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ECONOMY

 

The Economy of Assam can be described as an underdeveloped one. A state is  underdeveloped one when it is characterised by poverty, under-utilized manpower and untapped natural resources. Prof. Ranger Nurse states that underdeveloped countries are those which " Compared with the advanced countries, are under equipped with capital in relation to their population and natural resources."

The Indian planning Commission defines an Underdeveloped country as one " which is characterised by the coexistence, in greater or less degree, of unutilized or underutilized man-power on the one hand, and of unexploited natural resources on the other".

Eugene Staley defines an Under-developed country thus: “A country characterized (i) Mass poverty which is chronic and not the result of temporary misfortune and (ii) Obsolete methods of production and social organisation, which means that the poverty is not due to poor natural resources and hence could presumably be lessened by methods already proved in other countries". This definition of under-development is quite satisfactory. Thus, Assam, with its vast development potential untapped resources and poverty, can be easily described as under-developed state. 

We can now mention some important characteristics of the economy of Assam: 

1. Slow growth of state Income: The estimates of state income (Net State Domestic Product) show a steady but slow growth of the economy of Assam in the past few years. The State Income (SDP) for Assam, at current prices, stood at Rs. 946.00 crores in 1973-74 as against Rs.874.7 crores in 1972-73 showing an increase of 24.5 per cent in 1972-73 over 1971-72. The net national product of the country at current prices shows an increase of 24.5 per cent in 1973-74 over the previous year as the national product was calculated at Rs. 49,290 crores in 1973-74 as against Rs. 39,592 crores in 1972-73.

According to the revised series, State Domestic Product (SDP) at current prices stood at Rs. 1340.7 crores in 1974-75 as against Rs. 1318 crores in 1975-76 showing a decline of 2 percent over 1974-75. The SDP rose to Rs. 1521.9 crores in 1976-77 showing a rise of 16 per cent over 1975-76 and further rose to Rs. 1682 crores in 1977-78 showing a rise of 10 percent 1976-77. In 1978-79, the SDP stood at Rs. 1856.1 crores showing a rise of 10.5 per cent over 1977-78. In 1981-82, the SDP at current prices, increased to Rs. 2798.4 crores showing an increase of 50.7 per cent over 1978-79. The net national product of the country as a whole, on other hand increased from Rs. 87,253 crores in 1979-80 to Rs. 1,04,201 crores in 1980-81 showing an increase of 19.4 per cent over the previous year.

Again the state domestic product at current price rose by 11.3 per cent in 1989-90 over the previous year as compared to only 2 per cent in 1988-89. On the other hand, the rate of growth of national income in India was 10.4 per cent in 1988-89 and then declined to only 4.5 per cent in 1989-90. Again in 1990-91 and in 1993-94, the rates of growth of state income in Assam were 7.5 per cent and 13.8 per cent respectively. But at constant prices, the rate of growth of state income in Assam in 1993-94 was 9.2 per cent over the previous year.

This shows that the growth of state income in Assam could not keep pace with the growth of income for whole country in early although it showed marginal improvement in recent years.

2. Low per capita income : The per capita income in Assam is also very poor. It was Rs. 528 at current prices in 1970-71 and compares very unfavourably with the per capita national income of Rs. 636, much more so when viewed against the higher price level in Assam. Again the per capita income at current prices rose by 4.9 per cent in 1971-72. The per capita State income at current prices stood at Rs. 600.6 in 1973-74 as compared with Rs. 572.1 in 1972-73 and Rs. 535.5 in 1971-72. Similarly, the per capita state income of only Rs. 816 in 1976-77 shows a gap of over Rs. 200 with the per capita national income of Rs. 1049 in the same year. The per capita income at current prices rose further to Rs. 866 in 1977-78 showing a rise of 6 per cent over 1976-77 as against national annual increase of 8 per cent. The provisional estimated figure of per capita income at current prices stood at Rs. 1007.2 in 1978-79 and then the same figure increased to Rs. 1220.8 in 1980-81 and then to Rs. 5916 in 1993-94. But the per capita income of Assam in 1993-94(Rs.5916) compares very badly with per capita income of India (Rs. 7060) in the same year showing a gap of over Rs.1144.

