Dialogue  January - March, 2009 , Volume 10  No. 3


NEC and the Development Initiatives in the Northeast

Pallabi Borah*


The Northeast India has remained at the stage of relative backwardness for a long time where interstate and intrastate differences in the economic development within the region are also quite glaring. The region suffered from lack of infrastructure in various sectors of communication, technical expertise, etc. Thus, regional cooperation for removal of the basic constraints and development of the region called for an awareness of regional nature and concerted efforts and the cooperation on the part of the political units of the NE region. This idea of regional cooperation in economic development of the region crystallized in the form of the North Eastern Council Act 1971 enacted by the Parliament. The NEC came into being in August 1972 under the North Eastern Council Act No 84 of 1971, and was finally inaugurated by the then Prime Minister Mrs. Indira Gandhi on 7th November 1972. Set up as an advisory body with the main objective of Ďensuring balanced and economic development of the northeastern part of India , the Council is also expected to formulate for generalizing these objectives. All such schemes formulated by the Council are in addition to the schemes already formulated by the states themselves as well as central sector schemes.

NEC and the Economic Development of the Northeast:

     The Northeast is endowed with considerable natural resources. This region possesses 46% of countryís water resources with potential of hydroelectricity generation. The abundance of mineral resources shows the potential of industrial development. In regard of human resources, the literacy rate is higher than the national average. So, the region has abundant labour supply. But the question is about the quality of the human resources in the region. Despite the fact that the region possesses both natural and human resources, these are not tapped properly. The main hindrances in the development process of development have been due to lack of infrastructure development, the strategic location, typical topography and the existence of multiple linguistic and ethnic groups. In the backdrop of issues for regional development of the NE region, the formation of NEC was basically to identify the problems and potential of the region in a wider perspective and address them through a coordinated approach between the seven north-eastern states. As spelt out clearly in its Act its role is mainly of an advisory in nature with limited scope for taking up projects and programmes of interstate nature or of economic importance. However, in course of time its role widened not confining within the limitation of functioning as an advisory body and NEC evolved as a key player in the development efforts of the region.                                                                                                                      Keeping in view the basic objectives of the formation of NEC as a regional cooperation for removal of the basic constraints and development of the region, the Council could identify priority sectors for development of the region; it could identify priority sectors for development intervention with an aim to remove regional disparity and exploitation of resources for sustainable development.                                       

Prior to formation of the NEC, the plan priorities of the northeastern states deviated to a large extent from the priorities in the national plan. Social and community service was the only sector that received the maximum priority in the state plans. Even though the development of transport and communication was vital, the development of this sector was not adequately looked into.                                                                                  

In the pre-NEC era lack of fund with the states was the major hurdle in taking up big projects for the development of the infrastructure. Therefore the states mainly concentrated in those projects which yielded quick results.  As a result no big projects came up in the infrastructure sector during the first four Five-Year Plans. Thus, the region failed to keep pace with the development at par with the rest of the country.      

In its endeavour to achieve a role of an agency for integrated development of the region, the Council identified certain priority sectors such as power, transport and communication and health. Over the years, other sectors as agriculture and allied, manpower development, industry, science and technology, etc., have also became part of NECís development efforts.                                                                                        

Since the slow pace of development of the transport and communication and power sector has been the major cause of backwardness of the region, the NEC concentrated on these sectors in the successive plan periods. In case of states also, the importance attached to sectors other than social and community services was witnessed in the plans in post NEC period. This indicates the involvement of NEC in addressing the development needs of the identified thrust areas.                                                                                                   

Prior to establishment of the NEC, the vital sectors such as power remained underdeveloped with only 211.99 MW installed capacity as on 1974 and also absence of any Central and State sector power sectors. These received a new direction with the inception of NEC: the power sector of the region received a boost. 

NEC has a reckonable contribution in the power sector of the NE region by way of developing the basic infrastructure. The generating capacity of the region has increased considerably due to the addition of hydro-electricity projects (HEP) and a gas based project. In the power sector, it is seen that over the last three decades, NEC has sanctioned projects having total generating capacity of 673.5 MW. The installed capacity of the region increased from 211.99 MW in 1974 to 2202.19 MW in 2002 in which NECís share is 33.84% of the total capacity addition during this period. The Council has also intervened in streamlining of the power transmission system and the connection of the region to the national grid. This can be said to be an important development with greater impact on the power situation of the region. Besides, investigations carried out by NEC for the development of power and multipurpose projects can be regarded as stepping stone, which can go a long way in proper harnessing of water resources.                                     

