PSPD in English Archive 2008-11-18   2740

[Colum on Asia]Economic Development of India and Regional Disparities

Economic Development of India and Regional Disparities


The gradual emergence of India as an economic power in the world has been a subject of intense discussion and scholarly debate as there still remains a lot of unanswered question about the impact of this development on the people as a whole. Not many economists seem to be prepared to buy the idea that India’s economic development is all-encompassing and that it provides sufficient economic security to the citizens, especially the poor and the marginalized. There is a general acceptance of the view that “India is a paradox,” or probably “a political and economic paradox,” as described by Lloyd I Rudolph and Susanne Hoeber Rudolph in their voluminous scholarly compilation titled, In Pursuit of Lakshmi. This paradox is further projected as a rich-poor nation with a weak-strong state.

If the paradox of Indian policy is the weak-strong state, the paradox of India’s economy is its rich-poor quality. For instance it is regarded as one of the poorest countries, yet in a world of 154 states it ranks 15th in industrial production and twelfth in GNP. Often India is compared with rich Northern industrial states for its industrial strength and also its technical and scientific capacity (ranked third in the world). Only the United States and Russia are said to have more scientists and engineers. But the flip-side of this is the poor India, which places it with the ranks of the developing countries of the South. More than 50 per cent of India’s population lives below the poverty index, which incidentally has been the case since the 1950s. Statistical evidence shows that over 60 per cent of the population continued to remain embedded as the agricultural work force till the early eighties. But yet again, there appears to have been a marked improvement in the overall social, cultural and technological conditions of rural society and village life. This is complemented by an apparent decline in fertility rates (there is reduced mortality rates and higher life expectancy). Between 1971 to 1981 the population growth rate is said to have decreased “almost imperceptibly,” from 2.48 to 2. 475 per cent per year, instead of declining to an anticipated 1.9 per cent.

But yet again the feeling of well being is not representative of all the nooks and corners of the country and therefore in all fairness the Indian paradox would seem to be incomplete without extending it to the isolated and “neglected” North Eastern region. This highly diverse and culturally rich region of India has been reeling under the pressures of a very slow, almost negligible development process, owing to several factors, from the process of its formation to its location in India’s geographical and geopolitical map. North East India is a classical case of regional planning in India gone awfully wrong resulting in sharp regional differences in the levels of economic development. These are factors, coupled with the persistence of archaic social relations and economic structures, which contributed to the growth of insurgencies, militancy since the formation (1947 to 1970s) of most of the seven states that make up the North Eastern, besides bloody ethnic conflicts and cross border tensions with neighbouring countries. All in all this has turned North East India into a melting pot of social unrest and unending complexities.

The Indian state has tried to respond to these complexities, most of the responses looked like lopsided modernization plans imposed from the top, in different ways. The latest in the series of plans to “integrate the region,” with India’s economy is through a process called “Look East Asia,” policy, which is more about utilizing the proximity of the region to South East Asian countries and opening it to the international market in Asia. This plan which was conceptualized almost two decades ago is the focal policy of the centrist Congress party led Government in India to develop North East India. How it will be done is a long drawn question that has posed different challenges to the state and the elite, business class which are looking to derive maximum benefits from this initiative. In other words the North East chapter in India’s political and economic paradox has no immediate answers or so it seems. 

Colonial economic development and regional disparities:

The policy of divide and rule is not alien to the Indian audience or for those who have studied the history of British colonial rule in India. This policy, was not just applied to create religious frictions between two large religious groups like the Hindus and the Muslims, but it also extended its arms to the North East India, to keep the indigenous people of this region far from the “mainland,” for they were either considered “too dangerous,” or people who lived in the jungles. This discrimination of the people who lived either in the hinterland or far from the main towns and cities is seen by many historians and political scientists as the starting point of a socio-economic regional imbalance, resulting in variations that would go on to become what we know today as secessionism or movement for freedom and self-determinations by indigenous groups from as far as Kashmir to North East India.  

North East India as a region:

The role of the states in the process of planning in extremely important in India as it forms the basic character of the Indian federation. A peep into the history of the region will reveal that its association with India was some sort of a geo-political accident which primarily was centered around international considerations.

This region, which was once tagged to the “north east frontier of Bengal,” comprises of the seven states of Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland and Tripura. Sikkim has been recently added to the North East as the eighth state of the region.

