, tourism and development in the North-East region can be largely welcomed, we would like to mention that issues and problems like shortage of power generation capacity, over-dependence on hydro-power, absence of proper road connectivity, etc., need to be given special emphasis in order to help the region achieve high growth.

However, the high priority to be accorded to the development of roads in the North-East Region is well reflected in the Union Government’s intention to invest nearly Rs.50,000/- crores on the roads sector in the North-East over the Eleventh Plan period, that is, over the next 5 years. The East-West corridor project, which will connect Silchar in Assam to Porbandar in Gujarat, is scheduled to be completed by 2009 – and this will go a long way in improving connectivity and transforming the region into a vibrant economic zone. Also, India is exploring a transport corridor through Myanmar, a potential gateway to East Asian countries, to form a free-trade region. The proposed ‘Trilateral Highway' connecting India, Myanmar and Thailand is being discussed. This project, I believe, has the potential of strengthening economic exchanges and international co-operation significantly. With necessary infrastructure development within the region, and the building of connecting links between North-East and the rest of India, and North-East and South-East Asia, the economic potential of the region can be suitably exploited. Time-bound implementation of projects, conducive centre-state relations and political stability, monitoring of fund–flows and necessary marketing and branding of the region can truly transform this goldmine of a region into a vibrant hub of business, tourism and trade.

Opportunities For Investment In

Agriculture

And Food Processing

Rubber and bamboo are among the important agricultural produces which can attract a lot of investment opportunities. Tripura is the chief production hub and has been declared as the ‘second rubber capital of India’ right after Kerala by the Indian Rubber Board. The state has the potential to produce 10,000 hectares of rubber (the available plantation area is 35,760 hectares). Other rubber producing states in the region are Mizoram and Assam. Coupled with the fact that globally India ranks third in the production and fourth in the consumption of rubber creates a huge market for investors. The NE states also produce a substantial percentage of bamboo, accounting for 65% of India’s production value and 20% of the global production value. Mizoram alone contributes to around 40% of the country’s bamboo production. While India’s bamboo market is expected to grow to 5.5 billion USD by 2015, the UN’s Industrial Development Organisation estimates the NE’s bamboo production to grow up to 1.25 billion USD in the same period

In spite of the efforts of the MOFPi and regional development organizations such as the NeDFI, challenges remain in realizing the full potential of the region’s agricultural resources. Fragmented land holdings by small and marginal farmers which dominate the landholding pattern in the north east is uneconomical. The region has low proportion of irrigated area and investment in building irrigation capacity has been insufficient and ineffective. The use of agricultural inputs in the north east is also low compared to the rest of the country. Fertilizers used per hectare during 2010-11 were negligible in the region, especially in Nagaland (2.35 kg), Arunachal Pradesh (3.01 kg); and ranged between 13 kg in Meghalaya and 63 kg in Assam compared to the national average of 135.27 kg per hectare. Also the share of agriculture in total electricity used is just under 1% in all the north-eastern states, except Tripura (7.41%), as against the national average of 20.43%.

POWER The region is endowed with perennial rivers and water bodies,

therefore, it has a huge hydroelectricity potential. This potential, if tapped well, can be used to export power to other regions of the country. The spill-over benefits will be the development of infrastructure such as roads, communications, and electricity supply to remote hilly areas, resulting in better quality of life. States such as Arunachal Pradesh, Sikkim and Meghalaya have huge potential in hydropower generation.

Many policies such as the ‘50,000MW hydro initiative’, the Hydro Policy 2008 have been formulated by the central government to promote investment in hydropower in the region. Under the Mega Power Policy, the qualifying threshold capacity for setting up hydropower plants in the region and for availing the special benefits thereof is 350 MW, whereas for the rest of the country, it is 500 MW.Under the Hydro Policy 2008 the project developers in the central and state sector can explore the possibility of foreign assistance to finance their projects. This assistance is already being utilised by NEEPCO for Pare Hydro Electric Project and MeSEB for Renovation and Modernisation of Umiam II HEP.

SKILL DEVELOPMENT : INSENTIVES TO INVEST

As per the ‘North Eastern Industrial and Investment Promotion Policy (NEIIPP)–2007’ by the Ministry of Commerce and Industry, the region has been declared as special economic zone (SEZ).

The central government has implemented various schemes to attract investors. These are as follows:

Subsidy at 90% of the transport cost of raw materials brought from outside the region as well as the finished goods sent from the region to other parts of the country. The transport cost between Siliguri (the entry point to the north east) and the factory site only is considered for subsidy calculations. In addition, subsidy is also available at 90%

of transport cost on movement of raw materials and at 50% of transport cost on movement of finished goods from one state to another within the region.

Income tax exemption for five years for the new industrial units set up in the region.

Growth centres and IIDCs to be converted into total tax free zones for the next ten years. Similar benefits will also be extended to new industrial units or their substantial expansion in other growth centres or IIDCs of industrial estates, parks, export promotion zones set up by the states. Similar benefits will also be provided to units located outside the specified locations, if they belong to the specified industries listed in Annexture A of the Indian government circular.

Capital investment subsidy (CIS) at 15% of investment in plant and machinery, subject to a maximum ceiling of 30 lakh INR will be given. Eligibility conditions will be same as in case of tax benefits.

Interest subsidy of 3% on working capital loans will be provided for a period of 10 years. Eligibility conditions will be same as in case of tax benefit.

A comprehensive insurance scheme for industrial units to be designed, in consultation with GIC and 100% premium to be borne by the Indian government for 10 years.

CONCLUSION

Institutional change supporting economic enhancement and growth at a social level requires economic incentives, supported by political will. With India moving into a new era of economic liberation, the region should not be left out. The framework for development of the region can be broadly based upon four vital components. The first component of this development plan should be social empowerment. It needs to empower rural communities, create sustainable institutions so that they manage common activities around microfinance, livelihoods and natural resource management. The second component needs to be economic empowerment. The objective of this component should ideally be to develop the capacity of rural communities to plan and manage funds for various economic initiatives and common activities for the public. The third component will be partnership development. The objective of this component should be to partner with various service providers, resource institutions and public and private sector organizations to bring resources such as finance, technology, and marketing into the project so that the community groups are able to improve their livelihoods. The fourth and final component will be project management. This will facilitate various governance, implementation, co-ordination, learning and quality enhancement efforts in the project.

Thus, with some of the changes that this paper attempts to deliberate upon, a process could be set in motion that could support the north east in its endeavor to contribute to the economic resurgence of the home region as well as to the development of the rest of the country. It is vital that this process includes mechanisms for equitably sharing the benefits to be derived from development and focuses not only on the big-ticket items that support broad-based, long-term growth, but also on those complementary activities that have immediate impact on poverty reduction at the community level.

LIST OF ACRONYMS

NER North eastern region ASE Association of Southeast Asian Nations R&D Research and development NeDFI North Eastern Development Finance Corporation BRO Border Road Organisation PWD Public Works Department NHAI National Highway Authority of India NHDP National Highway Development Programme DPR Detailed project report CONCOR Container Corporation of India Ltd NEEPCO North Eastern Electric Power Corporation Limited MeSEB Meghalaya State Electricity Board NEIIPP North Eastern Industrial and Investment Promotion Policy NEC North East Council DoNER Development of north eastern region IIITAS Indian Institute of Information Technology and Advanced Sciences UNESCAP United Nations Economic and Social Commission for Asia and Pacific SEZ Special economic zone CIS Capital investment subsidy MOFPi Ministry of Food Processing Industries