Harnessing of hydroelectric potential is a major achievement of the Council, as out of a total installed capacity of 1030 MW of hydroelectric power NECís contribution is around 59.15%, which is 630 MW. It is observed that during the last 30 years of NECís intervention the commercial as well as domestic consumption of power has shown an upward trend in the Northeast due to availability of power. However, the time and cost overrun of all the major power projects is quite high, which has delayed the expected benefit. Most of the projects took exceptionally long period of time and huge amount of money due to various unforeseen cost, which were not reflected while taking up the project. Delay in disbursement of fund is also a cause for the time and cost overrun in case of power projects.                                                        

Prior to establishment of NEC, the scenario of transport and communication was not at all impressive in the Northeast. The road development in the region has been very slow due to various geographical and socio-economic reasons. During the Five Year Plans, the allocated funds for development of the transport sector in the Northeast were not adequate in comparison to the need of the region. Inadequate transport facility was a serious drawback that crippled the development of the region for a long time. As a result of the partition, the region suffered not only economically in the form of relatively high prices of consumer goods and a high cost economy but also by a sense of isolation from the rest of the country. Moreover, the railway network was also inadequate and it was noticed that three-fourths of the total volume of goods traffic to and from the rest of the country were transported by the railways. The entire network east of New Bongaigaon was in meter gauge and the problems that were faced included not only insufficient railways network but also the hurdle caused by the change of gauge. The region also faced serious problems in transporting essential commodities like cement, steel, food grains, salt, etc. 

NEC has been involved in the development of roads and waterways since its inception. Due to demand and urgent need for improvement of air connectivity, the Council has taken up up-gradation and improvement of airports in addition to road and waterway transport, from the 8th Plan onwards, based on the recommendations of a Committee of Secretaries of the Government of India                                                                                              
It is seen that out of a total road (of all types) length of 79241 km in the region, NECís share is around 6380 km, which is approximately 7% of the total. Since all these roads are all weather roads and mainly of interstate nature the impact in the development of both goods and passenger traffic is immense. Development of railway network, taking up of the rail-cum road bridge at Jogighopa, Bhomoraguri Bridge over Brahmaputra , Inter State Bus Terminus and taking up of 13 airports for improvement of facilities, etc., are important contribution of NEC in this sector. However, majority of road projects, whether implemented by the state PWDs or the Border Road Organization (BRO) could not be completed in time and hence per annum execution was very low. Delay in release of fund, fixed budget, accommodation of too many projects with limited fund, legal issues, etc., are the main hindrances for timely execution of these projects.                                                                              

At the time of the inception of the NEC, the area under cultivation was roughly over 12 per cent, which made a huge gap between the demand and supply of agricultural commodities in the region. Constraints like non-availability of high quality seed of improved variety, lack of irrigation facilities, transport bottleneck in the movement of fertilizer, etc., hampered increase in the production. To overcome these constraints, the NEC took a number of steps through its Agriculture and Allied sector.                                                                                                               

In the health sector, the thrust of NEC has been in the area of healthcare facilities and health manpower development. This has been done by way of promoting medical colleges (including allopathy, homeopathy and ayurvedic). Also, NECís effort in these areas is by way of infrastructure development, assisting in technological upgradation, providing training for health manpower development. Over the years NEC has contributed in various ways towards health manpower development for all constituent states by way of reservation of seats for students in various health institutions of the region.                      

NEC has also been contributing for the growth of industrial activities in the NE region by way of conducting various resource investigations and surveys. This has helped in creating a knowledge base about resource availability and documentation. The schemes and projects identified and taken up by NEC are aimed at benefiting the entire region in terms of employment generation, utilization of locally available resources and proper marketing of these products. NECís effort towards the industrial development of the Northeast also has been in developing first generation entrepreneurs. This has resulted in setting up of various small units in the region. For developing forward linkages, NEC has contributed by setting up marketing agencies like NERAMAC, provided support for organizing exhibitions, seminars and business meets. The Council has also contributed towards the development of sericulture by providing facilities for rearing and reeling eri, muga and other handloom products. NEC has also taken up various schemes for promotion of tourism in the northeastern region including Sikkim.       

NEC has taken measures for arresting the ecological and environmental degradation. It supported 1700 jhumia families covering an area of 3400 hectares thereby shifting families away from the traditional cultivation practices. Watershed development, training on alternative method of cultivation and trade are some of the efforts in the agriculture sector.


