India’s foremost challenge in the fourth lockdown phase is its economic revival. Terrible loss of lives and livelihoods have pushed millions into a new hunger-poverty trap.
The lockdown measure has been termed by many as “draconian” as it disproportionately burdened the poor and underprivileged in the informal sector.
The country’s economic contraction of about 12.5 per cent in 2020-21, as estimated by the leading think tank, National Council of Applied Economic Research, has created an abysmally low demand-supply situation.
For growth stimulus, the Centre has announced a public spending package of Rs 20 lakh crore with a size of 10 per cent of the GDP having both relief and restoration components.
The first phase under the Pradhan Mantri Garib Kalyan Yojona released Rs 1.7 lakh crore as relief funds, while the second phase is about an Atma Nirvar (self-reliant) economic package.
Agriculture alongside medium and small, micro enterprises (MSME) are the two most important sectors, where about Rs 1.55 lakh crore has been announced for restoration under capital funding, concessional credit, agriinfra projects and formalisation of MSME.
This is to enhance the demand supply chain in phased manners from various geographically delineated zones of India.
The country’s 733 districts are currently delineated as green, orange and red zones based on Covid-19 containment and spread. 319 districts are in the green zones, of which 114 are from India’s North-eastern Region (NER), whose substantive economy is incidentally based on agrarian and micro and small enterprises (MSE).
\The question is, can the agriculture and MSE sectors of the green zones of the NER be at the frontline to support India’s economic recovery. In the past, it was always at the periphery of the country’s dominant economy in the absence of any “core” sector. And it was primarily a site for natural resource appropriation, while both its agriculture and MSEs were at subsistence level.
Its Special Category Status implicitly created a “dependency syndrome” on central assistance and dis-incentivised its economy, market and physical infrastructure.
Can this “new normal” due to the Covid-19 pandemic drive the region now to catch up with the missed opportunities of the past and create niches in its agricultural and MSE sectors to become an important player in India’s demand-supply network? It certainly has huge potential.
As per NSSO data, the region’s MSEs, which are largely localised, rural and household-based, contribute about 62 per cent in its total industrial output.
The Economic Census data shows a total number of 1.64 million MSEs in the region with the highest number in Assam at 662,000. The sector currently shares about nine per cent of India’s total production from MSME and absorbs about seven per cent of the country’s MSME workforce. Government measures in this sector was initiated back in 1958 with the MSME Development Institute at Guwahati, facilitating skill development across its states with a range of programmes to enable livelihoods, increase productivity and income levels of the people.
The North East Industrial and Investment Promotion Policy of 2007 also focused on the promotion of this sector with a set of capitalisation programmes. The agricultural sector of the region, on the other hand, also significantly shares about 20 to 30 per cent to its formal economy against the national agricultural share in the GDP of about 15 per cent.
Agriculture in the NER, with gradual transformative programmes, has moved far beyond its subsistence level and diversified from traditional rice and shifting cultivation methods to various innovative areas for gaining marketable surplus, like horticulture, organic farming and cash cropping like rubber, tea, spices and bamboo.
For the last two decades, the region has been under the Centre’s policy focus for its overall economic development, and its potential areas of agriculture and MSE were further tapped through numerous transformative strategies and resulted gainfully if not substantially.
Sikkim, for example, has gained attention by becoming the world’s first fully-organic state in 2016 and created opportunities for sustained livelihoods to the local communities. This alternative, chemical-free farming aims to preserve the environment, fragile ecosystem and rich biodiversity, and provide a healthier life to the people.
Chemical fertilisers and pesticides were phased out, farmers were trained in organic agriculture and composting pits were dug throughout the state. Today, all 76,000 hectares of farmland in Sikkim is certified organic where use of chemicals are strictly forbidden. The state once again is in focus for being completely coronavirus-free.
As the NER has been largely out of the Covid-19 pandemic glare, it must now take advantage of the situation and play an active role to explore various higher-value chains in agro-products emphasising on processing and marketing, and in MSEs, which can diversify their manufacturing for the immediate high-demand products in the health sector like masks, gloves, face covers and others.
It can then create an appropriate economic and market linkage for the supply chain.
The Atma Nirvar project can be a channel for opening such opportunities for the local economies of the NER in agriculture and MSEs, and connect to the larger demand-supply network of India.
An innovative and pro-active political and economic approach like formalisation and creation of a common regional market, with defined pricing policy and ensured accessibility of local stakeholders, can create a roadmap.
Both MSE and agri-marketing systems need to be incentivised with a competitive and investmentfriendly approach, and intra and interregional trades need to be facilitated even through the e-commerce platform with digital accessibility to farmers and entrepreneurs.
However, the optimality challenge lies in ensuring scale, efficiency and quality, while inadequate infra-links, lack of capitalisation, fragmented and localised traditional market structures, which mostly function in the shadow of informality, being the major impediments in this region. Stakeholders mostly suffer from accessibility issues, post-harvest loss and lack of information.
An appropriate strategy in this situation can fuel a transformative moment for the region with India’s recapitalisation policy. There is already a severe blow on the NER’s other existing economies of tourism, construction and extraction, and a serious consideration about scaling-up agriculture and MSEs is essential to sustain its economy and then make it a “self-reliant” region with sustained sources of livelihoods.
A spatial integration of the NER in terms of having a common market is essential for the larger domestic economic stabilisation programme of India and can even create an opportunity to gain Eastern and South-eastern neighbouring markets with an immediate supply-chain at this hour when influential China is under a new wave of bashing, triggered by the pandemic.
A Special Export Zone for the NER’s agrarian and MSE products under the Centre’s Act East Policy can open up a vista in the current murky situation of the export sector. The post-pandemic world awaits a “great transformation” of the structure of capitalism as its fragile and exploitative nature is exposed with multiple anomalies.
This moment is pushing us to rethink for a big structural reform, as the existing urbancentric “core” growth poles have produced deep asymmetries and unsustainable economies with high spatial inequalities, resource exploitation and labour vulnerabilities. It systematically destroyed several time-tested local, traditional and ecologically sensitive peripheries and their culture of economic practices; and the NER is unquestionably one such space.
Can the current pandemic be an opportune moment for the NER to unhinge from its past and build an alternative by centralising and scaling its local and traditional sustainable economic systems and become “selfreliant”? The answer probably lies in an efficient and resilient politics of the region, which will be driven by a serious economic consideration.
The writer is a faculty member, Jawaharlal Nehru University, New Delhi