3. Poor rate of capital formation : The State’s economy is characterised by poor rate of capital formation. The volume and rate of savings in Assam are very poor. Savings depends on the level of per capita income. As the level of per capita income in Assam is very poor, the savings potential of the State is thus low. Unfortunately, the marginal propensity to consume of the people of Assam is very high on account of sub-standard living conditions of the majority of the population. Possibly, there are large accruals of additional income in the rural sector. But there are inherent difficulties of mobilising these incremental rural incomes. Thus shortage of savings is the main root of capital deficiency in Assam.

4. Excessive dependence on agriculture : The state’s economy is depending too-much on agriculture. Colin Clarke and Kuznets state that economic development consists in the progressive enlargement of the proportion of tertiary occupation. Of the total working population of the state, about 77 per cent were engaged in agriculture and allied activities. But in Assam, cultivators and agricultural labourers together account for 64.1 per cent of the total working population as against 67 per cent for all states of India, according to 1991 census. District wise, Mikir Hills district has the highest percentage of agricultural workers (83.9 p.c.) followed by Goalpara (78.1.p.c) and Nagaon district (77.2 p.c.) The lowest percentage occurred in Old Lakhimpur (49.4 p.c.) and Sibsagar district (51.1 p.c.). Total number of workers in the manufacturing, other than household industry, constitutes 2.8 percent of the total workers in the state while workers in trade and commerce account for 5.7 per cent. Further the percentage of income from agriculture was 57 in 1970-71 and then it remained 56 per cent, 54 per cent, and 54.1 per cent in 1975-76, 1976-77 and in respectively compared with 45 percent for the country as a whole in 1975-76. In 1993-94, the percentage of income front agriculture in SDP declined to 34.1 percent as compared with 30.0 percent for all India. As non-agricultural occupations could not grow sufficiently due to lack of sufficient investment, the agricultural productivity per worker in Assam has declined from Rs.508.77 in 1951-54 to Rs.355.27 in 1969- 72. This shows how the agricultural sector of the state is over-burdened.

5. Population pressure and Unemployment: Population pressure in Assam is very heavy. The rate of growth of population in Assam is one of the highest in country. The growth rate in the decade 1951-61 was 34.97 was 34.97 percent against 21.64 percent for all India. Similarly, the growth rate during the decade 1961-71 was 34.95 percent in Assam as against 24.80% for the country as a whole. During the last fifty years(1921-71), the growth of population in Assam has been 215%. This high rate of growth is not entirely due to biological cause. A significant portion of the increase is due to the influx of people from outside and this trend has been continuing at least since the beginning of the century. Thus whatever development has been achieved in the State, it is being swallowed up by increased population. Thus the increasing trend in the growth of Assam’s population can be visualized from the fact that Assam’s population as percentage of all India has been increasing from 1.4 percent in 1901 to 2.2 percent in 1951 and then to 2.5 percent,2.7 percent and 2.6 percent in 1961,1971 and 1991 respectively. The overall population density per Sq. km. of the State is 284 which are higher than the national average density of 267 persons. In 1991, the total size of population of Assam is estimated at 2.24 crores as against 1.46 crores according to 1971 census.

As alternative occupations in the secondary and tertiary sector do not develop sufficiently, thus the increasing number of population is being thrown on land to eke out their living from agriculture. This tendency of increasing dependence on agriculture is creating disguised unemployment in the economy of the state.

6. Shortage of technology and skills: The economy of Assam is suffering from low level of technology and acute shortage of skilled labourers. Poor techniques and lower skills result in inefficient and insufficient production which leads to poverty. The technological backwardness of the State is even greater than that of all India standards. Thus the rate of development of the State is quite slow.

7.Lack of infrastructure : From the very period Assam was a neglected State partly due to its geographical features. The State was lagging in respect of transportation, communication, electrification and credit facilities etc. than most of the other states of India. Due to this infrastructure backwardness, industrialisation, the major wheel of economic development, started very belatedly in Assam. The surface transport facilities by Roads, Railway, and Waterways within Assam and the links with the neighbouring states and rest of India are not adequate and subject to severe hardships during the monsoons. The Railway route length in Assam covering the entire North Eastern Region is 2200 km of Metre Gauge and 266 km. of Broad Gauge. The P.W.D. Road length (as on 31st March 1990) is 30,086 km. 0f which only 6389 km. stretch of Brahmaputra. One more bridge at Pancharatna, which is urgently required is now under construction. The length of total road per 100 sq. kms in 1968 was 18 km. in Assam as against 29 km. for all India. Postal and Telecommunication services in Assam were not very satisfactory. Postal services are improving gradually in recent years. But telecommunication system needs more attention.

