1
Annual Plan’ 2010-11
CHAPTER- I
ARUNACHAL PRADESH
A MACRO ECONOMIC OVERVIEW
1.1 Arunachal Pradesh is the largest and youngest State amongst NE States, with a population of only 10.97 lakh as per 2001 Census inhabiting over an area of 83,743 sq. km. The density of population is only 13. About two third of its population belongs to Scheduled Tribe (64.22%) from 26 major tribes and more than 100 sub-tribes. The State is known for its ethnic, linguistic, cultural, religious and physiographical diversity. The State possesses a heterogeneous demographic character with distinct variations from each other in regard to dialects, culture, social customs and ethos. It is one of the most backward States in the country in the traditional sense of economic parameters. Historically, there was virtually a very little emphasis on economic development during the British Raj and even immediately after independence. Scattered and sparse pattern of habitation is not conducive for rapid economic development. The long isolation and separation from the mainstream of the country have still posed formidable problems to the efforts of socio-economic development of the State. The State is quite distinct not only from other hilly States of India in terms of its strategic location, remoteness and relative isolation. Arunachal Pradesh shares 1680 kms International boundary with China, Bhutan and Myanmar. Apart from a wide variety of physical and climatic conditions obtaining on the border areas, the situation has now become more complex in the recent time due to frequent China’s claim over Arunachal Pradesh.
1.2 The economy of Arunachal Pradesh is predominantly agrarian. Agriculture and allied activities have overriding importance as a source of livelihood to the people of Arunachal Pradesh. About 80% of the people of the State live in rural areas and their farming system is basically at subsistence level. Agricultural yields are low, while traditional farming, with a shrinking jhum cycle, has become ecologically unsustainable. The land is mostly owned by the community. Subsistence nature of farming coupled with modern consumption structure is the driving force behind the changing economic institutions in Arunachal Pradesh. The rural-urban migration, due to pull factors in the state, has resulted in substantial increase in employment in service sector. Thus, the process of modernization has led to the transformation of the traditional economic institutions in the State. There is no agricultural surplus and limited capital formation and entrepreneurial skills. Despite varied programmes by the State and Central Governments, self sufficiency in food grains remains unattainable in the foreseeable future. Heavy imports of food grains and basic primary products have drained away the financial resources of the State. In terms of per capita State Domestic Product and other development indices such as power, road length, Arunachal Pradesh ranks below national average. The State is confronting unique economic problems arising out of remoteness and poor connectivity, hilly and inhospitable terrain, a weak financial resource base, poor infrastructure, sparse population density and poor and limited marketing network and credit institutions.
1.3 Although Arunachal Pradesh started with an initial advantage of having high per capita income during 1990s, the State is now lagging behind steadily compared to all India average. Arunachal Pradesh has been growing at very slow pace and requires huge public and private investments to accelerate the development process. The poverty level is much higher than the national average. The low per capita income, lower growth rate of income and higher poverty ratio is a cause of concern. The Primary and Secondary Sectors continue to be overwhelmed by the Tertiary Sector. At current prices for the year 2007-08, the contribution of Primary, Secondary and Tertiary Sectors to total GSDP is 28.11%, 33.89% and 38.% respectively and their contribution to total NSDP is 29.22%, 31.64% and 39.14% respectively. The estimates at constant prices for the year 2007-08 reveal that the contribution of Primary, Secondary and Tertiary Sectors to total GSDP is 25.65%, 34.08% and 40.27%espectively and their contribution to total NSDP is 26.31%, 32.09% and 41.60% respectively. At current prices, GSDP is estimated at Rs. 368277 lakh in 2007- 08 as against Rs.16177 lakh in 1999-00 and at constant prices, GSDP is estimated at Rs. 247577 lakh in 2007-08. It reveals that the growth of GSDP during the years from 1999-00 to 2007-08 is 128.49% at current prices and 70.36% at constant prices. In 2007-08, Net State Domestic Product (NSDP) is estimated at Rs.32588 lakh at current prices and Rs.245196 lakh at constant prices as against Rs. 149696 lakh in 1999-00. The growth of NSDP during the years from 1999-00 to 2007-08 is 118.17% at current prices and 63.80% at constant prices. The per capita Income (per capita NSDP) for the year 2007-08 is estimated at Rs. 27398 at constant prices and Rs. 20570 at constant prices as against Rs. 13990 for the year 1999-00. It shows that the growth of per capita income during the years 1999-00 to 2007-08 is 95.84% at current prices and 47.03% at constant prices. The per capita GSDP of Arunachal Pradesh for the year 2007-08 is estimated at Rs. 30896 at current prices and Rs. 23035 at constant prices. The per capita National Income ( per capita net National Product at factor cost) for the year 2007-08 was estimated at Rs. 33299 at current prices and Rs. 24321 at constant prices. But for the year 2007-08, per capita Income of Arunachal Pradesh is estimated at Rs.27398 at current prices and Rs. 20570 at constant prices.