Performance of NEC:

                                                                                                                                                                                                                           It has been observed that the NEC priority sectors are based on the assessed need and requirements of the region, but blocking of fund in some sectors due to non-utilization is an important problem. This non-utilization is ascribed to factors like delay in release of fund, delay in receipt of utilization certificates from the implementing agencies and other locational factors.                                                                                                   

The plan performance of NEC reveals that during the fifth five year plan, utilization of fund was 77.96%. The utilization in transport and communication was quite low. The factor responsible for this low utilization was due to inadequate capacity of the implementing agencies for executing such volume of works. During the Sixth Plan, water and power and transport and communication utilized surplus fund of Rs 78.72 lakh and Rs 177.44 lakh in excess of the allocated outlay. The main reason behind this is the progress made in the construction of Kaliabhomora Bridge over Brahmaputra, where actual expenditure was Rs 8135 lakh against an allocation of Rs 6950 lakh.                                                    

In some of the sectors like agriculture and industry there has been very less utilization of funds, which has negated the effort of NEC to develop these sectors. It is seen that only the power generation projects could make the maximum utilization of fund during the last thirty years.            

Agriculture and Allied and Industries and Minerals are the two other important sectors where fund utilization is low in all the successive plan periods. Utilization of fund in the agriculture sector is also low in almost all the plan periods.                                                                      

The Doyang Hydro-electric Power project could utilize only Rs. 400 lakh out of an allocation of Rs. 860 lakh in the Seventh Plan period, in spite of the fact that water and power sector utilized more than 100% during this period. This project ultimately became the costliest project in terms of cost per MW of power.  

Though the NEC approved considerable fund for the development of catchment areas in Tipaimukh, Barak, Kopili HEP and Umium, none of the work was taken up during the first year of the Ninth Plan. This delay in taking off of projects could be one of the major reasons for the cost escalation of most of the NEC projects.                                                                  

 In the process of implementation some agencies (for instance the State PWD in case of road schemes) the flow of fund through the state government has not been smooth and the projects get delayed. This reflects the poor evaluation and monitoring of NEC financed projects. On the other hand, since the priorities in every sector of the NEC plan are fixed by the Central Government, the NEC has a very limited role in deciding the priority sector investments.                                                                

The plan allocation of the NEC have shown a steady increase over the years from a total of Rs. 53.93 crores in the Fifth Plan to Rs. 3500.00 crore in the Tenth Five Year Plan enabling NEC to encompass a wide range of sectors over the years. However, though the working group on the 11th Five Year Plan had proposed a Plan-size of Rs 12,450 crore, the Planning Commission has agreed to an allocation of Rs 7,394 crore only. This drastic slashing of NEC funds is feared to slow down development projects in the region.

Need of the Hour:

      It has been observed that NEC has encompassed different sectors under its fold with more emphasis on power and transport and communication sector. The other sectors of NECís concern need to be more focused by way of funding projects, which can fill the critical gaps. In covering too many sectors, some of the sectors seem to have less perceptible impact. In certain cases because of withdrawal of NEC support after completion, sustainability of the projects remains undefined. Hence emphasis should be given more on such projects, which are of regional nature or of economic importance benefiting two or more states, and has the capacity to sustain after withdrawal of NEC support. This may be taken as an evaluating criterion for project sanctioning under NEC purview.
The NEC planning process reveals that the concerned departments of the states normally identify the projects and considerable time is consumed in finalization of the projects. Also due to non-adherence to strict guidelines, the proper identification of the projects is found to be a major drawback. Also, receipt of large number of proposals from states without commensuration of availability of fund has been the problem of reallocation of the approved fund. This has resulted into a sense of dissatisfaction among the constituent states since in most cases project size were reduced and dropped. The NEC budget is normally reduced at the centre and hence it is necessary for proper appraisal of projects before consideration for budgetary approval from the centre. A more realistic assessment of the projects and financial requirement by way of pre-funding appraisal is a necessary step to avoid problems of the fund reallocation.                                                                                                       

It has been observed that accumulation of work and reloading with new work has been the primary cause of non-completion of projects within scheduled time with cascading effect. To avoid this, NEC need to look beyond the traditional agencies even if the subject is under state purview. Here the criteria should be the past record of the implementing agencies with regard to timely completion of the projects. In this regard NEC should intervene at the state level for strict adherence of norms.                                                                                                                   For standardization of project proposals a clear guideline including sector wise standard format need to be framed. This will enable the state or any other agency to submit proposals to NEC for funding. A booklet containing rules, regulations, guidelines schemes of NEC along with standard format need to be made available. This standardization process will help in judging the merit of the proposals.                       