Assam is still deficient in respect of generation and consumption of power. The per capita consumption of electricity in Assam was only 78 Units in 1989-90 which was barely 33 per cent of the national figure of 236 units during the same year. Total power generation in Assam is very less at present and it stood at 1068.3 Million kwh, in 1992-93. The potential of generation of thermal (coal and natural gas) power is also high. At present, various hydro and thermal power projects are under construction. The pace of rural electrification in Assam was very slow. Electrified villages comprised only 6.4 per cent of the total villages of the state in 1973-74 as against 100 per cent electrification in the village of Haryana and 78 percent in Tamil Nadu. In 1992-93, 83 percent of total villages in Assam are electrified.

In case of banking facilities the state is lagging far behind the national position. in 1991, a bank office in Assam covers on an average, 17 thousand people as against 12 thousand persons for the country as a whole. Further number of bank offices per 100 sq. kms was only 0.2 in Assam as against 3.7 for all India in the year 1971. Per capita bank credits in Assam stood at Rs. 52.5 in 1977 as against Rs. 238.6 (approx.) for all India and in 1992, the same figure further declined to Rs. 46.0 only. The state is also lacking in sound administrative machinery which is very essential for spending up the pace of development.

8. Under-utilisation of natural Resources : Assam is a land of potentialities. Various natural resources are available within the state. Unfortunately, due to its geographical isolation, Assam was a neglected state from the very early period. Gradually Assam’s importance was realised as sufficient natural resources were found available in this region. But till now, various resources, viz. water, minerals, forest, land etc. remain under-utilised or even untapped due to various difficulties, such as their inaccessibility, shortage of capital, lack of proper attention, primitive techniques, transport bottlenecks and the small extent of the market. Assam has 28 per cent of the total hydro power potential of the country, which remains under-utilised. Further, a vast quantity of mineral resources and forest products still remains under-utilised. Thus in this way due to lack of proper attention, the natural wealth is being wasted.

9. Lack of industrial development : Assam is lagging behind other states in regard to industrial development. This is due to absence of large investments in industry during preceding plans and Assam’s geographical isolation. The industrial sector in the state has been centralised around some major industries, i.e., Tea, Jute and Oil. The volume of private industrial investment in Assam is very low due to heavy risks involved in the investment. These risks are both natural risks, arising through natural calamities like flood, droughts and political risk as the state itself is a border state. Further geographical isolation of the state inhibits private investment from other regions. This is aggravated by transport bottlenecks. The consequential higher unit cost of transport act as a further disincentive to external private investment in the state. That Assam had been an industrially backward state in the country will be apparent from the fact that during 1969 per capita value added by manufacture in Assam amounted to Rs. 28.00 only as against all India figure of Rs. 51.00. Further, per capita gross output in industry in Assam stood at Rs. 128.00 as against all India’s Rs.220.00 during the same period.  Again, total income (product) from industry (mining, manufacturing and construction) in Assam constitutes only 18.0 per cent, 19.9 per cent and 19.5 percent of the total net state domestic product (at current prices) during 1973-74, 1977-78 and 1993-94 respectively.

10. Poverty : The state’s economy is characterised by long standing poverty. With the increase in the size of population, growing inequality of income and increased price level, the degree of poverty in Assam started to increase as the number of occupations could not grow satisfactorily. Dandekar and Rath in their study "Poverty in India" has estimated from the NSS consumer expenditure data of 1960-61 that about 48 per cent of Assam’s population was lying below the poverty line on the basis of minimum nutritional needs. Further, the extent of poverty in Assam was aggravated during 1970-71. It has been estimated that the consumer price level in Assam is About 20 per cent higher than the All India level. The poverty line of Rs.40.00 (according to planning commission's approach document) may be taken correspondingly as Rs. 48.00 at Assam prices. Taking Rs. 48.00 as the poverty line, it was estimated that number of persons below the poverty line in Assam would be 5.53 lakhs (40.14 per cent) and 107.12 lakhs (77.38 per cent) in urban and rural areas respectively making a total of 112.65 lakhs (73.67 per cent) for the state as a whole. Again the planning Commission’s Expert group Report (1993) shows that the number of persons lying below the poverty line in Assam was 89.6 lakh (39.0 per cent). Thus the Extent of poverty in Assam is gradually increasing day by day creating suffering for the millions of people living below the poverty line.

