Thirty years ago, India broke the chord of economic nationalism that was invoked with the dream of a self-reliant nation. In 1991, the liberalisation programme re-structured earlier economic foundations through a set of reform measures, which propelled the market economy for a competitive and efficient growth model. It subsequently gifted a promising growth trajectory and moved away from an insurmountable poverty barrier to aspire for a well-off nation.
The growth milestone, however, was ineffective to address inequity. Rising urbanity was created while the inter-generational crisis continued in India’s rural and remote areas. The gap between the rich and poor became stark, and regional disparity remained alive and constant in this journey of liberalisation.
State units never grew uniformly; and some of them typically remained in the backyard of advanced, developed and core states that promptly welcomed the liberalisation programme. The rest were marked as backward and underdeveloped, as unfriendly and indolent approaches were made, with colossal infrastructural barriers and political instability that pulled them down the economic pyramid.
States in the North-east are obvious examples of this other side of the liberalisation programme. Long and contested political movements and subsequent state formation processes in the post-Independence period produced a different narrative in the region. Most states were created out of Assam under the North Eastern Area Reorganisation Act, 1971. The process was completed in 1987 with the creation of the North-east’s last state, Arunachal Pradesh.
All states, except Assam, became geographically small and cut-off, politically contested and volatile, and economically impoverished and backward. With such a legacy, the land-locked states became part of India’s liberalisation programme but were not enthusiastically keen or aware of it. That, however, has not stopped India from adopting a new economic vision for the North-east.
A series of liberalised policies were introduced for the region during the 1990s and 2000s. Most significant of them were the Look East Policy, North East Development Fund Corporation, North East Industrial and Investment Promotion Policy, and Special Accelerated Road Development Programme-NE. They were all for investment generation, infrastructural and industrial development, and economic growth.
Finally, the Union ministry of development of the North-eastern region was established to make it an integral part of India’s reform measures. The first Vision Document 2020 of the ministry aimed to achieve 12.95 per cent growth rates for the North-east to “catch-up” with the rest of India.
The policies, however, have generally failed to achieve the desired goal of growth. Political instability was the prime factor that prevented the North-east from becoming an effective part of India’s liberalisation regime. None of the states could ever be in the top-ranking category in the last three decades.
Data of the gross state domestic product, or GSDP, provided by the Central Statistical Office of India evidently shows that the share of the North-east in the economy has been insignificant in the reforms period despite having a rich resource base. During the reforms period of 1990-91, 2000-01 and 2010-11, the combined shares of GSDP of the eight states of the region in India’s economy persistently declined from 3.07 per cent to 2.99 per cent to 2.61 per cent respectively.
This low and declining share is enough to understand the rising regional gap between the North-east and the rest of India. Growth of the gross domestic product, or GDP, similarly reveals a high regional disparity. North-eastern states could never figure in India’s growth map or cross the boundary of underdevelopment.
In the first decade of the reform period from 1990-91 to 2000-01, the economy of the North-east grew at three per cent against India’s five per cent. It increased to six per cent in the decade of 2004-05 to 2013-14, which was India’s shining period with growth rates reaching eight to nine per cent.
The poverty in the region also became highest with 28 per cent in 2011-12 against India’s remarkably falling trend of 21 per cent. Manipur showed the highest poverty ratio in India at 37 per cent.
Such an ominous status, however, did not dissuade the Centre from integrating the region into its economic liberalisation programme. A renewed set of policies have been freshly introduced since 2014 to make it a future “growth engine” of India. Thus, the Act East Policy, North East Special Infrastructure Development Scheme, North East Road Sector Development scheme, and the North East Industrial Development Scheme are some of the new programmes that have been adopted in continuation of the earlier liberal economic policies.
With huge financial investment in the last six years, the region has remained at the top of India’s reforms agenda. Therefore, the GDP of the North-east has increased and its share in the national economy in 2018-19 has gone to 2.72 per cent from the earlier 2.61 per cent in 2010-11.
The increase, however, is so insignificant that it made no fundamental change to the existing narrative of underdevelopment and regional disparity. Except Assam, whose economic history evolved with tea and oil, all other states in the region continued to have GSDPs below 50,000 crore from 2012-13 to 2018-19; and had shares of less than one per cent in India’s GDP. Tripura had the maximum share with 0.26 per cent while Arunachal Pradesh, which received the most attention of government spending during the last six years for infrastructure building, had the lowest share at 0.13 per cent.
If one looks at the scenario of all 14 small states of India, the North-eastern states were ranked at the bottom of the GSDPs from 2012-13 to 2018-19. Uttarakhand and Jharkhand had the maximum share in India’s GDP. Both states were created in the 2000s, much later than North-eastern states. Other small states like Delhi, Goa and Puducherry have been very important and integral to India’s economic reforms programme and have a significant share in its GDP.
Among the big category states, Assam ranks second last with a 1.76 per cent share and is just above Chhattisgarh at 1.60 per cent against Maharashtra with highest share of 13.88 per cent in India’s GDP. Economically speaking, Assam was one of the leading Indian states in the post-Independence period but got pushed back heavily in the liberalisation period due to multiple political challenges.
The GDP growth rate in the North-east during the last six years was about seven per cent and remained much below the targeted 12.95 per cent and India’s overall 10 per cent. Reform measures and an expansive investment programme have so far been futile in the region.
The year 2019-20 was unprecedented with the pandemic situation as India and the world faced a tremendous blow on economic growth. Against this challenge, the North-east surprisingly had a different trend. Growth data released by the CSO in 2021 shows that for the first time, in 2019-20, GSDP in some of the North-eastern states was much higher than the national growth rate. The tiny land-locked Mizoram achieved a 13 per cent growth rate to become the leading state of India. It is followed by another tiny and remote state, Tripura at nine per cent.
India grew at around three percent during the lockdown period of 2019-20, and most of the advanced states equally faced the blow. Mizoram and Tripura remained exceptional, and for the first time in the post-reforms era, ranked in the top category of Indian states. One could say that unrelenting government measures and ceaseless spending, even during the lockdown period on various infrastructure and development projects, might have added to the GSDP figures of those states.
It would also be interesting to see the poverty figures in those states against India’s achievement of bringing it down to seven per cent in 2019. Since state-level poverty figures are not in the public domain since 2011-12, it will not be possible to understand the relation of such new growth and poverty. The change in growth trends, however, needs to be nurtured to achieve a sustained outcome in the coming decade and accomplish the dream of making the North-east a “growth engine” of India.
The chequered reforms history of the North-east made them paradoxes in India’s narrative. As states in the region mostly remained at the bottom of the economic pyramid, they could never be exemplars in India’s liberalisation programme. The case of Mizoram and Tripura therefore is intriguing and creates a way to explore the potential of the region in the policy domain. There are many roads to growth and development, but given the region’s diversity in terms of people, environment, resources, knowledge and geography, a sustainable path is most imperative.
Political stability and cohesion are the other imperative in the North-east to make economic reforms successful. The region has a high propensity for conflict on multiple issues including territorial disputes, which often creates obstruction to any seamless trade and economic activity.
The recent conflict between Assam and Mizoram needs to be cited that led to a nation-wide uproar. It affected the everyday economy and trade, and Mizoram was at the receiving end. Such conflicts will be counter-productive to the region’s recent achievements in economic growth and could once again pull it down the economic pyramid.