c. Challenges and Strategy
III. Progress to Peace and Prosperity
(a). Catching-up with the Rest of the Country
Improving the standard of living of the people would require sustained increases in per capita income levels and its fair distribution amongst all sections. By 2020, people of the North East should have living standards comparable to people in the rest of the country. Given that income levels in the region are lower than the national average by over 30 per cent and that the region has lagged behind, catching up with the average income level in the country by 2020 would require significant acceleration in the growth rate in the NER. The task has been made even more formidable with the Indian economy reaching a higher growth path and the GDP estimated to grow at almost 8 per cent per year during the Tenth Plan.
The continued growth of the Indian economy at 9 per cent per year from 2006-07 to 2020 would, on an average, increase per capita income by about 7.61 per cent (Table 2). As over the period, population growth is expected to decelerate, per capita income growth is expected to accelerate from 7.51 per cent in the Eleventh Plan period (2007-12) to 7.80 per cent during the Thirteenth Plan (2017-22). Thus, by 2020, per capita income in the Indian economy is expected to be about Rs. 87,459 at the 2006-07 prices or about USD 2,250 at the prevailing exchange rate. To reach this level of income, between 2006-07 and 2019-20, GSDP in the North Eastern Region will
Source: NIPFP computation.
Data Sources:
1. Population estimates: Registrar General of India, Census 2001.
2. Quick estimates of GDP at factor cost: Government of India, Press Note on Revised Estimates of GDP, dated 31 May 2007 3. GSDP: mospi.nic.in
2006-07 (Base year) 92,233 4.17 22,139
XI FY Plan 10.00 1.25 32,718 8.64
XII FY Plan 13.67 1.17 57,724 12.35
XIII FY Plan 16.37 1.05 87,462 15.16
Required GR (% pa) 12.95 1.18 11.64
Actual growth rate per
Table 3: Projected Per Capita GSDP at 2006-07 Prices of NE States: 2007-08 to 2019-20
Note: Growth rate of real GDP at 1993-94 prices for the period 2000-01 to 2004-05 was 5.86 per cent per annum.
Table 2: Plan-wise Projected Per Capita GDP at 2006-07 Prices
GDP (FC) at 2006-07 Per Capita GDP at
Prices 2006-07 Prices
Plan Level Average Average Level (Rs.) Average
(Rs. crore) annual GR of annual growth
growth Population rate (%)
rate (%) (%)
2006-07 (Base year) 3,743,472 111.22 33,659
XI FY Plan (2007-08 to 2011-12) 24,419,920 9.00 1.39 42,079 7.51
XII FY Plan (2012-13 to 2016-17) 37,573,074 9.00 1.24 60,665 7.67 XIII FY Plan (2017-18 to 2019-20) 31,665,640 9.00 1.11 81,322 7.80
Growth rate per annum (%) 9.00 1.26 7.61
Estimated per capita GDP at 2006-07 prices in 2019-20 87,459
have to grow at 12.95 per cent per year on an average, or at 11.64 per cent in per capita terms (Table 3 and Exhibit 1).
The process should be put in place expeditiously to accelerate the growth process in the region. However, it would be unrealistic to expect that the growth rate of per capita income will accelerate from 4.6 per cent recorded during 2000-05 to 11.64 per cent immediately. It is, therefore, necessary to split the time-frame into three Plan periods and set targets to steadily accelerate the growth rate in a phased manner to achieve the desired targeted per capita income growth rate of 11.64 per cent during the period. An illustrative scheme of acceleration is shown in Table 3, according to which, the growth rate of per capita GSDP should accelerate from the average of 4.6 per cent during 2000-05 to 8.64 per cent during the Eleventh Plan (2007-12), 12.35 per cent during the Twelfth Plan (2012-17) and 15.16 per cent during the Thirteenth Plan (2017-22). The changes required in the governance system, development strategy, reforms in policies and institutions, capacity-building in people and institutions and creation of a market friendly environment to achieve this acceleration will be discussed later in the document.
