Dialogue  July - September, 2002 , Volume 4  No. 1

Why Assam Continues to Decelerate?
Atul Sarma

The growth performance of the Assam economy was more or less comparable with all-India during 1951-79. Thereafter it lagged behind the rest of the country except for 1990-92. For example, Assam grew at the rate of 4.2 % and 3.0 % as against 5.4 % and 7.3 % for all- India between 1980-81 to 1990-91 and 1991-92 to 96-97 respectively. With high population growth, the gap in per capita income between Assam and the rest of the country widened sharply with every passing year. Assam’s per capita income of Rs.1173 at 1980-81 prices stood above the national average by four per cent at the base year of economic planning in 1950-51. But it continuously fell behind the national average per capita in the subsequent years: it constituted just 55 per cent of the national average per capita income in 1998-99.

This outcome followed from the fact that Assam’s per capita income rose by 7.0 % as against 12.5 % for all-India between 1970-71 and 1980-81. The differential growth sharpened in subsequent decades particularly in the decade of economic reforms. Between 1990-91 and 1998-99 Assam’s per capita grew by less than one third (12.1%) of the national average (40.1 %). In short, Assam which was the fifth highest in per capita income terms at the beginning of the planning process is now the second lowest after Bihar.

This happened despite the general awareness and interest in development on the part of different segments of Assam’s population. As the Committee on Clause 7 of Assam Accord (1990) observed: " This magnitude of popular awareness and interest in development is a rare social force." Great concerns for Assam’s development can, in fact, be traced back to the 1950s in various charters of demands by the Assam Students Union (ASU) at different times. For example, the Assam Accord (signed on August 15, 1985) contained a Clause (7) for all round development of the state. And the Assam government formed by student leaders constituted a Task Force on Economic Development of Assam (May 20, 1987) to suggest measures for the economic development of the state.

The Central government also on its part took a number of major initiatives particularly in the 1990s. Having recognised the slow progress of the measures for speedy all round development of the state under Clause 7 of the Assam Accord, the Planning Commission constituted a committee (under the chairmanship of L.C.Jain, Member Planning Commission) in February 1990. Further in November 1996, the Planning Commission in pursuance of the Prime Minister’s announcement of ‘New Initiatives for the North Eastern region’ constituted a High Level Commission to critically examine backlog in basic services and gaps in important infrastructures and to suggest policies, programmes and the requirement of funds for their removal. The important point to flag here is that all different state and the Centre level committees in addition to many academic studies clearly brought out the constraints on the development of the North East in general and Assam in particular.

As part of its new initiatives, the Central government took several important steps in the nineties. The state was included among the special category states that get plan assistance on the basis of 90 % grant and 10 % loan. The North Eastern Development Finance Corporation (NEDFi) with authorised share capitol of Rs. 500 crore was set up in 1995. The economic package of Rs. 6100 crore for specific projects in NE states as announced in October 1996 by the then Prime Minister, H.D.Deve Gowda included fourth rail-cum-road bridge over the Brahmaputra at Bogibeel, upgradation of Guwahati airports and a few industrial growth centres in addition to some road projects, drinking water supply schemes and health care programmes. He also introduced North-East sub plans in all Central Ministries for which 10 % of their budgets would be earmarked.

Mr. I.K.Gujaral who followed Mr.Deve Gowda as Prime Minister also assured the implementation of the package in toto. In January 2000 Mr. Atal Behari Bajpai further announced a Rs.10. 271.66 crore package for the region.

On the top of it all, the central plan assistance to Assam is quite high. For example, the per capita assistance to Assam (Rs 3161) was almost three times the all-India average (Rs. 1080) taking the entire Eighth Plan period. Similarly, industrial licensing, concessional finance and investment subsidy, tax holidays, growth centres and freight equalisation of some major industrial inputs have been used as instruments to induce economic development in the region.

All this leads to a very basic question: Why is it that with all the popular awareness and interest in social development as well as special concerns and dispensation of the central government in recent years Assam continues to decelerate? The answer to this question will be clear in the course of making a case that Assam failed to stir growth on a sustained basis essentially for lack of an appropriate policy frame keeping in view its constraints and strengths. The problems impeding the economic development of the state were always fairly well known. I would argue to show that there was no policy frame with a consistent thrust for economic development and that policy interventions even in right directions were grossly inadequate. What an appropriate frame was required to do was to address first the binding constraints on economic development and formulate a perspective for rapid growth. I discuss below both the constraints as well as flaws in the past development strategy.

Partition led to the disruption of the long existing trade links and infrastructure that the northeast was accustomed to. As the Shukla Committee succinctly put it: "Partition further isolated an already isolated geo-politically sequestered region. It was left with over 4500 km of external frontier with Bhutan, China, Myanmar and Bangladesh but no more than a slender 22 km connection with Indian hinterland through the tenuous Siliguri corridor, the Gateway to the Northeast. The very considerable market disruption, socio-economic distancing and retardation that resulted has not been adequately appreciated and compensated." 

The alternative trade routes and infrastructures that were developed in the post-partition period have remained for long a makeshift arrangement, as it were. The conversion of the meter gauge to broad gauge took years. A large part of the northeast is yet to have a railhead. The railway network linking the places only to exploit the commercial interests of the colonial power is yet to be restructured for even growth.

Just to give an idea of transport/market disruption, in the pre partition days, boats laden with tea, coal and timber reached Kolkata from Dibrugarh in 8days. But now Calcutta –Guwahati takes more than 25 days for lack of night navigation and customs formalities at various points.

The net effect has been that people pay higher prices for their purchases originating in the rest of the country. Producers do not get right prices for their products such as fruits, potato, ginger or exquisite handicrafts and hand loom products. The income generation that has taken place, even if at a modest rate, drains out to producers elsewhere through consumption linkage for these economies being unable to produce income induced consumption goods. They thus remain heavily dependent on the rest of the country for their most day-to- day requirements.

The geographical isolation coupled with inadequate infrastructures is certainly a major stumbling block to growth. But an appropriate development strategy could use this disadvantage to the maximum advantage. For such disadvantages act, in fact, as barriers to trade and to that extent, provide protection to the local entrepreneurs for undertaking a right mix of activities.

The population influx from across borders in the aftermath of partition has huge implications both on polity and economies of the northeastern states in general and Assam in particular. As such, this is a highly emotive issue as has been demonstrated by student uprisings in Assam and other northeastern states. But the inability to effectively deal with this problem by the student leaders when they came to power after a protracted movement against this issue only highlights the extent of complexity that it is associated with.

This problem should be clearly understood, and its realistic solution must be found. Without going into great details of the migrant population from across borders, the following points can be flagged. First, the flow of immigrants, which continued much beyond the aftermath of partition, has presumably been induc