68 yrs on, Assam looks to revive financial fortune

Guwahati: From being one of the most prosperous states of the country post-Independence, to one of its poorest, Assam has been on a roller-coaster ride for 68 years.

However, as the country celebrates its 68th Independence Day, the state, with a prudent financial plan in place, has set itself a growth rate of 6.88%, above the national projection.

In 1950-51, Assam had an enviable per capita income of 4% above the national average. With floods, infiltration and militancy wreaking havoc, its per capita income dropped to 41% below the national average in 1998-99.

Said the Planning Commission, "What is more alarming is that the gap (between the state and national per capita income) is growing. Between 1980 and 1990, per capita income (at 1980-81 prices) grew by 20% in Assam, compared to 40% for India. Between 1980 and 1998, per capita income in Assam grew by 10%, compared to 39% for India."

For almost three decades, between 1951 and 1979, all was well with the state's finances as its economy grew at more or less the same rate as the rest of the country.

A report of the Planning Commission states, "Assam's per capita income fell due to a higher rate of population growth caused by immigration. Over the period, Assam's population grew at an average rate of around 4% per year. The widening disparity since 1980-81 is, however, due to slower growth of its economy. While the Indian economy grew at 6% between 1981 and 2000, Assam's GDP grew at 3.3%. While the growth rate of the Indian economy accelerated in the 1990s, Assam's economy decelerated."

There was a fall in the growth rate of electricity, gas and water supply and in the construction sector. Capital expenditure for development also fell and these resulted in fewer job opportunities and rising unemployment.

"Assam is the only major state in India that showed increasing rural poverty between 1957 and 1994," the commission report said.

It has identified small agriculture operational landholding size and agriculture development, floods and erosion, infiltration from Bangladesh and militancy as the causes for the downturn.

"Unless extortion by various insurgent groups is brought under control, industrial growth is unlikely to accelerate. Assam is a complex state with huge ethnic diversity, Bangladeshi immigrants and an educated middle-class frustrated by poor economic development," the commission suggested.

Then there was the six-year-long anti-foreigners movement which stalled all development activities in the state. The post-Assam Accord period wasn't much better. The Planning Commission, quoting data over a 15-year period, from 1984-85 to 1999, said the state recognizes the "failure of revenue receipts to meet...the rapidly growing expenditure commitments, particularly expenditure on salaries, wages, allowances and pensions".

There were heavy losses from negligible returns on capital expenditure on projects and investments in public-sector undertakings, declining buoyancy of state tax revenues and the consequent rising costs of public debt and higher borrowings.

The Economic Survey of Assam, 2013-14, states, "The fiscal reform measures adopted by the state started yielding favourable results since 2005-06 and moved with revenue and fiscal surplus during the period from 2005-06 to 2008-09 and subsequent years of 2010-11, 2011-12 and 2012-13.

Chief minister Tarun Gogoi is ready to scale new heights. While his rivals criticize him for the growing debt burden, which stands at Rs 27,248.16 crore, Gogoi sees this more as a device which will protect the government of cost escalation a decade later.

"Gujarat's debt burden is Rs 1.5 lakh crore and ours is just Rs 27,248 crore. I ask my officers to go for more loans because a loan taken today will protect me from rising costs 10 years later," Gogoi said.