Accelerating growth in the NER to catch up with the rest of the country requires a massive increase in investments as well as a significant improvement in productivity. The crude estimate of additional investment needed by assuming an incremental capital-output ratio (ICOR) of 4, works
Exibit 1 : Assumed Real Growth Rates of the NER Economy to Achieve the Economic Target by 2020
Overall CAGR GSDP 2007-08 to 2019-2020 12.95
GSDP Growth
Per Capita Income Growth
Overall CAGR GSDP 2007-08 to 2019-2020 11.64 %
Overall CAGR GSDP 2007-08 to 2019-2020 1.18%
8.64
12.35
15.16
16.37 13.67
10.00
1.17 1.05 1.25
XI FY Plan XII FY Plan XIII FY Plan XI FY Plan XII FY Plan XIII FY Plan
out to Rs 1,329,891 crore (Table 1.7A in Annexure 1.1 in Volume III) at 2006-07 prices or 48.1 per cent of the GSDP during the period. Thus, estimated investment is placed at Rs 211,613 crore (or 35.3 per cent of GSDP) during the Eleventh Plan; Rs. 505,499 crore (47.7 per cent of GSDP) during Twelfth Plan and Rs 612,779 crore (55.6 per cent of GSDP) during the first three years of the Thirteenth Plan period. An alternative estimate of investment by assuming declining ICORs from 4 during the Eleventh Plan to 3.6 during the Twelfth Plan and 3.2 during the Thirteenth Plan periods places the total investment requirement at Rs 1,156,785 crore or 41.9 per cent of GSDP in the region for the period. While the two estimates made under alternative assumptions look very large in absolute terms, as a proportion of GDP of the country they are only 1.4 per cent and 1.2 per cent, respectively. If the national investment rate relative to GDP during the period is assumed at 36 per cent, investment of 1.4 per cent in the region works out to a national investment share of about 3.8 per cent which is broadly equivalent to the population share of the region.
Indeed, increasing the investment share in the region to equal its population share requires considerable stepping up of public investment in the physical and the social infrastructure and creating an accommodating climate for private sector investment. This calls for significant initiatives in policies and institutions. There needs to be a paradigm shift in development strategy to increase the productivity of public investment by strengthening forward and backward linkages.
This would call for empowerment of the people to have maximum self-governance and grassroots planning, building capacity in people and institutions to take the development agenda forward and a quantum leap in the quality of infrastructure and connectivity. Provision of world-class infrastructure and connectivity would require a significant increase in public investment. In the initial years, it is necessary also to expand the social infrastructure, particularly education including vocational education and skill development. Given the low level of entrepreneurial activity in the region, in the initial years, the government also has to take a proactive role and make investments in promotional areas as well.
Thus, both Central and State Governments in the region will have to make large investments to overcome the infrastructural deficit, particularly in the initial years, though in course of time, it should be possible to involve the private sector in this task through Public-Private Partnerships (PPPs). In order to enable this, it is necessary to create a proper framework for PPPs in infrastructure investments. Budgetary support for public investment too needs to be augmented to provide the required volume of viability gap funding.
(b). Structural Transformation
Acceleration in the growth process in the region requires changes in the structure of the economies of the various States in the region. The growth rates in different States required to catch up with the per capita GDP of the country is summarised in Table 4. The increase in the growth rates required varies across States. Assam, the largest State in the region contributes close to 60 per cent of the regional GSDP. It also lags behind the country’s average per capita income by about 17 per cent. Therefore, to catch up with the country’s average per capita income, the State should accelerate its GSDP growth to an annual rate of 14.75 per cent, with a per capita GSDP growth of 13.39 per cent during the period 2006-20. Similarly, Manipur has to accelerate its growth of GSDP
to 12.87 per cent. Every State in the region except Nagaland has to grow faster than the national average, whereas Sikkim and Tripura can afford to match their pace with the national economy.
Growth acceleration in most of the North Eastern States requires structural changes in these economies. In most of the economies, income from public administration constitutes a major source and the Government Sector dominates the economy. Acceleration in economic growth will have to come from agriculture, manufacturing and non-government service sectors. This calls for significant changes in the development strategy followed so far, and the creation of an enabling environment for private investment in productive sectors.
(c). Poverty Eradication in North East
The vision of the people is to banish poverty from the region by 2020. The estimated poverty ratio in the region using the mixed recall period in 2004-05 was 17 per cent which was lower than the country’s overall poverty ratio of 22 per cent, but the measure is beset with several problems and is unreliable. Apart from inadequate sample sizes for States other than Assam in the National Sample Survey (NSS), this general measure does not adequately take into account specific consumption requirements and higher costs of living of the region. Empowering people with capabilities ensures they receive adequate food, clothing and shelter so that every family is free from hunger, leads a healthy life and participates productively in the growth process. This, too, requires a structural change in the region from government-dominated economies and economic structures shaped by planning from above, to those based on participatory planning with private sector participation in the growth process.
