Reclaiming a lost world

These new initiatives have stemmed from a general realisation that the situation in the Northeast was fast deteriorating and that economic activity had stagnated. There were no new avenues, even forself-employment, for the youth graduating from general and technical institutions. This led to unrest and agitations resulting in alienation and, ultimately, to insurgency.

Foreign powers, inimical to India, have exploited this situation by encouraging militancy. To complete the vicious cycle, insurgency has generated a fear psychosis among potential entrepreneurs discouraging the further infusion of investible funds in the region. There has even been some flight of capital. Many corporate bodies and commercial firms have relocated their personnel in such a way that apart from a skeletal staff, major activity has been shifted to places like Siliguri.

Even under normal circumstances, private investors avoid entering into new ventures or expanding old ones unless they are sure of very high profit margins or require the raw material or the semi-finished goods available in the region for industries elsewhere. Traders arrive because they get a market where consumer goods can be sold at very high prices. Publicfinancial institutions, however, have acquired a negative reputation because their personnel hardly ever interact with the people.

Banks behave in the same way as reflected by their low credit-deposit ratios. According to the latest estimates by the Northeastern Institute of Bank Management, the credit-deposit ratio of scheduled commercial banks at the end of June 1997, was only 30.82 per cent for the NE region against the all-India average of 55.70 per cent. The per capita disbursement of credit of all financial institutions during the five years ending March 1997 was only Rs 364 for the Northeast as against the all-India figure of Rs 2,587.

Added to this is the peculiar psyche which tends to resist private investors who are considered to be veritable bloodhounds attracted only by the abundant local resources. There are very valid reasons for this. Ever since industry and trade, in modern parlance, came into existence in the 19th century, the British rulers always treated this area as a colony. Even theRailways and the riverine transport were planned to subserve their colonial goals. The first-generation industrialists who replaced the British entrepreneurs also started behaving the same way. The large industries, which are few apart from tea, oil and plywood, transfer most of their earnings for investment outside the state. Local people, therefore, do not believe that private entrepreneurs help to create wealth and generate employment. This is also because most entrepreneurs employ their own relatives.

In a state like Gujarat or Maharashtra, entrepreneurs are given red carpet treatment. Nothing of the sort happens here and although government agencies pretend to service prospective investors very little business is done. They have a quot;single windowquot; clearance in name, but entrepreneurs have to surmount numerous bureaucratic hurdles of the horrible licence raj. There is a peculiar reason for this. Government offices seem to proliferate in this region because of a lack of other avenues of employment. Notsurprisingly, potential investors often get fed up mid-way and give up.

The atmosphere prevailing in organisations like Oil India and ONGC has also contributed to this situation. These organisations create secure jobs in wage islands amidst a sea of poverty because they can afford to sweep away their inefficiencies and profligacies under the carpet of artificially high administered prices and profits. People hanker for these jobs as a result of which none is equipped to cope with the risks entailed in setting up viable units.

Not surprisingly, no big industrial unit has come up in the region over the last 20 years apart from the Prag Bossimi Synthetics and the Numaligarh Refinery. The Assam Gas Cracker Project at Tengakhat was expected to act as a catalyst for industrial regeneration and the development of Assam and the entire region. The project, however, has been delayed by more than four years despite having been cleared by the Union Cabinet.

The one bright spot is agriculture. This sector has notexperienced any stagnation in the recent past although growth has been slow. In tea, Assam8217;s most important plantation activity, although insurgency has affected the companies owning the units and the executives who run the gardens, plantation labour has not been affected. Production has increased and profits have gone up swayed by a buoyant market where prices have jumped by more than 50 per cent over the past two years.

It is against this scenario that the new initiative from the Centre has to be viewed. If more Plan funds are allocated to fill the gap left by an unwilling private sector and recalcitrant public financial institutions and banks, then it might be possible to kickstart economic regeneration. Once this process is set in motion along with measures to curb insurgency, the entire atmosphere could change.

What would help is the concern and sympathy of political leaders. They have to provide the necessary psychological push to this project. In the past, the general response was both apatheticand patronising. K.D. Malaviya, a former Union petroleum minister, established the oil refinery based on Assam crude at Barauni, not Assam, lending credence to the popular view that the region is being used as an enclave economy by the Centre. History has proved that movements that rose because of refineries grew in time to become large, state-wide agitations. Let us hope that all this will change and a new era of prosperity will dawn in the Northeast.

The writer is a former chief secretary to the Assam government