Main problems of Economic Development in Assam and Factors responsible for these problems

Various problems are attached with the initiatives to develop the economy of Assam. Although every state has its own share of special problems, Assam may be described as a major ‘problem state’ with its geographical isolation, proneness to natural calamities, sensitive borders, disturbed law and order conditions and other factors. Factors impeding economic growth in Assam can be classified into Economic and non-economic factors.

Economic factors : Following are the main economic factors which are responsible for creating problems of economic development in Assam :

1. Rapid growth of population : Population pressure in Assam very heavy. This is a very disturbing factor as the increasing number of population is a liability rather than asset. Census date shows that Assam has one of the highest demographic growth rate in the country, the growth rate in the decade 1961-71 being 34.95 per cent against 24.80 per cent for all India. During the last two decade 1971-91, the growth rate of population in Assam was 53.26 per cent. A significant portion of the increase is due to the influx of people from outside. The rate of growth of occupation and wealth in Assam cannot keep pace with this high rate of population growth creating problems of unemployment, poverty and inequality of income in the states.

2. Natural Calamities : Assam is unfortunately one of those few states which are every now and then visited by natural calamities such as floods and droughts. Experience and a study of the problems connected with the Brahmaputra and its tributaries suggest that it will be a long time before the problems of flood are adequately tackled. Total damages to crops, cattle, houses, public institutions in Assam has been increasing year by year, i.e., from Rs. 13.2 crores in 1970 to Rs. 24.6 crores in 1972 and from Rs. 11.98 crores in 1976 to Rs. 39.80 crores in 1980 and then to Rs. 306.6 crores in 1989. Thus production and income of the State faced setbacks in every year due to floods and revenues are being diverted for flood relief in every year. Total diversion of revenue for flood relief has been increasing from Rs. 104.74 lakh in 1962-63 to Rs. 286.32 lakh in 1974-75 which accounted to 2.6 per cent and 1.8 per cent respectively of the state total revenue. Thus a good volume of state’s resources has been diverted for making repairs and for giving relief to the flood victims. Had there been no such burden, this amount of resources would have been available for development plan purpose. Further, natural calamities in Assam make speedy implementation of plans difficult.

3. Geographical isolation of the state and its difficult terrain : Geographical isolation is a characteristic feature of the state which always goes against its development strategy. From the very early period Assam was a neglected state partly due to its geographical isolation which restricted capital flow into the state’s Economy for industrialisation of the state. Geographical isolation of the state involves higher unit costs. Further, lack of contact, lack of attention and lack of supervision by the centre are all the results of geographical isolation of the state. The difficult terrain of Assam surrounded by hills, rivers and dense forest leads to increase in the cost of administration cost of developmental projects, besides making mobilisation of resources particularly difficult.

4. High Cost Structure : Cost structure in Assam is very high. This is due to Existence of higher price level in the state in comparison to other states. According to K.K. Bhatia’s standard basket method, showing preliminary estimated of indices of comparative cost line of selected centres of different States of India with Delhi as the base, the index for Digboi (Assam) is higher by 18% over Delhi. This index for Digboi is again the second highest in the country following Bombay. If Digboi is taken to represent Assam and the average of the 16 centres to represent India, then according to this Index (standard Basket Method) it is 21% higher.

Taking all these into consideration, broadly speaking, it is felt that the consumer price level in Assam may be taken to be about 20 per cent higher than all India average. The cost structure in Assam is thus very high and this has raised the cost of all the projects under different plans. This had added an additional strain on the financing of development project in Assam. Besides due to this high cost of living, chances of raising tax rates and the volume of savings for financing developmental plans become narrow and the cost of Administration increases due to high cost structure. Thus this high cost structure is always going against the development of the economy of Assam.

5. Poor transport and Communication facilities : Assam is lacking a sound transport and communication system. Geographical isolation, difficult terrain and lack of attention are some of the basic factors which are responsible for poor development of transport and communication facilities. Both the railway and road transport facilities in Assam are very less according to its need. Assam accounts for 3.9 per cent of the total railway route length of the country during March, 1993 but in case of broad gauge lines it accounts for measure 0.35 per cent of the total B.G. routes of the country. Expansion works like preparation of new railway lines: Conversion metre gauge lines into broad gauge lines, extension of national highways, construction of new bridges over Brahmaputra, development of well connected transport facilities and sound communication system etc. are not up to the mark. In the absence of all these above mentioned facilities, a region cannot develop industrially. In recent years, steps have been taken to improve the transport and communication system of the state without which the development of the economy is impossible.