The eradication of poverty, inequality and deprivation in democratic India should invariably be addressed in a participative, holistic manner reflecting the letter and spirit of the provisions
Table 4: NER States: Average Annual Growth Rates Required to Reach India’s Per Capita GDP Level in 2019-20
State Growth Rate of GSDP Growth Rate of Per Capita GSDP
2007-12 2012-17 2017-20 2007-20 2007-12 2012-17 2017-20 2007-20
Arunachal 8.751 1.90 14.25 11.18 7.47 10.64 13.10 9.93
Pradesh
Assam 10.00 16.00 20.25 14.75 8.61 14.63 18.98 13.39
Manipur 10.75 13.25 15.75 12.87 9.45 11.98 14.57 11.60
Meghalaya 8.75 11035 14.25 10.96 7.47 10.10 13.11 9.72
Mizoram 9.50 9.50 9.50 9.50 8.22 8.27 8.40 8.27
Nagaland 8.50 8.50 8.50 8.50 7.22 7.28 7.41 7.28
Sikkim 9.00 9.00 9.00 9.00 7.69 7.79 7.92 7.92
Tripura 9.00 9.00 11.50 9.02 6.73 7.78 10.38 7.80
NER 10.00 13.67 16.37 12.95 8.84 12.35 15.16 11.64
India 9.0 9.0 9.0 9.00 7.51 7.67 7.80 7.61
Source: NIPFP estimates
Note: GSDP is at fixed costs at 2006-07 prices
Percent
relating to ‘The Panchayats’ and ‘The Municipalities’ in Parts IX and IXA of the Constitution brought into force by the 73rd and 74th amendments to the Constitution, passed by the Parliament in December 1992 and gazetted in April-May 1993.
This will ensure grassroots development through democracy in a people-oriented and people-centric manner, with community supervision and people’s control over the provision of basic services and public goods. Such assured access to entitlements is the surest path to poverty eradication, especially when livelihood sustenance is dependent on sustained and sustainable development initiatives at the village and mohalla level.1
Inclusive and sustainable programmes, and schemes through a participative process of planning and implementation call for substantial and concerted capacity building of Panchayati Raj and other institutions of local self-government as well as effective communitization. Such capacity building, of both the elected representatives (with special emphasis on SC/ST and women) as also of administrative and technical officials, should focus on all dimensions of poverty eradication including
·The Institutional Development perspective;
The Human Development perspective; and
The Participatory Development perspective.
The need for a thorough and comprehensive study of the profile of poverty in the North East is emphasized to lay the ground for an effective time-bound strategy of eradicating poverty. Such a survey must capture the multiple deprivations of the people of the North East, including the facets of
Economic Poverty (EP);
Nutritional Poverty (NP);
Human Poverty (HP); and
Basic Amenities Poverty (BAP),
which are inter-related but distinct, with the conviction that an in-depth analysis on these dimensions can alone help to understand the living conditions of the poor.2
A five-fold programme of development perspectives for the eradication of poverty in NER is elaborated below –
1. Economic Development Perspectives (EDP) 2. Institutional Development Perspectives (IDP) 3. Participatory Development Perspectives (PDP) 4. Human Resource Development Perspectives (HRDP) 5. Infrastructure Development Perspectives (Infr. DP)3
1 see volume II- Chapter III Poverty Eradication in North East.
2 see volume II- Chapter III Poverty Eradication in North East.
3 See volume II- Chapter III Poverty Eradication in North East.
(d). Maximising Self-governance
Maximising self-governance for the people and building capacity in people and institutions to achieve it in all the areas in the NER is extremely important not only for the political and economic empowerment of the people to determine their own destiny but also to create a sense of pride and belonging through participation in the development strategy. Sustainable peace and prosperity in the NER is possible only when people participate actively in political and economic decisions. Empowerment of the people comes from their active participation in government and control over resources, to determine resource allocation to various public services and determine the developmental strategy. Devolution of power to villages is necessary for participatory governance and economic progress. In areas covered under Parts IX and IX-A of the Constitution, the Panchayati Raj institutions need to be strengthened. However, large parts of the region are covered under Schedule VI of the Constitution and in these areas, village development councils will have to be activated and evolved to undertake grassroots planning. The State of Nagaland is covered under Article 371-A of the Constitution and the communitization process prevailing in the State should be developed to undertake developmental activities. Indeed, rejuvenation of institutions for such planning should be done in harmony with the traditional institutions in the region.
