Economic Profile

UNIT 3 ECONOMIC PROFILE OF THE of the Region

REGION
Structure
3.0 Objectives
3.1 Introduction
3.2 Land and Plantation
3.3 Extraction Economy
3.4 Dominance of Tertiary Sector
3.5 Emergence of Social Classes
3.6 Challenges
3.7 Let Us Sum Up
3.8 References
3.9 Answers to Check Your Progress

3.0 OBJECTIVES
After going through this unit, you will be able to:
 Explain the basic features of economies in Northeast India;
 Underline the significance of land, plantation and mineral resources in the
region; and
 Discuss the major challenges which these economies face.

3.1 INTRODUCTION
Economic profiles of the states of Northeast India impact the politics and
development of the region. Their geographic location and topography shape
them. The eight states of Northeast India have two types of terrains – plains and
hills. The land, service sector, traditional industry, natural resources (forest,
mineral, petrol, coal, limestone, etc.), and tourism are important sectors of the
economy of the region. Among these land, the land has a special significance.
According to Amalendu Guha (1977), all other inputs into Assam were brought
from outside except land. This unit deals with the economic profile of Northeast
India with reference to different sectors of the economy such as land, plantation,
minerals, tertiary sector, challenges, and migration.


Jagpal Singh, Professor of Political Science, School of Social Sciences, INGOU,
Maidan Garhi, New Delhi-110068

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INTRODUCTION
3.2 LAND AND PLANTATION
The land is the source of agriculture, plantation, and natural resources. The nature
of cultivation inland is different in plains and hills regions. The proportion of
plain areas in Assam is more significant than those in other northeast states. In
the hill areas, jhum (slash and burn) cultivation has been the traditional mode of
cultivation. Moreover, jhum cultivation would continue circularly. The main
crops cultivated in Northeast India are jute, fruits, tea, pulses, coconut, potato,
areca nut, rice, wheat, maize, oilseeds, sugarcane, ginger, mesta, spices,
pineapples, banana, papayas.
There is no individual ownership of agricultural land in the hill areas of the
Northeast. It lies with the community. However, in plain areas of the region, both
inhabited by the tribals and non-tribals, there are individually transferable and
inheritable rights inland like in other parts of India. In the tribal areas, allotment
of land for the purpose of cultivation to an individual is made by the village
community through the gaon buda/village head. He works on behalf of the
community, and the land is allotted according to the traditional custom. Violation
of the procedure by the individual allottee can lead to his dispossession of the
land.
The relationship between land and migrant peasants has been an important issue
in the political economy of Northeast India, especially Assam. Based on the
literature, the following pattern emerges about the relationship between land and
peasants. The migration of peasants from East Bengal into Assam had been an
important feature of the land-based economy of the state. The migration of
peasants from the East began in 1891with the encouragement of the British to
cultivate “wastelands” in Assam. The main purpose of encouraging migration
was to raise food production and revenue. The “wastelands” were those types of
land that forest and other common property resources (CPR) the British called
wastelands under the colonial individual ownership. Such forest land, which was
termed “wastelands” as a means of sustenance of the Bodos and Rabha tribes of
Assam. Till the 1930s, the land was in abundance in Assam. But the situation
changed from that time. The growth of the plantation economy from the first half
of the nineteenth century affected food production adversely in the province.
There was a food deficit in the region. This necessitated an increase in food
production in the province. In such a situation, cultivation in the land was carried
out by the migrants from neighbouring districts in East Bengal. The migration of
peasants from East Bengal to Assam happened for two reasons: First, the
impoverishment of farmers due to the nature of the land system, which was a
permanent land settlement.
The Permanent settlement impoverished the peasants in East Bengal, which
forced them to migrate to Assam (Fernandes 2020). Another reason was political.
The Muslim League government in the 1930s, headed by Saidullah, encouraged
migration from Bengal. Although the migration was encouraged apparently under
the Saidullah government’s “grow more food” policy of Saidullah government,
28 its main purpose was to increase of Saidullah/Muslim league among the peasants.
In the 1940s, the demographic structure of Assam changed, with a number of Economic Profile
migrant peasants becoming more than that of the local peasants. In reaction, of the Region
Congress leader Gopinath Bardolai introduced Line System. It demarcated land
occupied by the migrant peasants to prevent them from occupying land beyond
the land system (Fernandes 2021; Guha 1977; Nag 1990).
The plantation economy is also related to the question of land in Northeast India.
The closure of tea trade with China foreclosed the avenues of availability of tea
for England. The British looked for alternative sources of tea. And it was
available inland in Assam (plain and hill areas which were occupied over a
period of time). The British planters invested money to capture land for tea
plantations in Assam. The agents of British trading houses in Calcutta worked on
behalf of their counterparts in London. Plantation economy introduced
monetisation of Assam’s economy. It led to improvement in means of cultivation
in agriculture. Indeed, the bullock card was introduced for the first time. The
British encouraged tea plantation workers from other parts of India, Bihar, UP
and Rajasthan to work in the tea plantation, as they encouraged the peasants from
East Bengal to cultivate land in Assam. Although two economies – plantation and
agriculture were dependent on land, the link between them remained tenuous and
minimal. Changes in the land-related economy did not bring drastic changes
within the society (Guha 1977).

