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1 Strategy for Assam’s Development


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1

Strategy for Assam’s Development






1.1 State of Assam’s Development – The Point of Departure


  1. The most striking fact of Assam’s economic development is that it is falling behind the rest of the country. In 1950-51, per capita income in Assam was 4 per cent above national average. In 1998-99, it was 41 per cent below the national average at current prices and 45 per cent below the national average at 1980-81 prices. See Table 1.1.

Table 1.1: Per Capita Income (at constant 1980-81 prices)

Year

1950-51

1960-61

1970-71

1980-81

1990-91

1995-96

1996-97

1998-99

India

1127

1350

1520

1630

2222

2608

2761

3132

Assam

1173

1140

1221

1284

1524

1606

1628

1708

Difference

46(+)

210(-)

299(-)

346(-)

698(-)

1002(-)

1133(-)

1424(-)

Assam/India

1.04

0.84

0.80

0.79

0.69

0.62

0.59

0.55

Source: Government of Assam Vision Assam 2025

  1. What is even more alarming is that the gap is growing (See Figure 1.1). Between 1980 and 1990, per capita income at 1980-81 prices grew by 20 per cent in Assam compared with 40 per cent for all India. Between 1980 and 1998 per capita income in Assam grew by 10 per cent compared with 39 per cent for all India.

  2. During 1951-79 Assam’s economy grew at more or less the same rate as the rest of India. Yet, Assam’s per capita income fell due to higher rate of population growth in Assam due to immigration. Over the period Assam’s population grew at an average rate of around 4 per cent per year. The widening disparity since 1980-81 is, however, due to slower growth of its economy. While the Indian economy grew at 6 per cent over 1981 to 2000, Assam State GDP grew only at 3.3 per cent (See Table 1.2). While the growth rate of the Indian economy accelerated in the 1990s over 1980s, Assam’s economy decelerated in the 1990s.

  3. The poor growth performance is in all sectors as can also be seen in Table 1.2. Agriculture has grown only at 2.1 per cent per year over the 1980s and 1990s and has slowed down in the 1990s to 1.6 per cent. Manufacturing growth rate in the 1990s was higher at 3.4 per cent compared to 2.4 per cent in the 1980s, while services growth has decreased marginally from 4.9 per cent to 4.5 per cent.



Figure 1.1: Comparison of Per Capita Net NNP/NSDP

Table 1.2: State GDP at Factor Cost by Industry of Origin at Constant (1980-81) Prices

Sector

Average Annual Growth Rates

Per cent of total SGDP




1981-82 to 1990-91

1990-91 to 1999-2000

1981-82 to 1900-00

1981-82

1990-91

1999-00

Agriculture, forestry, fishing and logging

2.6

1.6

2.1

41.6

38.3

33.5

Mining & Quarrying

0.1

2.0

1.0

5.2

3.8

3.4

Manufacturing

2.4

3.4

2.9

7.7

6.9

7.1

Construction

3.7

2.4

3.1

4.3

4.3

4.1

Electricity, Gas and Water Supply

9.4

0.9

5.0

1.2

1.9

1.6

Trade, Transport, Banking and Other Services

4.9

4.5

4.7

40.1

44.7

50.3

Gross SDP

3.6

3.1

3.3

100.0

100.0

100.0

The fall in the growth rate of electricity, gas and water supply was from 9.4 per cent per year in 1980s to 0.9 per cent in the 1990s. Construction sector has also slowed down in the 1990s. Many incomplete projects have made investment less effective. At the same time capital expenditure for development fell from 3 per cent of NSDP in 1980-81 to 1.5 per cent in 1997-98. The resulting poor growth meant fewer new jobs with rising educated unemployment. Governments in the past have followed the easy way out to increase government and public sector employment. Thus, labour-employing activities under public sector like electricity and water supply grew rapidly in the 1980s. The situation today is such that 90 per cent of Assam’s tax and non-tax revenue inclusive of its share in central taxes and non-plan grants in 1997-98 went for maintaining the government servant, past and present, that is, for wages, salaries and pensions (NIPFP (1998), State Fiscal Studies: Assam P.40). Very little is left to do what the government is supposed to exist for. While most governments are more or less government of the employees, for the employees and by the employees, Assam’s has truly become one. See Box A.