1.4 Arunachal Pradesh is one of the Special Category States and is largely dependent on Central Assistance for Plan investment as the scope of internal mobilization of resources is limited in Arunachal Pradesh in view of low tax base. Therefore, the prime mover of the growth of the economy has been the flow of funds from the Centre. The State’s economy is characterized by persistent stringent financial situation marked by a very low level of State’s own resources co-existing with high level of borrowing. The growing fiscal gap has put severe strains on the economic system. Starting with a poor base and getting further heated in the process of growth; the economy of Arunachal Pradesh is beset with scarcities of resources. The regulatory measures have failed to save the economy from extreme difficulties like debt-servicing liability and debt trap. The fiscal vulnerability of the economy of the State is a consequence of low economic activity, absence of private sector and the disproportionate fiscal burden on the public sector of generating and maintaining economic activity. The low population density and poor infrastructural facility in the State is the primary bottleneck to enhance the scope of taxation and hence very limited. The most part of the State population lives in scattered villages away from the mainstream and their integration and involvement into the market economy is still a far cry. The economy being mainly agrarian in character, the scope for taxation in rural areas is basically nil. The present resource position of the State does not indicate a healthy picture in as much as the State has opened the current year with a negative balance of (-) Rs.272.96 crore. The latest negative balance is estimated at Rs.532.19 crore. Arunachal Pradesh has to bear an extra burden of Rs.615.00 crore while implementing the recommendations of Sixth Pay Commission. This has adversely affected the BCR position. As a result of implementation of the recommendations of Sixth Pay Commission by the State Government, the revenue surplus of the State would get converted into revenue deficit and fiscal deficit would become more than 3% of GSDP.
1.5 Vast natural resources, particularly enormous hydropower potential, oil and natural gas, tourism and tourism sector offer a strong advantage to transform this strategically located State into one of the richest States of the country. And yet, on analysis of present economy of the State, following paradoxical and striking features emerge:
· Vast natural resources and potential for growth in agro-forestry and horticultural sectors, exotic flora etc.
· A bio-diversity hot spot.
· Tremendous hydro power and tourism potential.
· Rich heritage of traditional handlooms and handicrafts
· The reserves of mineral resources are capable of supporting industries like Fertilizer plants, refractory units based on dolomite, Calcium carbide manufacturing units and cement plants, Gasification and coking plants based on coal deposits.
Despite above added advantages, Arunachal Pradesh continues to remain poorest of the poor State with poor and inadequate basic infrastructure, low economic growth and poor resource base. However, it is expected that the economy of the State will flourish once hydropower projects being executed both by Public Sector Undertakings and Private Power Developers are commissioned by 2015.