3.3 EXTRACTION ECONOMY

Apart from agriculture and plantation, land in Northeast India is also a source for
extraction of natural resources – forest products such as timber, petroleum, coal.
Although attempts to extract natural resources in the states have been made since
the 1950s, it was since the 1990s that attempts became more persistent. The
Extraction economy in Northeast India was boosted after the introduction of New
Economic Policies, which were extended into the Northeast in the 1990s. During
this period, the central government, some state-level politicians, contractors, and
local business people attempted to extract coal, sandstones, lime, and uranium. It
harmed biodiversity, environmental protection, and health hazards. However, the
extraction of coal was banned by National Green Tribunal (NGT). Plant to set up
Uranium plant at Domiasiat village in the West Khasi Hills District was stalled
due to the protest. The death of some miners in the rat-wholes in Jaiantia Hills
and attack on some social activists by supporters of the miners show the
implications of the extraction economy on the social life in the region (Karlsson
2011).
In Nagaland, the exploitation of minerals did not exist in Nagaland until the
1990s (Fernandes 2020: p.275). The introduction of the New Economic Policies
resulted in the acquisition of land to extract natural resources. Extension of
reforms in the extraction economy made the availability of land necessary for the
extraction of minerals, mining, etc. In Meghalaya, not less 500, 000 acres of land
was needed for mining in the states during 1947-2000; around 585.92 acres of
land was used for mining purposes in Meghalaya. The areas affected by territorial
disputes, e.g. Merapani border region involving Nagaland-Assam territorial 29
INTRODUCTION dispute, are mineral-rich: they can be a revenue source for both states. In Tripura,
the land is acquired for natural gas exploration. It did not have mining until the
beginning of the reform period. In Manipur also exploration is a recent
development (Fernandes 2020: p. 275-276).

3.4 DOMINANCE OF TERTIARY SECTOR

There is limited scope for the development of agriculture and industry due to
topography in the region. In such a situation, the development of the service
sector is more viable in the Northeast (Ashok Pankaj, et.al. 2021). The service
sector, known as the tertiary sector - banking, insurance, transport,
communication, public administration and other services such as health,
education, sanitation, etc, dominate the economy in the Northeast. Indeed, the
tertiary sector has grown faster in the Northeast than other sectors. The study of
Hanjbam’s (2009) of Manipur shows that in 2009, the tertiary sector constituted
more than 50 per cent of the state’s NSDP (Net State Domestic Product). Indeed,
this study categorises Manipur’s economy as “tertiarised” economy. In
comparison to the tertiary, the primary sector - agriculture, forestry, logging,
mining, quarry contributed less than the tertiary sector to individual the state’s
NSDP (Hanjbam 2009). The secondary sector has seen low investment in
Northeast India. Several units in the secondary sector in states in Assam,
Nagaland, Manipur were declared sick since the 1990s (Fernandes 2021,
Hanjbam 2009).
In comparison to two components of the secondary sectors, manufacturing and
construction, in Manipur, the construction sector leads the secondary sector in
Manipur. Different states in the Northeast have traditional industries. However,
these units usually remain sick. They do not have sufficient capital. Several units
have been closed down. In Manipur, LMSI (Large and Medium Industries) are
virtually non-existent (Hanjbam, 2009: pp. 124, 127). The study of Anamika Das
and Dipak K. Mishra (2021) shows that in the Saulkuchi silk cluster in Assam,
both OAEs (Own Account Enterprises) or the self-owned enterprises exist along
with large enterprises. The workers in such enterprises live in poor working and
living conditions. There is no scope of capitalist expansion in such enterprises.
Even the capitalist class in Assam, the Marwaris limit their economic activities to
trade and mercantile operations.