Active participation of people in the political processes and in grassroots planning can bring about the desired transformation of the region by helping to establish peace and set in motion the wheels of progress towards prosperity. The planning process will have to build upwards from the level of villages and wards with active participation of people. The selection of various projects and their prioritisation, adaptation of Central and State schemes to meet the priorities of the people, ensuring untied funds for implementation, and compilation of an information system required for planning and creation of a system of social accountability would empower people to determine their own economic destiny.
An equally important component of Vision 2020 is the establishment of peace and harmony.
Security of life and property is essential for the happiness of the people. Besides, this is an important precondition for prosperity as it contributes to creating an investment climate in the region. There is a strong perception that the region is infested with insurgency. While much of the perception may not be accurate – large parts of the region are as peaceful as anywhere else in the country – it is necessary to deal with the issue of insurgency where it exists in a spirit of accommodation, pluralism and sub-nationalism.
(e). Harnessing Resources for the Benefit of the People
The vision of prosperity for the people requires participatory development by harnessing the resources of the region. The region is rich in resources, including natural resources such as land, water, minerals, forests and of course, people. It is also important to utilise the savings of the people which are deposited in financial institutions for investment in the region. The people would like to see the large river systems converted into a source of prosperity. Mineral wealth can be used to create opportunities to increase employment and income. They would like to harness the vast hydroelectric energy potential and use the comparative advantage to expand economic activities in
the region. They would like to see that the global public goods they provide through the vast forest cover recognised. They would like to overcome their saving-investment deficit by increasing the credit-deposit ratio through the generation of economic activity in the region.
Participatory development in agriculture will have to adopt a different approach in the hills and the plains. Tribal populations in the hills have practiced shifting (jhum) cultivation for generations.
Indeed the shifting cultivation, when it started had a cycle long enough to recoup the soil fertility, but with the population pressure on land, the shifting cycle has got considerably reduced with enormous environmental damage. Although some people believe that this traditional system should continue as the tribals are comfortable with it, from the viewpoint of preserving forest cover increasing productivity, and improving the incomes and living conditions of the tribal population, it is necessary to gradually demonstrate the benefits of moving to settled cultivation. The progression from jhum to settled cultivation, particularly in horticultural crops, organic farming and smallholder plantations through proper extension services, could increase income levels in their own setting in a sustainable manner. In the short-run, however, until the tribals are weaned away, it may be necessary to minimize the damage of jhumming through measures such as ‘contour building’, growing pulses, and the use of improved seeds. In contrast, in the plains, the strategy would be to enhance land productivity by increasing crop intensity, making better use of water resources and a balanced use of organic manures and chemical fertilizers to make up for deficiencies in the soil. Using the resources of the region for development will strengthen backward linkages. A manufacturing sector based on these resources, particularly agro-based manufacturing, would help create productive employment opportunities. The enormous hydroelectric power potential and mineral wealth in the region could be tapped to create comparative advantage for private sector participation in manufacturing activity.
(f). Building Capacity in People and Institutions
An important component of the people’s Vision 2020 is to achieve a high level of human development. Raising the quality of education and health is as much a goal in itself as it is a means to enrich the quality of life for people, and expand their life choices.
An important aspect of human development is building capacities of the population, through raising the quality of and access to health and education. The ability of the region to harness resources for sustainable development also requires significant private initiative and investment, which in turn depends on the availability of a skilled workforce. A development strategy based on the resources of the region will occur simultaneously with the emergence of a group of strong, indigenous entrepreneurs, which in turn calls for an enhancement of the skill levels.
An important factor constraining economic progress in the region is the poor capacity of both public and market institutions. Responsive governance is possible only when institutions have the capacity to undertake governance and developmental functions efficiently. such planning requires capacity building right from the village level. It is necessary to facilitate such planning by creating district planning agencies and developing capacity in them to coordinate and implement plans right from the village level. There is an urgent need to clarify the roles of different institutions including
the roles of the NEC and the MDONER. The NEC should be evolved as a professional planning agency.
Capacity development is as important for market institutions as it is for government institutions. Most of the economic activities in the region are government-dependent and, as very high proportions of the resources of the States in the region come from Central transfers, development has been transfer-dependent. This has made the NER economy dormant and the markets for factors and products inactive. Often, the non-existence of markets in the region is seen
Capacity development is as important for market institutions as it is for government institutions. Most of the economic activities in the region are government-dependent and, as very high proportions of the resources of the States in the region come from Central transfers, development has been transfer-dependent. This has made the NER economy dormant and the markets for factors and products inactive. Often, the non-existence of markets in the region is seen