6. Capital deficiency : Capital deficiency is a characteristic feature of underdeveloped countries. This characteristic is nothing peculiar to Assam when the whole country is suffering from capital deficiency. But this is serious handicap with which the state’s economy is involved. The problem of finance assumes serious proportions, both because agriculture and small business dominate the economy and also because neither the Government nor the corporate sector saves enough to meet the cost of its own Investment projects. The volume and rate of savings in Assam are very poor. Savings depend on level of per capita income. As the level of per capita income in Assam is very poor, the saving potential is low. Unfortunately, the marginal propensity to consume of the people of Assam is very high on account of sub-standard living conditions of the majority of the population. Thus, in spite of having huge development potential, the State’s economy cannot develop due to lack of capital formation. Further, a sizeable section of the population earning its livelihood in Assam is of a migratory character. A substantial portion of the savings of such seasonal migrants is not available for being ploughed into Assam’s economy as it is remitted outside, Similarly, the corporate sector and trade are substantially in the hands of persons exercising control from outside and they are remitting profits outside Assam. A recent study has been made by an Expert team sponsored by I.D.B.I. on the basis of available statistics of rail and road borne trade. The study indicates that which commodity flows into and out of Assam are more or less balanced at the level of about Rs. 200 crores annually, there is a regular outflow of monetary income from Assam to the extent off Rs. 63 crores annually. This heavy amount of outflows of capital is creating a heavy pressure on the financial condition of the state besides making the pace of development slower.

7. Waste of natural resources : In spite of having huge amount of natural resources, the State’s economy still remains largely under-developed and involves itself into the wastage of huge quantity of natural resources. Investment in Assam is mainly channelised towards exploitation of rich resources viz. tea, jute and oil, which is reflection of the continuation of old colonial pattern of investment. Barring the setting up of a fertiliser factory and three refineries no significant utilisation has come about. Assam has 28 per cent of the total hydro power potential of the country, which remains under-utilised. The vast coal resources have not been exploited (Except for traditional use of the Railway etc.) despite several possibilities for use as fuel for production of power, for production of coke and as base for several chemical industries. The forest resources in Assam are also under-utilised, particularly in the matter of non-standard species. Thus insufficient exploitation of natural resources in Assam is responsible for this poor economic development of the state.

8. Lack of skilled personnel: Assam is also suffering from an acute shortage of skilled labour. Most of the labours are unskilled. For higher skills, the State has to depend upon other states and foreign countries. Consequently the state has to pay higher wage rates for skilled labour than in many other States. Besides, the State has to import technicians from outside the state on attractive rates of remuneration for installation of capital-goods industries and thus it raises the cost of the development projects besides making the gestation period of these projects lengthy.

9. Lack of Entrepreneurial and Managerial talents : About the availability of entrepreneurial and managerial talents, the picture is very gloomy. There is lack of initiatives and entrepreneurship on the part of local talents to start new industries within the state for which there is sufficient development potential.

10. Poor credit facilities : Credit facility, which is a part of infrastructure requires for development, is very minimum per capita bank credits in Assam stood at Rs. 15.6 in 1970 as against Rs. 83.9 for all India. The credit deposit ratio in Assam stood at 23.5 in 1970 as against 55.9 for all India. In recent years also credit deposit ratios of the commercial banks in Assam stood at a poor level which were 44.3, 49.5, 45.5 and 43.4 in 1975, 1976 1977 and 1978 (June) respectively. Again in December 1994 the deposit ratio in Assam was 55.9 per cent as against 59.4 per cent for all India. Thus the lending policy of the commercial banks is far from generous to this poor State of Assam. Thus in the absence of large scale credit facilities, industries in the private sector cannot grow satisfactorily.

11. Primitive Technology : Technological progress is the root of economic progress. But Assam is suffering from lack of technological development due to poor scientific educational facilities. Assam is still following primitive technologies in Agricultural sector and thus agricultural production remains stagnant whereas other State like Punjab, Haryana, Gujrat, Uttar Pradesh have been able to make sufficient progress in agriculture by applying modern technologies. Small scale and cottage industries in Assam are still following old orthodox technologies  and cannot stand in the competitive market. Thus the economy of the State has remained economically backward due to the absence of advances in technology.

Thus most of the favourable factors, which are responsible for sound economic growth, are missing in Assam. Rather various unfavourable economic factors are standing on the way to retard the pace of economic development of the state.