Check Your Progress Exercise 1

Note: i) Use the space below for your answers.

ii) Check your answers with the model answers given at the end of this
unit.
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 1) Discuss the significance of the tertiary sector in the economy of Northeast Economic Profile
India. of the Region

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2) Explain the role of the extraction economy in Northeast India.

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3.5 EMERGENCE OF SOCIAL CLASSES

Different communities in the Northeast had their traditional hierarchy intertwined
in social and economic relations. Traditional social and economic relations have
been impacted since the British period. Migration from East Bengal and other
parts of the country, which continues into the contemporary times, expansion of
educational and other institutions, demographic changes within the communities,
and the state policies in the post-Independence period, including the attention of
the economic reforms of the 1990s have resulted in the rise of new social classes
in Northeast India. The impact of these factors has not been equal in all states
and communities, nor have they seen the even level of rising of new social
classes. The social classes are not exclusively social or economic groups. Their
economic and social characteristics are embedded. These classes can be
identified as entrepreneurs/businesspersons/traders, middle classes (salaried
classes), youth, elite (who have education, economic assets, political power),
peasants, etc. The growth of these classes began during the colonial period with
the encouragement of the colonial authorities to carry out various economic
activities, and it continued in the contemporary period. The growth of new social
classes (especially the middle classes, such as teachers, lawyers, government
employees) took place more in the cities than in the villages. Since urbanisation
is not a dominant feature in the region, the more articulate classes (middle classes
etc.) are concentrated in the cities. Some of them play a leading role in economic,
political and community affairs. As you will read in the units of block 5, these
social classes address various concerns of their respective communities and
organise social movements.
Class differentials among tribals have emerged across states in Northeast India.
Although the land is not private property in the hills of Northeast India, studies
on Arunachal Pradesh show individualisation (individual ownership of land) of
land ownership. Shifting cultivation is giving way to settled cultivation in valley
and slop areas. Vandana Upadhyay’s study on the transformation of land rights in
Arunachal Pradesh shows that a class of “moneyed and the powerful” persons
has emerged in Arunachal Pradesh. The persons belonging to this class have
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INTRODUCTION occupied large plots of community land for horticulture, tea rubber plantations.
They lend money to poorer tribals and keep land registration records as collateral.
Inability to repay the loan on time results in the transfer of land from the
borrower. This has resulted in differentiation within the tribal peasantry, resulting
in landlessness and smaller and marginal farmers. Differential access to
government support systems also contributed to differentiation with a tribal
community in Arunachal Pradesh. This new class formation among tribals in
Arunachal Pradesh is happening along with the commercialisation of agriculture.
It has occurred due to collaboration between market forces and the government
(Upadhyay 2020).
Andreas Kulke’s book Class Formation, Social Inequality and the Nagas in
Northeast India (2019) that contrary to general perceptions, the tribal society is
“class less”, the Nagas in Nagaland have the formation of classes. This class
formation is visible in income disparities. An urbanisation without creating
employment has taken place. A class of so-called “educated unemployed” has
emerged among the Nagas of Nagaland. This has happened along with the
emergence of “neo-patrimonial culture” in Nagaland. In Meghalaya, also a class
of entrepreneurs – miners, real estates businesses, has emerged. This class
involves in expropriating natural resources such as coal. It causes environmental
degradation and depletion of natural resources. A nexus has emerged between the
entrepreneurial class and political class. Depletion of natural resources has
resulted in opposition of civil society organisations and individuals in the state. In
response to the petition of civil society organisations, NGT banned coal mining
in Jaintia hills. However, despite the ban, illegal mining continues unabated. In
2018, some social activists were violently attacked when they opposed illegal
coal mining. In the same year, some miners were trapped in the coal mines in
Jaintia Hills: their bodies could not be retrieved. However, mining still continues
unabated despite the ban and protests.

