Assam - Economy
The state is well known for Assam tea and Assam silk. The first ever oil well in Asia was penetrated here. Assam accounts for about half the tea production of the country. Assam accounts for 99 per cent of the muga silk production in the world. Uunlike the mulberry silk that is bleached and dyed, muga silk appears like spun gold. More than 5 lakh families work at eri silk, while about 20,000 families work in the muga silk industry and about 25,000 families are engaged in mulberry silk production.
Assam’s economic development is lagging behind that of the rest of the country – and the gapis increasing. At Independence, Assam’s per capita income was only marginally less (a difference of 4 percent) than that of the average for the country. In 1998 the average per capita income for the country was over 1.8 times that of Assam. The relative stagnancy in the growth of income is attributable in turn to the inability of each of the component sectors to grow at rates that would allow the State to reach the levels attained by the rest of the country.
Assam is today the most industrialised state of the North East, accounting for nearly 70 percent of industry in the region. Although tea, coal and oil continue to be dominant in the economic profile of the State, there has been noteworthy diversification. Agricultural production has continued to grow, and there has been an impressive expansion of basic services and their outreach.
A nascent industrial infrastructure, capable of being built upon, already exists in Assam. There are four oil refineries, several large and medium sector manufacturing industries, including sugar mills, textile spinning units and processing houses, cement plants and fertiliser units. All of this is in addition to the traditional strengths in tea and jute. There are over 800 tea gardens, accounting for about 10 percent of the State’s income, producing approximately 400 million kgs of tea, including 150 million kgs for export.
The partition of India meant a major reorganisation of Assam’s economy. This had serious implications for industry in Assam. The high transportation cost meant that raw materials and inputs from the rest of India cost more, as did the transportation of goods to the rest of India. There are some modern industries but they operate with few backward or forward linkages. Surpluses generated by the industries in Assam have not been invested in the State, especially in the last two decades, marked as they were by periods of strife. Infrastructural problems and the shortage of capital have also meant slow growth in this sector.
Industrial diversification and growth has been constrained by the inadequacy and quality of complementary infrastructure, the geographical isolation of the region, and the lack of well developed markets. There are few traditions of indigenous entrepreneurship, and the tentativeness of private investment from outside the State has necessitated a major, if not always efficient, role for the State. The agriculture sector has not grown at a rate comparable to that of the rest of the country. The overall growth rate since the 1980s has been a little over 2 percent, not sufficient to generate surpluses for investment, or create purchasing power in the rural sector to provide a market for local industries.
The inability to build on the promise afforded by the horticulture sector is largely attributable to the deficiencies in complementary investments, in storage, in rural transportation and in market facilities. For the same reasons, fisheries, poultry farming and dairy are yet to acquire the momentum required to raise incomes substantially and sustainably. Post-1997, timber processing and the related downstream industries have suffered setbacks, and economic activity, and consequently income and employment, are at levels much lower than even a decade ago.
In absolute terms, the number of poor people in the State increased from 7.8 million in 1983 to 9.5 million in 1999-2000. 36.09 percent of the State’s population continue to live below the poverty line, a figure appreciably above the national average of 26.10 percent.
At Independence, the State of Assam inherited an economy that served largely colonial interests. It had a modicum of industry and relatively underdeveloped infrastructure, the latter largely catering to the interests of tea and other extractive industries. Since Independence there has been considerable development in the State. Yet, Assam has levels and rates of growth of income below the average for the country. Of concern is the fact that the gap is widening, a trend that needs to be corrected urgently. Although there have been periods of encouraging growth, by and large the growth rate of NSDP has not kept pace with that of the country. This is a trend particularly perceptible since the early 1970s, and accentuated in recent years.
In 1950-51 Assam’s per capita income was 4.1 percent higher than the average for the country. By 1980-81 Assam’s per capita income was 27 percent lower than the national average. By 1998-99 the gap had widened to 45.5 percent. Significantly, with the commencement of the process of liberalisation, and the concomitant process of modifying the role of the Government, the gap has appreciably widened.
There is also inter-district inequity. The per capita income of the district with the highest income is more than three times that of the district with the lowest per capita income. In 1994-95, seven districts accounted for nearly half of the State Domestic Product the remaining 16 contributed the other half. The seven districts with the lowest per capita income accounted for only a seventh of the State Domestic Product. Kamrup district contributed almost a fifth of the State’s GDP originating in the tertiary sector, and over a sixth of State’s GDP in the secondary sector. At the other end of the scale, the North Cachar Hills district contributed 1 percent of the State’s GDP in the secondary sector, and about 1.5 percent in the primary and tertiary sectors.
Most farmers work on small and marginal farms, and the average size of holdings has been falling. The small size of farms, traditional farming methods combined with low levels of mechanisation are significant factors accounting for the low productivity. While the total production of food grains and other crops has recorded increases in the last fifty years, the per capita food grain production has shown a decline. This has implications for food security, in particular for vulnerable and disadvantaged sections. Despite the fact that yield rates of the principal crops have been increasing since Independence, these are still below the average yield rates of the country and significantly below the yield rates of high performing States.
A number of factors constrain the attainment of higher productivities. The shift from community farming, largely subsistence oriented systems to modern, technologically advanced and market oriented agriculture has taken place slowly, and is uneven in its spread. Modern agriculture, marked by improved agricultural practices, multiple cropping and high yields, is just beginning to take off in Assam. The effective non-availability of credit, especially to marginal farmers, is another important factor. Most importantly, the uncertainties and vagaries of nature continue to beset agriculture; the regular occurrence of floods and natural calamities has been an extremely important factor.
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