Thursday, September 20, 2012

Look East Policy and Northeast India: Establishing Backward Linkages

India’s Northeast is a land which boasts of vast natural resources and a blend of different people and cultures. The region is blessed with biodiversity, huge hydro-energy potential, oil and gas, coal, limestone, forest wealth, fruits and vegetables, flowers, herbs and aromatic plants, and rich flora and fauna, many of the extremely rare variety. The Northeast comprises of eight states, namely, Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura and Sikkim. With an area of 2.6 lakh sq. kms, it occupies 7.8 per cent of India’s total land and with a population of 45 million, it is inhabited by 3.75 per cent of the population of the country. The region shares borders with China in the North, Myanmar in the East, Bangladesh in the Southwest and Bhutan to the Northwest.

Northeast India is often described as the Gateway to Southeast Asia. The proximity of the region with Southeast Asia provides it with the potential to transform into a commercial hub and tourist paradise. The Northeast has a very crucial role in the ‘Look East Policy’ of the Indian government, which was framed in 1991 to increase India’s economic interactions and linkages with its eastern neighbours. The Look East Policy aims at connecting the Northeast with the Southeast Asian nations through a network of highways, railways, pipelines, and transmission lines crisscrossing the region.

India has entered into quite a few regional agreements to ensure better ties with its neighbours and also to improve its trade and economy. Some of these agreements are the Bay of Bengal Initiative for Multi Sectoral Technical and Economic Cooperation (BIMSTEC), Mekong-Ganga Cooperation (MGC) and India-ASEAN agreement. India has also entered into bilateral agreements with Myanmar, Thailand and Singapore on trade and other related issues. The Northeast of India has a major role in all these agreements.

In order to connect the Northeast with Southeast Asia a lot of focus is being given in strengthening the linkages between them. But what is perhaps more important is the establishment of proper backward linkages between the Northeast and the Indian mainland. The connectivity between the mainland and the Northeast, whether through road, rail or air, is very poor.

Northeast is connected to the Indian mainland only through a narrow strip of land, 22 km-long, passing through Siliguri in the eastern state of West Bengal. The road network within the Northeast is very poor. The road density in the northeastern states is among the lowest in the country. Arunachal Pradesh has a road density of 21.9 km per 1000 sq. kms. , Mizoram 23.58 km, Sikkim 28.07 km as compared to road density of 74.42 km per 1000 sq kms. at the national level. The railway network in the region is also poor. The railway route density in the northeastern states, except Assam, is very low. As compared to railway density of 19.21 km per 1000 sq. kms. of India, Tripura has a railway density of 4.29 km and Nagaland has 0.78 km per 1000 sq. kms. Almost 97 per cent of the railway routes in the Northeast are in Assam.

The air connectivity also is in quite pathetic condition in Northeast and is centred mostly around the airport at Guwahati in Assam. Though almost each of the states has their own airport, yet it is not very well connected to other parts of the country. The network among the states in the region is also not satisfactory. In 2009, the Ministry for Development of North Eastern Region (DoNER) was keen on setting-up a dedicated regional airline for the region but it didn’t receive an appropriate response from private airlines despite the subsidy offered by Government for an exclusive “intra-State” operation for the eight States.

After India’s partition in 1947, the access of Northeast to its nearest port got cut. The nearest port was Chittagong, which went to East Pakistan (now Bangladesh). The region's access to the sea is now about 1,600 km away, in the form of Kolkata port. Goods from the Northeast headed for China or Southeast Asian countries are shipped via Kolkata through the Strait of Malacca and on to China. Though Bangladesh has now agreed to allow India to use the Chittagong port as another outlet for its goods, most of the cargo is still send from the Kolkata port.

Without improving these linkages, if the government only focuses on creating more linkages between Northeast and Southeast Asia, there still would be very little development. That is because though products from Southeast Asia will enter the Northeast, the lack of proper connectivity with the mainland will result in poor penetration of these products in the mainland Indian markets. And this will also result in excess foreign products in the Northeast with very few buyers, making the Northeast a dumping ground of Southeast Asian products.

The same is the case with the products manufactured in the Northeast. The region has many indigenous products but lack of a proper market has restricted the production of such products. Because of poor connectivity problems, the producers don’t produce these products on a commercial scale. These products are of very good quality and can match the products of other Southeast Asian nations but the inability to transport these products to bigger markets lowers the quantity of production.