3.6 THE CHALLENGES

Economies in the Northeast face challenges, i.e., poverty, unemployment,
backwardness, anxiety, and social unrest. Northeast India also lacks adequate
development of infrastructure. Arunachal Pradesh, Assam and Manipur have a
higher hand count of poverty ratio than the national average. Rural poverty is
higher in rural areas than in urban areas. The principal reason for the increase in
the poverty ratio in Arunachal Pradesh is the increase in rural poverty. However,
there has been some decline in poverty within the states of Northeast India in the
first two decades of liberalisation. But the decline has not been equal across the
states (Joydeep Baruah 2021). There is a lack of employment opportunities in the
Northeast. The traditional sector does not provide employment. As mentioned
earlier, several units have become sick. Kalyan Das (2021) weighted periodic
labour force survey data with the census data from 2011 to show the youth
unemployment rate in the states of Northeast India. The youth unemployment
rates in 56 per cent in Nagaland, 35 per cent in Manipur, 26.8 per cent in
Mizoram, 27 per cent in Assam, and 26 per cent in Arunachal Pradesh. These
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youth unemployment rates are against the all India average rate of 17.8 per cent. Economic Profile
Food deficiency is a common feature in the states on Northeast India. There is a of the Region
high level of dependence of the people on Public Distribution System (PDS) for
meeting the food requirement (Pankaj, et al. (eds.), 2021: pp.29).
Lack of transport and infrastructure has been a perennial problem in Northeast
India. As you will read in unit 16, initiatives have been made through the Look
East and Act East policies. It has happened following the introduction of New
Economic Policy in the Northeast. Infrastructure – transport, hospitals and
academic institutions (after schooling in the local areas) are not well developed in
the region. Even infrastructure development suggested by Look East Policy
(LEP) focuses on urban areas. Priority of infrastructure development according to
LEP is on trade among the nations, not on internal conditions within the region.
Villages generally lack basic facilities. Studies reveal that people have to track
long distances to avail themselves of health and educational facilities.
Educational needs and health emergencies have to shift to Guwahati, Shillong or
outside NER (Kekhrieseno alluded to in Fernandes, 2020: pp. 277).
Studies suggest that lack of unemployment opportunities and poverty in the
Northeast has boosted the outmigration of people from the Northeast to other
parts of India. As you will read in Unit 7, the migration of people into Northeast
India has been going on since the nineteenth century. Until the 1990s, migration
was primarily a one-sided phenomenon: from other regions into Northeast India.
Migration from the Northeast to other regions was insignificant earlier. However,
since the 1990s, there has been a growing trend of migration from the states of
Northeast India to other regions of the country, especially into Delhi, Gurugram,
Mumbai, Bangaluru and other cities. Families of the migrants back home
financially depend on the remittances sent by the migrants to other states. They
mostly work in the hospitality industry, spas, restaurants, salons, beauty parlours,
etc. Maximum migration to other regions of India takes place from Manipur
(Kikon and Karlsson 2019; Mc Duie-Ra 2012).

Check Your Progress Exercise 2

Note: i) Use the space below for your answers.
ii) Check your answers with the model answers given at the end of this
unit.
1) Discuss the rise of new social classes in Northeast India.

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INTRODUCTION 2) Identify the challenges before the economies in the Northeast India.

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3.7 LET US SUM

The land, service sector, traditional industries and natural resources and tourism
are important sectors of the economies of Northeast India. Ownership of land in
tribal areas of the region lies with the communities. The tribal peasants practice
Jhum cultivation. The land is the source of agriculture, plantation and natural
resources. The land question in the Northeast is linked with migration. The
migration started during the colonial period, and it continues in the contemporary
period. One reason for migration into the region was to cultivate the land and
engage in plantation activities. Tertiary economy – banking, insurance, transport,
communication, public administration and other services such as health,
education, and sanitation is the dominant sector of the economies in Northeast
India. Over the years, some social groups such as salaried middle class and
entrepreneurs have emerged in the region. The economies of the states face
challenges such as poverty, unemployment, lack of infrastructure, etc. Lack of
opportunities in the Northeast forces outmigration from the region to other parts
of the country.