Box A: Government of the employees, for the employees and by the employees

Rapid growth of government and public sector employment has led to a dead end. The Assam government spends 90 per cent of its budget on salaries. Very little is left to provide services to the people or to invest in development.

To what extent, this has become a government for the employees can be seen from the fact that the government spends for reimbursement of medical expenses of its 4 lakh employees and their 16 lakh dependents more than that it spends for the remaining 250 lakh citizens of Assam for providing medical services.

The bloated government has also led to a fiscal crisis. The government has a monthly over draft of Rs 200 crore. It cannot mobilize even 10 per cent of the funds needed to benefit from many centrally sponsored development schemes with a 90 per cent grant component. It is unable to complete projects that go on forever delaying completion and increasing costs.

Downsizing government is the most pressing imperative if Assam is to develop faster.




  1. It is not that Assam has made compensatory progress in other indicators of human welfare. Its progress in education and health shown in Table 1.3 and 1.4 is just about average for the country. The literacy rate as per the provisional tables of 2001 census shows a decline in literacy compared to the NSS data for 1997 that is not credible.

Table 1.3: Literacy Rate (Per cent)

 

Assam

India

 

Total

Male

Female

Total

Male

Female

1981

NA

NA

NA

43.56

56.37

29.75

1991

53.42

62.34

43.7

52.11

63.86

39.42

1997@

75

82

66

62

73

50

2001*

64

72

56

65

76

54

Source: Economic Survey Various Issues

@ National Sample Survey, 53rd round, Jan – Dec 1997; * Census of India 2001 (2001), Provisional Population Totals Paper 1 of 2001.



Table 1.4: Gross Enrolment Ratio (Per cent)




Primary (I-V)

Upper Primary (VI-VIII)

 

Assam

India

Assam

India

1997-98

109.1

89.7

69.3

58.5

1998-99

109.63

92.14

61.12

56.8

Source: Economic Survey Various Issues

  1. The progress in alleviation of poverty is also disturbing (See Tables 1.5 and 1.6). Compared to India, it has higher rural poverty and the decline has been much smaller in Assam. Rural poverty shows a decline only in recent years. Assam is the only major state in India that showed increasing rural poverty over a long period from 1957 to 1994, even though inequality as reflected in Gini coefficient, of consumption expenditure was falling. Urban poverty level has been lower in Assam. However, urban population constitutes only 11 per cent of the total population in Assam compared to 25.7 per cent in the country as per the 1991 census.

Table 1.5: Poverty in Assam (Head Count Ratio in per cent)




Assam

India




Rural

Urban

Total

Rural

Urban

Total

1972-73

58.3

32.1

55.9

55.8

45.0




1986-87

44.3

27.8

42.5

38.8

34.4




1993-94

49.0

10.0

49.6

38.7

30.0

33.5

1999-00



















30 day recall

40-04

7.5

36.1










7 day recall

34.00

6.3

30.6










Source: Government of India (2001), Economic Survey 2000-2001 and www.indiastat.com

Table 1.6: Selected Indicators of Human Development

 

LEB

I.M.R.

Death Rate

Birth Rate




Years (1991-95)

Per ‘000 in 1998

Assam

55.7

78

10.1

27.7

India

60.3

72

9

26.4

Where

LEB is Life expectancy at birth

I.M.R. is infant mortality rate

Source: Economic Survey Various Issues



  1. Assam must grow faster and catch up with the rest of the country. How can Assam grow faster? To understand that we must first look at the reasons for Assam’s poor record of development. We need to understand why a relatively prosperous state has become one of the poorest in the country.
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