As is the case with all of India the North East too boasts of an economic structure that is multistructural (plural) in character though it is still a backward region with practically no or very little surplus-generating economic activity. Development in the rest of India, which is commonly termed as the “plain belts,” differs from that of the North East, except the Bhramaputra valley (Assam) which has close proximity with “mainland” India. Most of the states of north east India are underdeveloped agrarian societies with weak industrial sectors and inflated service sectors. North East India contributes only 1% of the whole of India’s manufacturing output. Though people are mostly dependent on the traditional slash-and-burn (jhum cultivation) method of agriculture, this method is steadily destroying forests and washing out soil on the highlands. But jhum is a traditional practice and there is an intense debate in different circles on whether it should be continued or not.

The problems of Regionalization:

Regionalization has been another problem, arising out of ill-planned regional planning process. Unlike the West where regional planning has different connotations, like for instance it is understood in a differential context, where selected ‘backward areas,” have been the focus of intensive developmental planning, the same yardstick cannot be applied to India’s North East where regionalization is closely associated with integration and differentiation. In India the planning process invariably depends on a homogenizing developmental model notwithstanding the diverse and multinational characteristic of the region. Further the problem of regionalization is integrally connected with the problem of location of industries, the key to industrialization as well as several intra-regional tensions.

Is has been often seen in India, since independence that ethnicity and economics have not been very well adjusted owing to a lopsided regional planning process and this in turn has created a politically charged up atmosphere. Today North East has been made to appear like an eye-sore not so much for its own fault, but for what has been thrust on it since history. Most of the region which shares more than 98 per of its borders with neighbouring countries (Bangladesh, Burma (Myanmar), China and Bhutan), with historical, cultural and geographical and ancestral links to South East Asian countries, has resisted integration with the rest of India. The history of forceful annexation and neglect of its economic growth is what fueled the conflicts and insurgencies that has spanned over half a century. Today’s The Central Government in New Delhi is up against almost 40 different separatist armed groups in the region. The region has been militarized beyond repair perhaps and today use of draconian laws like the Armed Forces Special Powers’ Act (AFSA) in Manipur and Assam has fuelled the crisis further. The law has been misused by the army with even a junior ranked officer allowed to shoot anyone merely on the basis of suspicion.  This has led to violent public uprisings which is what has prompted a long standing quest in New Delhi to integrate this region with “mainstream” India.

The Look East Asia Policy and North East India

From 1992, India has been pursuing successfully a ‘Look-East’ policy to enhance economic cooperation with its eastern neighbours. There has also been a political and strategic shift in India’s foreign policy which for long focused on the western developed countries. The Look-East policy which is a convergence between foreign and external trade policies has been quite successful. However, considering the historical and cultural links as well the proximity of the North East India with South East Asian countries, a conscious attempt is being made by India Government and policy planners to use the Look-East policy, as an instrument to develop the troubled, north-eastern States. East, North-East and South-East Asia now account for over a quarter of India’s total global exports and imports.
A number of scholars and writers on India’s recent push for development of trade links with argue that the Look East Policy has to look North-East first. Notwithstanding the fact that one-third of India’s trade volume is with South-East Asia but the impact on the country’s North-East has been negligible. Given the fact that the North East has been looked as a “natural bridge,” between India and South East Asia, development planners are excited about the future of this region, which though has staggered behind the rest of the country, but which also has the potential to convert its rich natural resources, like gas, oil, minerals, hydro-electricity and horticulture into gainful economic activities.


India’s economy is no doubt getting integrated with the world, especially after the country’s willing acceptance to liberalize its policies and welcome a more open market economy. This has no doubt generated a good feel for the people of the country, who seem to believe that the economic turnaround would change their lives for the better. But what must be ensured is that the benefits of the economic growth accrue to each and every member of the society. This case even more applicable to India’s North East which has been at the bottom of the growth table in the country mainly owing to ethnic and religious insulation of that state that make up this region. North East has been a case of weakness of the economic nexus between the developed and the backward regions. Development initiatives in the region have been somewhat lopsided, which primarily aims at the “modern way of life” rather than focusing on the social ability to produce, which scholars of economic studies argue will, “enhance the needs for conspicuous consumption.” What is also important to consider is that while a firm commitment is being built to integrate to the national economic goals, it should not come at the cost of the fragile ecology of the region or by displacing indigenous communities from their land. This would fuel another crisis and help reignite the flames of militancy which has plagued the region over five decades. Planning has to start from below, involving people so that it is meaningful to the development needs of the region as part of the national economy. Finally North East India must be looked at not as the periphery of India, but as the centre of a thriving and integrated economic space.

Bidhayak Das (Mains, 2008, SungKongHoe University)


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