This is an archived blog post from The Acorn.
Reuters writes (and because it is a wire agency, many thousand others will echo)
People in northeast India accuse the Indian government of exploiting the wealth of the region — which neighbours China, Myanmar, Bangladesh and Bhutan — but ignoring its development.[Reuters]
This is untrue.
Here’s why.
First of all, the 11th Finance Commission’s does give the north eastern states very favourable allocations. The states themselves are running mega budget deficits, knowing full well that Central assistance will be forthcoming.
Second, I did some analysis of my own, using data for some key states representative of the country.
Clearly, per capita assistance to Jammu & Kashmir and Manipur is among the highest. If you see per capita assistance to the state as a fraction of its per capita GDP, it is clear that these states get a very good deal. The Central government gives them 20 paise for every Rupee they earn,as compared to 3 paise for Goa or Kerala. Assam does better than many states getting 7 paise to the Rupee.
At least based on this back of the envelope analysis, the contention that these states get a raw deal from the Union government does not hold up.
More generally, I think looking at how much a state gets in return for its resources is only half the picture. Resources are useless if there is no market to consume them, or investors who can extract those resources, add value and sell goods to markets. Assam may have oil resources but in the absence of domestic investments and markets, they cant do anything with it. That’s not counting other costs like internal & external security, healthcare, education etc etc.
The presence of the north eastern states contribute to an Indian whole that is larger than the sum of its parts. The benefits go both ways. The theory of exploitation by a greedy central government out to deprive the states of their resources does not hold up in the Indian context. [The Acorn]The problems in India’s north-east are not quite the same as in ethnic-minority provinces in China, Pakistan or Indonesia. There is no ‘plundering’ of local resources going on. India’s north-east suffers from poor local governance and from the apathy of an Indian central government which assumes that throwing money at the problem will make it go away. Unlike in Xinjiang and Tibet, there is no state-sponsored (or for that matter any sort of) transmigration of outsiders into these places.
The real issues are poor governance, ineffective federalism (Prime Minister Manmohan Singh is a Rajya Sabha member from Assam; yet he is yet to visit his increasingly troubled constituency) and of course, that opportunistic ‘foreign hand’.
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