Non-Economic factors : These include :

1. Sensitive borders : Assam is bounded by sensitive borders in its four sides. Borders Especially with Bangladesh (formerly East Pakistan) on the west and south and with China on the north have remained too sensitive since independence. This adverse factor always goes against the economic interest of the State by obstructing the easy flow of industrial investment both in the public and private sectors. In spite of possessing huge natural resources, the investment in Assam has remained a risky one due to its sensitive borders. With the change of time public sector investments started to flow within the state’s economy, although very slowly, but the flow of investment in the sector still remains poor.

2. Disturbed law and order conditions: Maintenance of law and order is a critical subject as Assam is a sensitive border State. Assam has to spend a heavy amount on police administration for the maintenance of law and order. Per capita expenditure on police administration on Assam stood at Rs. 8.25 in 1972 which was the second highest figure among all the states. In recent years, the expenditure has increased considerably due to the problem of insurgency in the State. This unduly heavy expenditure on law and order maintenance has put a severe strain on the already slender finances of the State Government and has, to that extent, hampered the Government’s ability to finance the developmental schemes. Further, this disturbed law and order condition will also restrict the flow of private capital into the State’s economy.

3. Lack of efficient administrative machinery : Maintenance of an efficient and clean administration is very essential for achieving sound level of development. But administrative machinery in Assam is neither efficient nor clean. Leakage of funds in various developmental works is quite common, resulting in poor performance or various plan and non-plan projects and wastage of financial resources of the state. Prevalence of red-tapism always delayed the operation of various developmental plan projects and makes the utilisation of plan funds difficult which leads to even surrender of scarce plan funds to the Central Government.

4. Social Structure : Social structure in Assam is not favourable for economic growth. The joint-family system creates under-employment and makes savings difficult. The caste system restricts the mobility of labour, the laws of inheritance resulted minute sub-division and fragmentation of holdings and religion has advocated austerity and renunciation which always obstructed the people from the way of their material advance. Further, United action by the people of the State on the economic front has been prevented by the diversity of castes and creeds.

Thus, We have seen the various hurdles which the State has to face while attaining economic development. Both the economic and non-economic factors are equally responsible for this poor rate of development attained by the State.

ECONOMIC DEVELOPMENT OF ASSAM IN PRE-INDEPENDENCE ERA

It is difficult to deny that foundation of the modern economic system of Assam was laid during the British regime. In Assam, British rule commenced from 1825. British rules in the early period of their rule undertook two socially beneficial measures having great economic significance. These were the suppression of slavery in 1843 and the poppy cultivation in 1860.

The establishment of a modern economy in Assam based on Capitalist principles was the greatest achievement of British regimes which was possible mainly due to the development of tea plantation. Along with tea industries, a modern industrial sector grew up on Assam with the establishment of different industries like petroleum, saw mills, plywood and Coal mining, etc. Besides, a modern transport and communication system was also built up with the gradual development of river, road, and railway, postal and telegraphs services. All these developments ultimately led to the growth of Commercial sector in Assam.

But the agricultural sector which engaged three fourth of the total population of the State was more or less unaffected by the activities of the modern sector. Thus there was colonial pattern of development in Assam which created a dual economy a small modern sector and a huge traditional subsistence sector existing at the same time. Thus during the pre-independence period there was secular stagnation in the economy of Assam.

Agriculture in Assam during pre-independence period

During the British period, the principal agricultural crops of Assam were rice, mustard, pulses, Jute, cotton, sugarcane etc. With the arrival of Muslim immigrant cultivator from East Bengal, Jute cultivation started in Assam at the beginning of this century. During this period, the cropping pattern of Assam was not at all balanced and in respect of its diversification it was very less. Thus cultivation of rice covered the maximum area of the total cultivated land. In respect of trend in the sown area, it was very much irregular and fluctuating. In case of other crops, excluding Jute, increase in sown areas is very less.

In respect of the production of principal agricultural crops during this period, there was no continuous rise in production rather it was marked by fluctuation. During the period 1923-24 to 1947-48, total growth rate of production of rice was only 13 per cent. Again during the last period of nine years 1938-39 to 1947-48 the growth rate was as poor as 4 per cent. Further, during the 15 year period 1923-24 to 1938-39 rape, mustard and sugarcane had a growth rate of only 3 percent. But it was the production of Jute only which could maintain an increasing trend and its total growth rate was 68 percent during this period.

