Industrial sector in North East

Challenges and future possibilities in the context of India’s Act East Policy

POLITICAL ECONOMY PERSPECTIVE

DR.CHINGLEN MAISNAM
India has accorded high priority to India’s Look East Policy. GOI’s interest in the countries to its east is evident from the fact that it has undergone a paradigm shift in policy and is moving away from “Look East” approach to “Act East” mode. India is not merely ‘Looking East’ but is now ‘Acting East’, thus, revising the title to ‘India’s Act-East Policy’. “We have had enough of looking east. We now have 'Act East Policy' - a key component of my government's foreign policy," Prime Minister told Indian diaspora during a community reception at the Kyung Hee University in the South Korean capital Through his visit, he affirmed that India government has entered a new era of economic development, industrialisation and trade. The PM showcased the “Make in India” policy and his efforts to reduce the difficulties in doing business in the country. He invited business leaders and the diaspora to come and invest in India and promised the region’s political leaders that his government is ready to wrap up pending free-trade agreements with Asean and other countries. 'Make in India' whose supposed objective is to revamp the dwindling manufacturing sector. PM Modi sees Make in India as a vital impetus for employment & growth. Ambitious targets like raising manufacturing growth to 12-14 per cent per annum in the medium term, increasing share of manufacturing in GDP to 25 per cent, and creation of 100 million additional jobs in manufacturing by 2022. India’s Look East policy that was started by then Prime Minister Narasimha Rao in the early 1990s and subsequently pursued by successive UPA governments had reached a stage when it was felt under the Modi dispensation there was a need to inject a new dynamism to this and thus was rechristened as the Act East policy. Thus, the present Modi government has begun to raise the new catchphrase of “Act East” to replace the “Look East” of earlier years. India’s Act East Policy is being signaled as a symbol of India’s attention for the North East Region. It is believed that the new step will lead to promote greater economic linkages between this region and ASEAN. There is also a new focus on Make in North East in order to forge closer commercial and economic links with the larger markets in the fast developing East and Southeast Asian economies. The North Eastern Region of India, however, faces a number of critical developmental challenges at the moment. The region is characterized by low per capita income, low capital formation, inadequate infrastructural facilities, communication bottleneck and geographical isolation from the mainstream. It is also characterized by inadequate exploitation of the natural and human resources. Industrial activities are very low in the entire state and there is high unemployment rate among the relatively highly literate people. The high Level commission on the North East popularly known as the Shukla Commission’s Report on ‘Transforming the North East’ (1997) defined five basic deficits: a basic need deficit, an infrastructure deficit, a resource deficit, a two-way deficit of understanding with the rest of the country and a governance deficit. The biggest problem facing the region is the lack of adequate and reliable infrastructure.
In the front of industrial development, the region ‘a late comer to development’ is in the lowest rank among the region. The state is industrially backward and has been declared as category ‘A’ (Industrially backward region). Industrial backwardness of this region is reflected in the fact that the contribution of the manufacturing sector to the state domestic product of the region is much smaller than the contribution of this sector to the national product in the country. The growth trend of the industry sector is eratic and volatile. The contribution of the manufacturing to the SDP has been insignificant. Its contribution to GSDP is only 2-3 per cent. The industrial backwardness is reflected in its total number of enterprises. In absence of large scale industries, manufacturing in the region is currently dominated by micro, small and medium enterprises. Industrialisation in the region as it stands today is marked by declining share of manufacturing sector. The informal manufacturing sector (IMS), which is basically MSME in nature, is the highest contributing segment in the industrial output of the region. The MSME today occupies an important role in directing the development process for growth and prosperity of the region, however the sector has been facing a tough fight, not only against its own counterparts (MSME), but also from large and organised sector of the country and also from the MNCs. Poor infrastructure and inadequate market linkages are also key factors that have constrained growth of the sector. So, the speedy development of MSME is a fundament prerequisite for the meaningful involvement of the region in India’s Act East Policy. And deepen the engagement with the ASEAN countries.
The question, therefore, is; will the poor and resource poor states of North East which depend on Delhi for many of their basic needs be able to compete in the new open environment?. Can it be a producing region or will it be reduced to status of consumers who will consume the other products, shall Act East Policy and Make in North East make the region a transit area for goods or worse a dumping ground, how it can be an instrument to develop the neglected, troubled North-Eastern States?.


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