Industrial Policy in North East India: Peripheral Realities in Post-Liberalization Period.
| Author | Bhattacharjee, J.P. |
Introduction
The economy of North East India (NEI) in the post-colonial period was primarily identified with plantation and extraction sectors with well-developed activities in tea and oil in the plains of Assam, while across the hills and in many remote plain areas, the practicing traditional subsistence economies like shifting cultivation and indigenous handicraft industry thrived in isolation. Neither tea nor oil was part of the region's traditional economies. They were created in Assam by the colonial capitalists in the years 1837 and 1899 respectively for surplus extraction. Thus, a 'modern-traditional binary' (Sanyal, 2007) in industrial sector became predominant in NEI within a 'surplus-subsistence' frame. In the postcolonial period, the pattern of capital inflow for industrial activities in Assam in both oil and tea was from outside by the Indian big bourgeoisie (Misra, 1980, Goswami, 1981). Assam was the key supplier of resources for various 'core' industrial development of India, and was typically a 'peripheral' space of exportable surplus for India's 'core' sector, like hydrocarbon. Such 'siphoning capitalism' and its primitive accumulation had disrupted the vast indigenous economies, and the home markets in the region lost their capacity to diversify along with postcolonial India's industrial development (Bagchi, 2010). No significant policy was imagined by the post-colonial Indian State to reverse such scenario of core-periphery with an industrial base in Assam. On the other hand, the traditional economies and industries across the hills and plains of NEI survived in isolation without any policy for market linkage.
In the post-liberalization period, with new knowledge on market and geography, NEI started to gain policy attention. Accordingly with the idea of industrial development and capital formation in NEI, a state financial institution called North Eastern Development Finance Corporation (NEDFi) was created in 1995 under the Companies Act 1956. NEDFi was the agent for financial capital towards medium, small, micro and even large enterprises in the region. This was subsequently followed by the first 'North East Industrial Policy' in 1997 to address the 'chronic industrial underdevelopment' in the region. The policy aimed to create industries in NEI by supporting private investors. This was further revised a decade later in 2007 as North Eastern Industrial and Investment Promotion Policy (NEIIP) for another ten years with renewed focus. This has been revised again in 2017 as North East Industrial Development Scheme. The series of these policies were primarily to ensure industrial development in NEI and restore the imbalance created in the past. Unfortunately, the existing scholarly literature on India's industrial development and its policy has paid little attention to NEI, which is perceived as inconsequential. Thus, the outcome of post-liberalized industrial policies in the region is also not in the dominant body of knowledge. But given the current development policy attention on NEI, it is paramount to understand the strength and weakness of region's industrial capacity, and the objective of the paper therefore is to fill this gap through an empirical research. It has quantified the impacts of industrial policies in all the states of NEI using extensive data sources such as latest Economic Census, National Accounts, Annual Survey of Industries, unincorporated non-agricultural sector survey of NSSO to cover both formal (registered) and informal (unregistered) industries in the region. Lastly the paper also explores some policy suggestion for sustainable industrial development in NEI.
'North East' in India's Manufacturing Industry
The post-colonial state planning model made a conscious effort to 'preserve' and 'protect' the traditional practices in NEI through constitutional arrangement of Sixth Schedule. Thus, NEI was not imagined as an industrial site, while the efforts and capital for postcolonial state were concentrated primarily in western segments having a historical continuity since the inception of Bombay Plan in 1944. Industrial policies of 1948 and 1956 accordingly promoted various 'core' states and regions at the cost of resource-rich 'peripheral' regions like 'North East'. This resulted in regional disparities, which over time even in liberalization period, became wider with the increasing role of private capital towards those regions which already attained industrial progress through state capital. Thus, with about 37 percent share, western segment dominated India's industry, while its Eastern segment shared merely 3 percent, and North Eastern segment had only 1 percent share (Thomas, 2015). To address such regional disparities in industrial development and also to expand India's industrial base, the state policy in the liberalization period became proactive in industrially backward regions including NET Thus, the first North East Industrial Policy was made in 1997 to promote the role and significance of private capital and enterprises in the region. State assistance up to Rs 15 crore was given in such geographically 'isolated' regions as 'necessary costs' towards developing industrial base. In the absence of region's indigenous capital, infrastructure network and entrepreneurial skills, investment subsidy was offered up to the ceiling of Rs 30 lakhs to locate industries in NEI with tax exemption and transport subsidy to operate for next 10 years. To retain policy continuity, the 'second edition' of industrial policy was announced in 2007 as North East Industrial and Investment Promotion Policy (NEIIP) with much larger state support and ceiling up to Rs 1.5 crores; and its third edition has also been announced as North East Industrial Development Scheme 2017 with a financial outlay of Rs 3000 crores and with ceiling up to Rs 5 crores. To understand the impact of such series of policy initiatives, we have attempted to look at the decadal performance of industrial sector in the region. The estimated data in Table 1 shows that industrial sector in NEI shares about 24 percent of its total economy and construction but not the manufacturing sector is the major contributing area (Table 2).
Manufacturing, the crucial and sustainable component of industrial development, has not made any significant contribution towards industrial development in the region. Its share is about 6 percent of the total economy. Sikkim has contributed the largest share, without which the share remains around 2 percent in region's total economy. The overall manufacturing scenario in India has been discouraging in post-liberalized period, sharing only about 16 percent of the total economy. But as per sixth Economic Census data, the sector still remains major source of employment with about 30 million workers, sharing about 23 percent of country's total workforce (table 5). But in NEI, manufacturing sector employs less than a million people (table 5), sharing only about 15 percent of total workforce of the region, and 2.81 percent of India's workforce in manufacturing sector. The decadal growth rate in manufacturing sector in NEI (table 4) is 5.15, with both its formal and informal sectors growing at about 6 percent. This shows that despite policy measures and State financial incentives, a yawning gap exists and NEI still remain unrepresentative in India's...
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