Although there was fluctuation in the production and area sown in case of rice, but the productivity of rice maintained a continuously raising trend during the period 1933-34 to 1947-48.

During the pre-independence period, Assam exported a good quantity of rice regularly besides meeting her own requirements. On the whole, Assam was a net exporter of food grains even after considering the large quantity of wheat import by the state.

Thus considering all these previous positions it can be concluded that during the pre-independence period, agriculture in the state was more or less stagnant, having all the traditional and orthodox approaches applied into it.

Industrial development in Assam during pre-independence period

Industrial development in Assam was centered on Tea, Petroleum, Coalmining, Cottage and Village industries during the pre-independence period. In spite of having huge development potential, the industrial sector in the state could not develop at a satisfactory rate due to various constraints faced by it. Let us now look into the condition of these above mentioned industries before independence.

Tea Industry

Establishment of Tea Industry was one of the greatest land marks in the economy of Assam during the British period. In 1833, the first tea garden was established in Assam by the Government. Just after this, various private companies and enterprising individuals were induced to take up tea plantations in the state. Initially, a huge amount of Capital, mostly from British, was invested in this tea industry. A sum of Rs. 63.8 million was invested in the plantation sector of the state in the decade ending 181 as against an investment of Rs. 13.8 million in the preceding 12 years. Again a sum of Rs. 110.9 million was invested in tea industry during the next two decades. Further, under the waste and settlement Rules, the Government also encouraged the growth of tea industry by supplying sufficient land for tea plantation under very liberal terms. In Assam proper, the area of waste lands settled with planters increased from around 3 lakh acres in 1871 to 6.4 lakh acres by 1901. Further, with the aim of driving the farmers into the plantation jobs, the Government also raised land revenues. With the same intention, tea garden labourers were also offered comparatively higher wages including other facilities like concessional rice, free fuel and grazing land and a plot of land for private cultivation, etc.

During the period 1884 to 1900 there was an increase of 92 per cent in the area under tea plantation. But since the turn of the present century, i.e., during the fifty years period between 1900 and 1950 the acreage increased by 48 percent only. Total number of tea garden in Assam gradually increased from 906 in 1924 to 1120 in 1938-39. The yield of black tea in Assam increased from 99 thousand tonnes in 1933 to 118 thousand tonnes in 1938. Average number of labour force, daily engaged in these tea gardens in Assam was 497106 in 1942, 486250 in 1938 and 489425 in 1938.

Tea industry, being a leading industry in the state, encouraged the growth of several ancillary industries in Assam like plywood, saw mills, coal mining, general engineering works and also river transport service and railway transport. Further, as good as 12 to 15 percent of the total population of Assam are dependent on this tea industry.

Although the tea industry of Assam was a leading sector during those days but its role in the economy of the state was very limited as the growth stimuli produced by the industry was very small and confined within the modern sector only.

Further, most of the tea gardens were owned and managed by British companies. Percentage of area under Indian owned tea estates was only 16 per cent of the total area under tea in Assam. Again majority of the owners of India owned tea gardens were non-Assamese. Naturally out of the huge earning of these tea industries in Assam Only a part of it was used for financing the expansion of area sown and the remaining major part of the earning was remitted outside the state as dividends.

The tea industry in Assam also did not lead to the state as the European owners and managers depended mostly on the consumer goods imported from abroad or other parts of India. Moreover, tea industry in Assam helped very little in the growth of managerial quality and entrepreneurship in the state as very few people of the locality were given the superior managerial posts in these tea gardens.

Petroleum Industry : During the pre-independence period petroleum industry was also developed in Assam by the British rulers. In Assam, Oil was discovered in 1825. But the commercial production of petroleum began in 1899 after the formation of Assam Oil Company under the patronage of the Assam Railway and Trading Company. With the taking over of the management of A.O.C. by the Burma Oil Company in 1921, the petroleum production in Assam was increased to a great extent. The production of petroleum thus gradually increased from 11 million gallons in 1918 to 24 million gallons in 1926, 32 million gallons in 1928, 56 million gallons in 1931 and then to 65 million gallons in 1946.

Assam, being a monopoly producer of petroleum during the pre-independence period, earned a good amount of Government revenue from the production of petroleum apart from saving a good amount of foreign exchange for the country.

