THE north-eastern states of India became economically disintegrated as a result of political division of the sub-continent in 1947. Eventually, the region was cut-off from its traditional trading partners such as Bhutan, Myanmar, the then East Bengal now Bangladesh, Thailand and Indo-China. In fact, the region became land-locked that also exacerbated the isolation. Unfortunately, the issues have been ignored and less understood.
People here are in no position to drive the economy forward. Many wrong policies may have contributed as explanatory factors. Latest data reveals that incomes in seven of the eight north-eastern states are now below the national average. Just 15 years ago, four of these states had income levels higher than the country's average. Mizoram is the only state where per capita income has remained above the national average through the past decade and a half. Arunachal Pradesh, Nagaland and Sikkim had incomes 10 per cent to 20 per cent higher than the national average in 1993-94. All three together are now growing slowly. Arunachal is below the national benchmark by over 15 per cent while Nagaland is lagging by a whopping 25 per cent. Sikkim is fractionally below the national average by 2 per cent.
Of the remaining four states, always poor in terms of income, three have slid even further down. Assam and Manipur are trailing by over 35 per cent, compared to about 25 per cent in 1993-94. Meghalaya used to be 10 per cent below the national average, now it is 17 per cent behind. Tripura used to be the most laggard state 15 years ago with its net state domestic product per capita almost 30 per cent short of the national average. In 2007-08, it was still behind by 5 per cent.
The region is home to more than five crore people (3.8 per cent of India's total population). It constitutes over 80 ethnic groups -- rich in diversity. More interestingly the eight north-eastern states are also rich in mineral and natural resources.
Historically the region generally has been a food-deficit one. Myanmar was the supplier of cereals, pulses and fishery related products. Manufactured products on the other hand were supplied by Kolkata. People in the hilly villages used to plant oranges, coffee beans, paan, bay leaves, betal nut, cassava, yum and other tubers. They traded for rice, vegetables and dried fish at the weekly haat some 25 kms away, in what's now Bangladesh and Myanmar. That trade stopped long back with the drawing of borders.
Furthermore, agriculture suffered. People, for example, in hilly areas have had no choice but to look for alternatives such as mining for coal, limestone and stone quarrying. Most work as daily labourers in the mines or in the lime kilns, or run the mines themselves. In addition people from other states are busy in financing deforestation. After all people from prosperous states need nice wooden furniture! Moreover, cheap, old and polluting vehicles from the main land cause environmental degradation. In fact the experience of traveling by road from Guwahati to Shillong generates part fear and part anger.
Tea planters too exploited the whole situation. They never invested in land but inherited gardens left by the English planters at a lower price. The mottos were clear. Promise simple people entertainment, exploit them to the utmost with inflated prices for food and let them booze, and then disappoint them. The region needs better environment and infrastructure to grow.
In the plain land Assam and Tripura cereals (mostly paddy) and jute are cultivated. Before partition the labourers from the then East Bengal (now Bangladesh) were instrumental to neutralize the excess demand for labour during sowing and harvesting season. They used to come with their tools and then returned with a load of paddy.
Horticultural products are plenty here. They are cheap in the primary form. Their value additions are possible at a competitive price. But they are slimmed in main land once transport costs are factored, according to the policy makers. This logic seems vague. The policymakers need to be a bit innovative here.
The model of development in the region should be different from traditional. For centuries, Christian missionaries have generated quality services through education in the region. Thus the creation of effective service sectors, infrastructure development, providing training to the youths for the demand of service sectors are all powerful ingredients in order to facilitate the overall development of the region. The development model of Switzerland may bear useful lesson in this context.
The democratic political development in Bangladesh has created new opportunities in this region. The people of India apparently see it as a "significant opportunity" to forge a "new relationship" with Bangladesh. But the issue on " Teesta water" has been a major irritant in Indo-Bangladesh relationship because the scarcity of water in the Teesta causes sufferings to people on either side of the border during the lean season.
Bangladesh feels that India can afford to shorten the list of sensitive goods so that Bangladesh can export more products and reduce the trade imbalance in bilateral trade. Interestingly India has 460 products on its sensitive list. From Indian part the fear may be due to trade distortion as we have already seen the case of 'Vanaspati' in explaining major irritant between India-Sri Lanka free trade.
The same fear may cause other issues because, for instance, the garment components may be imported from third countries. The solutions such as on buy back Indian investment in this sector in Bangladesh may be thought of. Historically, the economic clusters played an important role in this region. In fact, this has implication even now. Bangladesh is the most densely populated country in the region. This country is bordered with comparatively scarcely populated countries such as Myanmar and India's north-east. This suggests the re-establishment of integration in a coherent way.
Admittedly, the policymakers deserve credit for the speed and scale of their responses to the above issues in recent time. However, it is too soon to conclude that they have broken with the past.
The writer is Professor at International Management Institute, New Delhi.