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Economic Potential of Northeast India: An Asset or Threat?

Shivananda H. is Research Assistant at the Institute for Defence Studies and Analyses, New Delhi.
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  • May 12, 2011

    The Northeast of India is endowed with huge untapped natural resources and is acknowledged as the eastern gateway of India’s Look-East Policy. Nonetheless, the region is cited as a conflict-stricken remote corner of India, witnessing a series of insurgencies and illustrating the alienation of the locals from the mainstream. Although the causes of insurgency in the region have been primarily political, the ambiguity related to the economic potential has added fuel to the turmoil.

    The sense of economic resources being exploited or the threat to exploitation exaggerated amongst the locals has provoked conflict in the region. Most of the armed groups fighting for secession have accused the central government of exploiting the region’s rich mineral resources, neglecting its economy and flooding the state with migrant settlers. Primarily in Assam, the insurgents are fighting against the Indian Government for extorting mineral resources, particularly oil, and being insensitive to safeguarding the natives from being engulfed by migrants in search of green pastures, both from other parts of India and Bangladesh. These outfits have resorted to sabotaging of oil pipelines and cargo trains used for transporting petroleum and coal from the region. For instance, the United Liberation Front of Asom (ULFA) blew up an oil pipeline on August 15, 2005 in Golpara district of Assam. The two bombs detonated on November 30, 2007 at Kokrajhar were planted below the oil tank of the truck that was bound for West Bengal. In 2008, they made an attempt to blow up the Paglasthan Oil Depot at Bongaigaon town, while the recent bomb blast on January 25, 2011 derailed a goods train in North Cachar Hill district.1 The ULFA blames the central government for taking away considerable oil resources without helping the northeast region to develop.

    The exploration of mineral resources has become a contentious issue and has fuelled conflict in the region. In Meghalaya, the extraction of uranium and coal has been a problem. On June 11, 2007 Shillong was paralysed by a 36-hour bandh called by the Khasi Student’s Union protesting against a public hearing on uranium mining in Meghalaya’s West Khasi Hill district.2 The huge oil reserve spotted in Nagaland, reported to contain oil reserves worth billions, is also a major issue of contention. The Nagas fear that they will be displaced when oil extraction begins. Local leaders have insisted on assurances of new land allotment besides monetary payments before relocating their people.3 The Nagas have demanded assurances that their lush jungles, rivers and rice paddies will be protected against oil spills and other environmental hazards. Further, they are demanding a share of the profit to be given to tribal councils for local development. Violent protests in Nagaland are likely to occur if oil extraction begins without considering these demands.

    Besides, ethnic conflicts among the tribes in the region are also sparked by competitive claims over the limited economic assets, which are an outcome of scarce economic development and limited opportunities. In Manipur, violent ethnic conflict broke out in the Moreh border area of Chandel amongst the Meitei, Nagas, Kuki and others because of their struggle to dominate the Moreh market. The most serious dispute was the Naga-Kuki conflict of 1992. The Kuki-Paite (Naga sub-tribe) conflict of 1997-98 in Churachandpur district resulted in 1000 people killed, 4600 houses torched to ashes rendering many homeless and compelling them to flee to other areas in the state.4

    Industrialisation in the region has not developed successfully and even small-scale industries have not been feasible due to lack of adequate economic infrastructure like transportation, communications and market accessibility. The region’s economy remains primarily agricultural. Primitive farm practices of slash and burn (jhum) and shifting cultivation are still practiced in many hill areas, while traditional single crop farming in the plains continues. As a result, the region is not able to produce adequate food grain to feed its own population.5 Most of the states in the region import food items from other parts of the country. While neither agriculture nor industry has developed, the service sector has expanded disproportionately though it is less productive and limited. In due course of time, while the national economy is growing at a swift rate, the economies of the region are slowing down creating an economic gap between the northeast region and the mainland.

    The rising economic gap signifies a sense of neglect by policy-makers in New Delhi and it has been an issue for contention for outfits revolting against the government. The Centre is blamed for being insensitive towards the region, both by local political leaders and the militant outfits. While there is no paucity of funds, the absence of development work in the region is either due to lack of skilled entrepreneurship or political corruption. While some developmental changes have indeed taken place in the region, the present policy framework has not been able to provide the basic requirements for dynamic development

    Moreover, the region remains isolated from the rest of the country and has not been able to attract investors or produce skilled labour and entrepreneurial resources. It has failed to transform even the primitive agricultural practices of the region into modern commercial agriculture. In addition, the region has not received the attention of the central government in building the required essential infrastructure for progress. All this has alienated the northeast from the mainland and proved to be a prime factor for the continuance of insurgency in the region.