Late Parag Kumar Das was a radical journalist from Assam who wrote extensively about human rights violations at the height of the militancy movement in the state during the early 1990s. Many of his writings also focused on the economic challenges facing Assam, which he traced to the state being used as a resource frontier by the central government. He was shot dead in broad daylight on 17 May, 1996.
Twenty-eight years after that fateful day, his Birth and Death Anniversary are still observed to honour his spirited fight to defend human rights. More recently, Parag Das Memorial Lecture was instituted to reflect on the relevance of his thoughts in contemporary times.
Unfortunately, there has not been an adequate reflection on the economic thoughts of Parag Kumar Das. Mr. Das was an economist by training. He completed his bachelor’s of education with Hons. degree in Economics at St Stephen College and then pursued MA Economics at Delhi School of Economics.
He later quit his job as regional manager of Guwahati Stock Exchange to join as executive editor of Assamese daily Asomiya Pratidin. He published some of his writings on economic challenges in the state in a book titled Swadhin Axomor Artoniti.
Das’s reflection on the reasons for the economic backwardness of Assam still holds relevance for a state whose economic fortune has taken a nosedive over the past three decades of the post-reform period. The growing gap between Assam and the rest of India was once pointed out by Parag Kumar Das during the early 1990s, but the gap has only widened over the past three decades of the post-reform period.
The state is presently languishing among the bottom five states in almost all indicators of development. In terms of per capita income, Assam has now featured just above Bihar, Jharkhand, Manipur and Meghalaya. There is also not much to write home about the state’s human development record, with the state languishing at the bottom in terms of the multi-dimensional poverty index, just above five states – Bihar, Jharkhand, Meghalaya, UP and MP.
Most of the big-ticket investments in the region are extractive in nature and are focused on the natural resource base, with limited benefits for the local population. Reflecting on the issue, Das displayed a deep sense of history as he traced the region’s economic woes to its colonial legacy of using the region as a resource frontier.
He opined that nothing much had changed in the post-independence period as the investments took place in resource-based extractive industries such as tea, Coal, Oil and Natural Gas, which operated as an enclave economy, whose benefits bypassed the local population.
Elaborating further on this, he noted that the Keynesian model of multiplier, which entails a positive spin-off effect of an initial round of investment, leading to multiple increases in income, does not operate in the state. The economists holding official positions with the government later supported his observations.
The economy of Assam is largely agrarian, with the sector accounting for more than 60% of total employment and more than 22 % of the state GDP. However, the sector is still suffering from lack of investment, with the private investment per hectare accounting for only Rs 512 per hectare, the lowest among all major states in India, as per the latest all India Debt and Investment Survey.
Such low level of investment can be partly attributed to poor coverage of the public procurement program for paddy, the principal crop grown in the region, even as the region is flooded with food grains procured from Punjab and Haryana, depressing the prices received by the farmers from the market.
The state grows approx. 4.5 % of the country’s rice production, but reports only 0.5% of the country’s procurement in 2020. Reflecting on the poor state of Agriculture in the region, Das noted long back that despite being more suited to growing rice, the state had little support from the center in terms of public procurement.
Other subsidiary farm-related allied activities for sustainable rural development are not adequate to sustain rural livelihoods. The state still imports bulk of high-value produce such as fish, eggs and chicken consumed at the state. For example, the state produces only 27 lakh eggs and imports 32 lakh eggs every day to meet its daily requirement. Only 32,000 MT of total annual fish consumption of 3 lakh MT fish is produced in the state. Many farmers in the region serve as casual labour, and many of them travel to faraway places such as Kerala, which has reported 6 lakh migrants from the state.
Late Das recognized the problem long back as he was critical of the predominance of merchant capital that took hold in the state in the post-independence period, disrupting the production base of the local economy as the traders, mostly hailing from outside the region, facilitated the import of most consumption goods into the region. The result has been a gradual transition of the state’s economy from one being a self-sufficient economy into a consumption-driven economy.
The state has experienced a phase of deindustrialization, with the share of industries in SGDP, dropping from 30% during the early 2000s to 23% during the mid-2000 to 2010s before recovering to a record 30% again in recent times as per the latest economic survey.
The sector’s contribution to employment is also meager at only 25%. Given the consumption-centric economy, the state cannot absorb credit. Das saw the promotion of local entrepreneurship as a way out of economic stagnancy, but he regretted that the poor Credit Deposit Ratio (CDR), was hardly encouraging for the development of local entrepreneurship. He read poor CDR as a process that entails savings mobilized through banks getting leaked out of the region instead of utilizing the same for the development of productive capacity in the local area.
Three decades later, little has changed as per the latest government data, as the region has still failed to improve its poor credit deposit ratio, reporting a CDR of 40.3 percent as against the national average of 73.79%.
Not surprisingly, the state has been grappling with poor labor market outcomes. For most period, the state has been reporting a high level of unemployment, which has mostly been higher than the national average.
As per the latest round of PLFS surveys from 2017-18 till 2020-21, the unemployment rate hovered around 7% in the state which is higher than the national average of 5% and this, coupled with a poor labor force participation rate (46.9%) compared to the national average (53.9%) does not bode well for the state.
Particularly distressing is high educated youth unemployment in the state which has increased 7 times in recent times, as per the latest records of employment exchanges.
Parag Das also gave a trenchant critique of the conventional education in the state, which hardly encouraged local entrepreneurship. He further noted that the education system in the state is heavily exam-centric and hardly prepared the youths for the challenges of setting up entrepreneurs.
He advocated that diplomas in technical education would stand the state in good stead. In this regard, Das was extremely critical of the middle class in the state, who lack the foresight to take the leadership, and that they were opportunistic, preoccupied with government jobs to maintain their status quo.
His observation still holds in the contemporary socio-economic milieu. As per the official record in National Sample Survey, 75th round (2017-18), Assam still produces graduates in humanities accounting for approximately two-thirds of the total graduates, next only to Bihar, Jharkhand and West Bengal. To mitigate the crisis of joblessness, the state government typically responds by creating jobs in public administration to sustain its legitimacy, which leaves the state with a bloated bureaucracy with very little room for any meaningful intervention in the local economy.
Revenue expenditure, much of which goes into servicing salaries, and interest rate payment, remained stubbornly high at 58% of the total public expenditure for 2023-24, leaving little room for development intervention.
Both the Central and State government and their development partners such as Donor agencies will do well to reflect on the issues raised by Late Parag Das to resurrect the sagging economic fortunes of the state.
At a per capita income lower than most Indian states, the state has over the years turned into a consuming state, rather than a producing one. Few big-ticket investments that the state has received in recent times have failed to connect with the local economy through forward and backward linkages.
To address this, the government should take proactive initiatives to improve credit availability for small and medium enterprises operating in the region, besides linking them with the production process at the national level.
Given the improvements in technology and physical infrastructure connecting the region, it should not be a difficult task to fragment the production process to map the region in regional and global value chains to create a virtuous circle of investment, growth, and employment in the region.
The government’s failure to do so would risk flaring up the ugly head of separatism in the region.
The author teaches Economics at the Department of Economics, North-Eastern Hill University, Shillong.