Why the govt's plan to use the northeast to reach out to Asean might fail

Prime Minister Narendra Modi (centre) with the heads of state of 10 countries of Asean
Dina Hasao in Assam, Dhalai in Tripura or Kiphire in Nagaland are tiny specks within the geography of the north-east India, riven by recent clashes. For the locals of the seven-sister states of this region, the reasons for the clashes are, however, quite significant though the rest of India may not have heard of them. 

Some of those clashes have to do with the elections to the three state legislatures of Tripura, Meghalaya and Nagaland, due in February. But none have anything to do with the plan of the government of India to use the north east as the base for outreach to the Association of South East Asian Nations (Asean) countries, whose leaders attended India’s 2018 Republic Day parade.

Neither the local population nor the candidates find it salient enough to interest them. 

Late last month, as the heads of state of ten countries of Asean converged in New Delhi, there was consequently hardly any connect established with the north east in any of the events that surrounded their presence. This dissonance between local concerns of these north eastern states compared with their potential is the missing link in New Delhi’s attempts to reach out to South East Asia. 

“The north east does not have a product mix to trade with the rest of Asia,” says Milindo Chakraborty, visiting fellow at RIS, a Delhi-based think tank. Even with a relatively less developed neighbour like Bangladesh, the region exports raw materials like dolomite and coal, while the imports to the region includes cement and processed stone chips. 

It is this asymmetry that makes the region a bystander while India sneeks to deepen relations with the Asean region. A paper produced for NITI Aayog by Chakraborty and his team shows that of the total value of Indian exports to Myanmar, the percentage of exports from the north east is 1.7 per cent. A decade ago it was a shade better at 3.1 per cent. Effectively, the region does not have anything much to do with South East Asia, so it has little interest in the developments Delhi is trying to push. 

“It has got to do with connectivity,” says Sumit Dutt Majumdar, former chairman of the Central Board of Excise and Customs.  He should know. The  indirect tax department that Majumdar presided over has pumped in tax set offs for companies that set up manufacturing bases in the north east states and other special category states including J&K, Himachal Pradesh and Uttarakhand. The government of India’s budget papers for FY17 shows it as Rs 193.36 billion. Majumdar estimates the share of north east at 10 per cent of the total. 

But he concedes the sum has not led to any industrial growth in the states. There were cases where the companies made fraudulent declarations in their tax papers to earn the concessions. But they were also dissuaded from investing there because of the slim connectivity of the region with the rest of the India, he adds. Few political leaders from the region have tried to break this insularity by taking advantage of even the few possibilities that exist. 

For instance, there is only a single train line connecting the area with the state of West Bengal and beyond. The Indian Railways run freight trains with foodgrain to the north east that return empty on the return leg. To cover up some of the costs, the Railways offers freight at dirt-cheap prices. There are, however, no industrial products to take advantage of the low rates. The only exception is coal. From the hills of Meghalaya, intrepid entrepreneurs bring coal down to the markets of Guwahati at Jogigopha. The coal is of good quality and is consequently prized in the grey market in Uttar Pradesh and beyond. So, the entrepreneurs use the cheap cartage to transport coal to Mughalsarai yard near Varanasi. The locals do not make much profit from the transaction. 

The lack of opportunities, which has made the north east a confluence of high inflation for commodities that keeps traders interested but cuts back on opportunities for production, is also visible from another metric: The puny size of each states’ annual expenditure. 

The combined budget of the six states (except Assam) for FY18 is Rs 821 billion. It is complemented in the annual budget of the department of north east (Doner) in the government of India, at Rs 26.8 billion. The department is supposed to be the nodal entity to guide investments from all other ministries to the region. Plus it is also supposed to curate development activities in the region. But the budget of the department has hardly risen commensurately over the years. It was Rs 25.2 billion in FY17. 

Naveen Kumar, secretary of the department, is an energetic man. But he, too, does not expect the budget of Doner to expand sizably in the budget for FY19. To its credit, Kumar has begun a venture capital fund for the region to encourage local entrepreneurship. But to make it happen he also says the north east needs connection with the rest of India to make it an effective part of the Act East story. 

Compare this with needs of the region. An indicator comes from the Union ministry of roads. Its special accelerated road development programme for north east has a budget size of Rs 57 billion, almost double that of Doner. So as the Asean countries come calling they find little of interest in the Indian north east to keep them interested. As a result the region has little interest in the larger outreach activities happening around them despite sitting between China in the north, and Myanmar to the south. 

Jitendra Singh, the minister of state in charge of Doner, says all the state capitals of the north east will be connected by a railway line by 2020. Singh says a double gauge rail line between Aizawl, the capital of Mizoram, with Imphal, the capital of Manipur will be ready by 2020. A total sum of Rs 5.6 billion has been earmarked for the project, the minister told Parliament. 

This is part of the 15 new rail lines and six double-track projects for the region. Road bridges are coming up across the massive Brahmaputra river, like the 9.14 km long Dhola-Sadiya in eastern Assam. So are efforts to push river based cargo movement. Road and shipping minister Nitin Gadkari ceremonially flagged off cargo movement on the Pandu-Dhubri river route along the Brahmaputra in late December, 2017. At an expected Rs 318 per tonne of cargo for the stretch this could encourage logistic operators to shift to inland waterways from road transportation which costs more than Rs 1,000 for the same stretch.

Essentially, the north east is just getting integrated with the rest of India. Acting East through Mynamar is still some years away.

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