CHAPTER - II
EMERGING ISSUES FOR PLANNING:
A HERCULEAN TASK AHEAD
2.1 Arunachal Pradesh is a tribal State, which constitutes 64.22% of indigenous tribal population. The local tribal population is at a various stages of socio-economic progress and face handicapped on account of isolation. Consequently, they have been unable to get a just and rightful role and have not been fully integrated into the national main stream. Their fragile socio-economic status and consequent vulnerability during the period of transition have to be safe guard their interest and secure socio-economic justice to them. In order to achieve a sustainable and balanced development, it is imperative that illiteracy be removed, health facilities be improved and extended to the interior and remote areas, economic, social and institutional infrastructures be improved, socially and culturally untenable distributional effects of growth be minimized and transactions cost be reduced by improving institutional and organizational structure of production. Transformation of a tribal economy like Arunachal Pradesh in a time bound manner is a Herculean task. There exists a glaring intra/inter district disparity in socio-economic parameters. The people living in the remote and inaccessible areas of Arunachal Pradesh are deprived from fruits of development. The pace of development is not commensurated with the growing population. There is dearth of physical infrastructure like roads, railway network, air communication, reliable tele-communication, infrastructure development in social sectors like education, health, sanitation etc. The State is lagged far behind even in comparison to other North Eastern States in most of the indices of socio-economic development. Despite being rich in natural resources, the State is not in a position to harness its vast potential like hydropower, tourism, horticulture. The growth of infrastructure, both social and economic, has not kept pace with the rest of the country leading to widening of regional disparities. Further, the unique features of the State necessitate disproportionately high cost of providing administrative, social and economic infrastructure in the State.
2.2 In the succeeding paras, some of the State’s critical development issues and concern are highlighted:
a) Backward and vulnerable Indo-China border: A threat to sovereignty.
During British regime due to conspicuous absence of regular administrative agency coupled with the persistent inter-village and inter-tribe feuds, the movement of the tribal people of erstwhile NEFA within the territory was very much limited. After Independence, the regular administration penetrated in to the territory. On the emergence of favourable administration followed by launching of various development programmes in the border areas, the intra-territorial/intra-district and inter-district movement of the people started increasing. Most of the people inhabitation in the border area is dependent on jhum cultivation. A low-productive agriculture, the total absence of industrial activities outside the household, almost total illiteracy has kept the people impoverished. Even with a small population, these areas remain deficit in food production. In fact, all essential commodities are air dropped by sortie only in these remote areas. Moreover, the settlement of the population is sparse and scattered. The economy has still remained barter based in these inaccessible and far-flung areas. Rapid urbanization in the State has also propelled large scale migration of people from high altitude international border areas to the urban centres. Combination of all these factors are responsible for large exodus of people from higher reaches to the administrative centres and State Capital located in the middle and foothill areas of the State. The rate of intra-district and inter-district migration of scheduled tribe population has been increasing in search of better livelihood, employment, and food and job security. The necessity of developing the border areas is urgent and time bound in view of large scale of exodus from these areas and keeping in view frequent territorial claims of China on Arunachal Pradesh. There is a growing apprehension among the people of Arunachal Pradesh that the backward and sparsely populated area of the State bordering China is an open invitation to their expansionism. Therefore, matching development of infrastructure and services in international standards along the international borders is the need of the hour from the strategic and defence point of view. However, the State has been so starved of funds for infrastructure creation that people from border regions have started migrating to the middle and lower regions in the State in search of better facilities in an alarming proportion. This trend needs to be arrested and reversed.
b) Inadequacy of fund under the Border Area Development Programme (BADP)
Arunachal Pradesh has a very long international border. This requires a special attention to be given to the border areas to provide the basic amenities of life to the villages situated near the international borders of Indo-China, Indo-Myanmar and Indo-Bhutan. The Indo-China border has high mountain ranges. Arunachal Pradesh has aptly been described as a region of bare, craggy hills, huge tropical and alpine forests, steep, rugged valleys and great cascading rivers as well as lofty ranges and towering peaks covered with snow. Indo-Bhutan border has dense forest and presents a succession of lofty and rugged mountain separated by deep valleys. Rugged mountains and rivers and the dense forest are the characteristic of the Indo-Myanmar border. A concerted effort is, therefore, required to develop these areas not only in terms of funds for infrastructure and increase the sense of alienation of the border population. The allocation under BADP has been grossly inadequate to cater to the needs of the border population. These funds could not make good to bridge the gap in economic and social infrastructure and means of livelihood. This has only helped in perpetuating the gap between the border areas and the foothill areas of the State. Further, the level of assistance under BADP does not permit undertaking major infrastructure projects. The fund is utilized for small schemes and programmes only. Development of border areas assumes greater importance in the overall planning process. The State Government appreciates the support extended by the Government of India through Border Area Development Programme. However, resources made available under BADP are not commensurate with 1680 kms long international border. In fact, the resources based-time bound action plan to implement the recommendations of the ‘Task Force on Border Area Development Programme’ is need of the hour.