Too many projects competing for NEC funding has made the scrutiny process cumbersome at the NEC level. To restrict projects only to those, which fulfill the guideline and the set norms, involvement of NEC officials for pre-funding appraisal is necessary. In prioritizing the projects for inclusion in NEC plan factors like visibility of the project, social benefit, size and time frame of the project, monitoring potential, assurance of maintenance from the states, competence of the implementing agency, etc should be considered.

Since maintenance of NEC funded projects is also a matter of prime concern to ensure effective benefit of the projects and for having sustained benefits, it is necessary to ensure post implementation functioning of the projects. This can be done either by creating corpus maintenance fund wherever possible or involve the project beneficiaries in maintenance of the projects.                                                                        

For strengthening of monitoring and evaluation of the ongoing projects, the Evaluation and Monitoring Cell at the NEC needs to be revamped. For doing this, this cell may enlist certain external agencies for monitoring and evaluation of the projects. Also, proper coordination among the sectors and the monitoring cell need to be strengthened by way of periodic joint meetings, field visits, etc.                                                

The regional policy should be prepared keeping in view the priorities and policies of the member states in the concerned sector so that the interest and autonomy of individual member states are not affected.           

Despite plan investment in the past infrastructure in the Northeast has been quite poor. Thus, to develop the regionís present infrastructure to be nationally and globally compatible, NEC in association with the state governments should take up some important steps. All the state capitals are immediately required to be connected by four-lane super highways. Inland waterways, wherever possible, must be developed. The state capitals of the Northeast must also find place in the Indian Railways map. Todayís world vis-ŗ-vis industries are knowledge intensive and therefore telecommunication and information technology will have to play a major role for development of the north east besides providing the vital communication with the remotest pockets.           

Development is synonymous with consumption of power in todayís world. The Northeast, amply reflected as the countryís future power house, must harness exploitable hydro-power of this region. Power generated in this region can be put to use commercially not only with the main land but also with the surrounding countries in line with the SAARC cooperation.                                                                                              

Northeastern regionís location as being surrounded by foreign countries is a matter of strategic concern. But a strategy may be formulated to leverage this into an opportunity. With the help of the Government of India, border trade has become a possibility and will definitely offer an excellent opportunity for the entire Northeast to become a hub of South Asian growth quadrangle and NEC may definitely play a vital role in promotion of border trade.                                                  

 The main thrust of NEC in its new role shall be to help upgrade the quality as well as standard of living of the people of this region. Policy decisions shall have to be directed towards elevation of families from BPL to APL.                                                                                                           

For better functioning of the NEC as a development agency for the Northeast there should be a very well coordinated relationship between NEC and DoNER.  There should be total transparency about the procedures of sanctioning and allocation of funds to various States. The allocation made should be informed to the states in advance of the Plans to be prepared by each of them.                                                       

NEC started as an advisory body for integrated development of the region. However, the role and functions of NEC underwent changes with the need of time. In fact the Council is being looked as an alternative funding source for the states under its fold with increase in expectations levels. In view of limited resource availability, the Council needs to make a strategic repositioning by way of a comprehensive reappraisal of the regionís development need and evolve a regional development plan.                 

Institutional strengthening of NEC is another important requirement that should be taken care of. Eminent planners, economists, heads of financial institutions may be inducted at appropriate level of NEC to instill professionalism.                                                                                        

NEC is expected to play a much greater role in view of the opening up of South-east Asian countries. In view of the special features of the North-east it is imperative that there should be comprehensive reappraisal of the regionís development experiences with a view to evolve a conceptual framework against which the future course of development plans can be chalked out. NECís role in future is visualized as a development wing, being part and parcel of the northeastern state governments and not as a superstructure dishing out inadequate funds from time to time for project left to their inevitable fate. The Council so far has to face many hurdles in its desired course of action for accelerating development of this neglected part of the country. If the hurdles are removed and full cooperation is provided by the Centre and the concerned states in its functioning, there is no doubt that the NEC will play a significant role in bringing high level of development and modernization to the region.       


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Datta, P S: Indiaís North-East: A Study in Transition, Vikash Publication House Pvt Ltd, New Delhi , 1992

Horam, M: North East IndiaóA Profile, Cosmo Publication, New Delhi , 1990

Yogi, A K: Development of the North-East RegionóProblems and Prospects, Spectrum Publication, Guwahati, 1991

Evaluation cum Impact Study: Functioning and Working of North Eastern Council since Inception (An unpublished report), Indian Institute of Entrepreneurship, Guwahati, 2002

Plan and Programmes for Regional Development by Director of Information and Public Relation, NEC, Shillong, 1990

Transport and Communication in North Eastern Region by Director of Information and Public Relation, NEC, Shillong, 1988     

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