Rich in natural resources but extremely backward, the North-East can attract foreign investment for an economic turnaround if it could shed its ‘insurgency-prone’ image, economic experts say.

Going more professional, states in the region should also be allowed to trade freely with neighbouring foreign countries and go in for an agri-revolution to boost its economy, they say.

Governments at the Centre and the States must remove the ‘insurgency-prone’ image of the North-East to attract investors from outside, says Jayant Madhab, chairman of the North Eastern Development Finance Institution (NEDFi).

"North-East needs an all-round resurgence," says G. K. Pillai, joint secretary (North-East) in the Home Ministry.

Projects worth Rs 6,600 crore have already been sanctioned to the region under the Rs 6,100 crore package announced by the then Prime Minister H. D. Deve Gowda in 1996. Today, the value of this has gone up to Rs 7,850 crore, he says. Lack of investment is reflected in the low credit-deposit ratio in Assam, which is just 31 per cent as opposed to the Indian average of 55 per cent, loan recovery rate is also low, and for government-sponsored programmes it is only around 15 per cent, which is a result of bad implementation of schemes. Growth in the manufacturing sector in the region is very small —— 2.7 per cent — in Assam, industrially the most developed among the seven states of the region. There has been no growth in the last five years, and all financial institutions there are faced with hard loans largely advances to government programmes which did not come out very well, says Mr. Madhab, a former director of the Asian Development Bank.

"The power situation is really bad despite the region’s more than 34,000 MW hydroelectric potential, and the governments in the region are yet to get serious about attracting private investment," he says. To overcome the developmental bottleneck, one must go for an agricultural resurgence before an industrial resurgence, he suggests noting that the North-East is a basically tribal society with more than 80 per cent of its population dependent on an agrarian economy.

Supporting this view, Union Agriculture Secretary Bhaskar Baruah points out to the soil and water regime of the region which is extremely conducive to agriculture. "We need agriculture-based industries there — small tea gardens cashew, horticulture, poultry, what not... that will be the key to economic development of the region," he says.

Besides the industrial resurgence, Mr. Madhab also endorses a long-standing demand of the regional politicians seeking direct trade links with neighbouring countries. "The North-East has 4,500 km of international border but only a 21-km strip connecting it to mainland India. This must be utilised to the region’s advantage, developing open trade links with neighbours like Bangladesh and Myanmar with whom it has always been carrying out a kind of informal business," says former Lok Sabha speaker P. A. Sangma, who hails from Meghalaya.

"The region is strategically located vis-a-vis SE Asia, and growth triangles similar to those in North Asia and South China have to be developed involving the region and the neighbours to exploit its economic potential," says Mr. Sangma.

For example, Tripuris have to spend Rs 27,000 on each truck to reach Calcutta traversing the arduous journey through Assam and North Bengal, even though it can do so straight through Bangladesh, while Calcutta-Chennai truck fare for a slightly less distance is only Rs 16000. Only recently, the Bangladesh Government has agreed "in principle" on the transit facility for goods from India and referred the proposal to an experts committees.

"With relations between India and China, Myanmar and Bangladesh improving, the region’s trade links must also be opened up to these countries." But Tourism Secretary M. P. Bezbaruah, who hails from Assam, says that opening up of border trade won’t help much in employment generation in a region which has a high literacy rate and low job openings unless production of various commodities based on resources available in the region go up."

Explaining how opening up of cross-border trade will be able to bring in more revenue to the seven north-eastern sister states, noted columnist Sanjoy Hazarika says, "Bangladesh’s biggest import from the region in 1.7 million cattle per year —— which is through smuggling."

"Why cannot we export them legally, which will be possible if trade links are developed further?" he said at a recent seminar on industrial resurgence of the North-East.

Mr. Bezbaruah says the seven states should also concentrate on the Tourism Industry as a major avenue towards economic development. "The region not only has unsurpassed natural beauty, but also a distinct cultural identity. This needs to be exploited, at the same time keeping in mind the fact that tourism is an industry that can generate massive employment as compared to many other industries for the same amount of investment," he says. Emphasising that the main target should be domestic tourists, he, however, says that if tourism has to become a major industry in the region, better communication facilities must be developed. "It is quite inadequate," he said.

"While the private sector would have to chip in to develop the infrastructure, the regional governments will have to provide the necessary opportunities," says Mr. Bezbaruah.