3.8 REFERENCES
Baruah, Joydeep (2021), “Poverty in Northeast India: An Overview”, in Ashok
Pankaj, Atul Sarma and Antora Borah (eds.), Social Sector Development in
Northeast India, Sage Publications, New Delhi, pp. 219-245.
Bhaumik, Subir (2009), “Just Development: A Strategy for Ethnic Reconciliation
in Tripura”, in Sanjib Baruah (ed.), Beyond Counter-insurgency: Breaking the
Impasse in Northeast India, Oxford University Press, New Delhi, pp. 293-307.
Das, Anamika; Misra, Deepak (2021), “Reproduction of Informal Enterprises: A
Study of the Sualkuchu Silk Handloom Cluster in Assam”, Economic and
Political Weekly of India, Vol. 61, No. 37, pp. 52-59.
Das, Kalyan (2021), “Unemployment and Outmigration for Work in North-east
India”, in Ashok Pankaj, Atul Sarma and Antora Borah (eds.), pp. 246-267.
Fernandes, Walter (2020), “Land Issues and Liberalisation in Northeast India”, in
Mishra, Deepak K. and Nayak Pradeep (eds.), Land and Livelihood in Neoliberal
India, Palgrave Macmillan, Singapore, pp. 265-81.
Guha, Amalendu (1977), Planter-Raj to Swaraj: Freedom Struggle and Electoral
Politics in Assam 1826-1947, Indian Council of Historical Research, New Delhi.
Isworchandra Sharma, Hanjbam, (2009), “Look East Policy and Manipur’s
Economy: A Critical Scrutiny”, in Kishan, Thingnam (ed.), Look East Policy
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and India’s North East: Problems and Perspectives, Centre for Alternative Economic Profile
Discourse, Manipur & Concept Publishing House, pp. 123-39. of the Region

Karlsson, Bengst G. (2011), Unruly Hills: Nature and Nation in India’s

Northeast, Orient BlackSwan and Social Sciences Press, New Delhi.
Kikon, Dolly and Karlsson, Bengt G. (2019), Leaving the Land: Indigenous
Migration and Affective Labour in India, Cambridge University Press, New
Delhi.
Mc Duie-Ra, Duncan (2012), Northeast Migrants in Delhi: Race, Refuge and
Retail, Amsterdam University Press, Amsterdam.
Nag, Sajal, (1990), Roots of Ethnic Conflict: Nationality Question in North-East
India, New Delhi, Manohar.
Sachdeva, Gulshan (2008), “Globalisation and Development Strategies for the
India’s Northeast” in Brar, Bhupinder; Kumar, Ashutosh; Ram, Ronki (eds.),
Globalization and the Politics of Identity in India, Pearson Longman, New Delhi,
pp. 287-300.
Upadhyay, Vandana (2020), “The Gendered Transformation of Land Rights and
Feminisation of Hill Agriculture in Arunachal Pradesh: Insights from Field
Survey” in Deepak K. and Nayak Pradeep (eds.), Land and Livelihood in
Neoliberal India, pp. 283-307.

3.9 ANSWERS TO CHECK YOUR PROGRESS

Check Your Progress Exercise 1
1) Compared to the primary and secondary sectors, the tertiary sector
occupies a dominant position in the economy of Northeast India.
2) Extraction of natural resources – forests, minerals, coal, petrol, etc. The
extraction of natural resources got a boost following the introduction of
economic reforms. Entrepreneurs, politicians and government carry
extraction of natural resources. Extraction of natural resources is opposed
by the civil society organisations in the region.

Check Your Progress Exercise 2

1) Different social classes such as entrepreneurs/businesspersons/traders,
middle classes (salaried classes), youth, elite (who have education,
economic assets, political power), peasants, etc., have emerged in
Northeast India. These classes in the region began to grow the colonial
authorities to carry out various economic activities, and they continue in
the contemporary period.
2) The challenges in the economies in the Northeast include poverty,
unemployment, food deficit, and lack of opportunities leading to
migration from the Northeast to other parts of the country.

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INTRODUCTION

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