In Assam, a place called Sualkuchi, situated 32 km to the southwest of Guwahati, is famous for its silk fabric. The hand-woven silk fabric of Sualkuchi on Muga and Mulberry occupies a place of eminence in preserving the Assam heritage and culture and plays a vital role in economy of Assam. The silk industry of Sualkuchi gives direct and indirect employment to more than 25,000 people throughout the year in silk weaving and allied activities. The annual consumption of mulberry silk in Sualkuchi is nearly two lakh kg and Muga and other allied silk is nearly 98,000 kg. Sualkuchi produces more than 31 lakhs linear metres of silk fabrics valuing Rupees ninety crores approximately. This silk industry has a lot of potential and opportunity to export large quantity of product. But it is facing problems due to lack of reach to bigger markets owing to poor connectivity.

In order to improve the backward linkages a few major steps has to be taken. Some of the steps that could be taken are listed below:

·        The East-West highway connecting Silchar in Assam with Porbandar in Gujrat, which was scheduled to be completed in 2009, is still under construction. The government should see that the construction work is finished as soon as possible.

·       The air connectivity between the capitals of northeastern states should be established. International flights between Guwahati and the capitals of the major Southasian countries should also be started. Air cargo services should be provided with storage facilities at the Guwahati airport.

     Bringing a hope for improved air connectivity within the Northeast, the  Civil Aviation Ministry in May 2011 decided to set up its regional hub of operation  at the Lokpriya Gopinath Bordoloi International Airport in Guwahati. The proposed hub is expected to become operational in 2012. Soon regional hubs would also be set up at Agaratala, Imphal and Dibrugarh airports.

·        Railway connectivity should be ensured between the state capitals. In this regard, Railways have undertaken an ambitious project to link all capital cities in the region at an estimated cost of Rs 17,000 crore by 2017. The project has been undertaken as a part of the Northeast Vision 2020, a blueprint for overall development of the region.

·        The Chittagong port in Bangladesh should be used more by India to ferry goods from the Northeast. This would save a lot of time and money and would also entail quick transport of materials to this land-locked region.

·        The number of border trade points has to be increased in the Northeast. The major border trade points in the region are Moreh in Manipur and Dawki in Meghalaya. Champhai in Mizoram was also identified as a possible border trade point but it is not functional. Steps should be taken to make it fully functional. India is also proposing to set up two additional centres in Avangkhu in Nagaland and Zowkhathar in Mizoram. Along with this, a few more border trade points could be opened at Lungwa, Pongru and Pokhungri in Nagaland and Nampong, Vijayanagar and Khimiyang in Arunachal Pradesh.

·        Adequate modern facilities like electronic weighbridges should be made available at all the border trade points. The Roads, Railways, telecommunications and banking infrastructure has to be improved around these points. And before opening new border trade points, the facilities in the existing ones has to be first upgraded.

·        Northeast India has a large perennial water system comprising the Barak and Brahmaputra rivers. Both these rivers are navigable for most parts of the year. Developing the river route would provide a very cost effective means of transportation to and from the region.

India’s Northeast has all the potential and resources of becoming a major commercial hub. It has all the possibilities to become the gateway to the dynamic Southeast Asian economics. The Look East Policy is of added interest to the Northeast. Once the region is connected with the Southeast Asian economies, the region would move steadily towards economic prosperity and development. But before that, all the bottlenecks have to be removed and the government has to be really keen in continuing its approach towards the integration of these two regions.

In order to enhance and create linkages between the Northeast and Southeast Asia, adequate infrastructure needs to be created along with a conducive environment for free movement of resources. An appropriate economic policy for the region as a whole and creation of support infrastructure would surely help the region realise its economic growth and trade potential. The state governments in the Northeast should also be prepared to play its role in the economic integration of these two regions and should fully promote the potential of their respective states. Effective coordination among the Ministry of External Affairs, Ministry of Commerce and Ministry of Road Transport and Highways is also essential for the achieving the goal of a well connected Northeast and Southeast Asia.

Northeast India has remained underdeveloped than the rest of India for a long period. Only during the last 10-15 years, this region is experiencing some conscious developmental activities. The Northeast is now a major part in the scheme of things for strengthening ties with the Southeast Asian nations. Improving the linkages with these countries through the Northeast has become a major priority for the Indian government now. However, at the same time, it should also be ensured that the backward linkages connecting the Northeast with mainland India should also be developed. Strengthening these forward and backward linkages can only ensure proper ties between India and the Southeast Asian nations. And once this is realized, both these regions would be moving faster in the track of economic growth and prosperity.

(The article has been earlier published in QUASOFIESTA 2012 magazine, GCC Centre of Management Studies, Gauhati Commerce College)






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