But as the petroleum industry was highly capital intensive thus its contribution towards the development of the economy of state was very little. This industry provided employment to a limited number of persons of which local people were very few in number

Besides, the petroleum industry was also owned and managed by foreign interests and thus major portion of the profit was repatriated keeping only a little portion of profit for reinvestment in Assam. A group of subsidiary industries like petro-chemical complex which could have been developed in the state side by side the petroleum industry, did not come up due to lack of capital, entrepreneurship and Government patronage.

Coal mining : During the British period coal mining was also undertaken in Assam. Coal was discovered in Assam as early as 1825. But the commercial exploitation of coal started only after the development of railways in Assam. Most of the coal fields in Assam are situated in Makum area which contained 80 to 85 percent of the total known Coal reserves. Coal reserves are also situated in the Khasi and Jantia hills. Although Assam had a huge amount of Coal reserve but only an insignificant portion of the reserve was exploited during the pre-independence period. Out of the total amount of Coal, explored in the state, the maximum portion was utilised by the tea gardens and the railway system of Assam.

Factory industries : During the pre-independence era, the progress of factory industries was very slow, irregular and unbalanced as a very few number of new factories were added in different years. Among the total number of new and old registered factories, tea factories formed the largest number in the state. Those other factories registered in Assam were rice mills, general engineering workshops, Oil mills and Saw mills, etc.

Cottage and Village industries : During the pre-independence period, a good number of Cottage and Village industries were existing in a precarious condition due to lack of finance, market and government patronage. Moreover, these cottage and village industries has to close down their business due to unequal competition from the cheap manufactured good both from abroad and other parts of India.

Later on, the Government realized the importance of their industries as they provide scope for employment to a huge number of populations both seasonally and throughout the year. Thus a separate Department of Industries was created in 1981 for the promotion and growth of  indigenous industries in Assam. This department took many important measures for building up an infrastructure for the development of these village and cottage industries. These include establishment of Gauhati weaving school, shillong weaving school for imparting industrial training, Titabar Muga Silk-worm Station for experimentation and a Government emporium for promoting the sale of cottage products at Gauhati.

All these efforts on the part of the Government created a congenial atmosphere which resulted in the growth of many handloom weaving and sericulture industries in Assam. In 1945, it was observed that "handloom weaving and sericulture which are the most important cottage industries of the province, have developed considerably during the last 20 years. This development is particularly due to the grant of subsidies by the Government of India since 1935-36. During this period, the number of fly-shuttle looms introduced by the Department through demonstration staff has more than doubled, the production of handloom fabrics has largely increased and the weavers have been enabled to earn larger income".

But the condition of other traditional cottage industries deteriorated during the pre-independence period due to lack of attention paid by the Government towards these industries.

Infrastructural development in Assam during pre-independence period

Development of infrastructure, viz,. ; transport and communication, generation of electricity etc. was in a very poor shape before the British rule in Assam. With the interest of developing tea industry, petroleum and the coal mining, the British Government did a lot in providing a modern transport system in Assam. Although inadequate, the progress made in the case of different types of transport-river, road and railway during the British regime was pioneering in nature. Let us now look into the development of various types of infrastructural facilities in Assam during the pre-independence period.

River transport : From the very early part of their rule the British authorities started to develop river transport in Assam considering the constraints in the development of roads and railways. The East India Company started a steamer service in 1847. Later, two more private companies were formed to provide regular commercial services to Assam in 1864 these were--- the Indian General Navigation Company and the Rivers Steam Navigation company. Afterwards, these two companies were joined together to form the Joint Steamer Companies which ultimately maintained steamer services in the state throughout the British period. The steamer services helped the state in exporting bulky products like tea, Jute, timber etc. and also in importing other consumer goods at a very low transit cost.

Railways : In the pre-British period, there was no railway system in Assam. With the growth of tea gardens in the interior places of the state, the need for a well developed railway system was felt for providing cheaper means of transport to these tea gardens. In 1881, the Assam Railways and Trading company was formed by the British and the first railway line from Dibrugarh steamer ghat to Jaipur road was inaugurated in the next year. Two more companies--- Jorhat provincial Railway and Tezpur-Balipara Railway were also set up in 1885 to cater the need of transport for the tea gardens of Jorhat and Tezpur area.

In 1892, the Assam Bengal Railway was formed to provide railway connection to Assam with the rest of India. In 1902, Dhubri was connected with Calcutta by the extension of the Eastern Bengal Railway line. Again in 1909-10, Amingaon was connected with Calcutta through Dhubri. During the period 1896 and 1933 there was rapid expansion of railway lines in Assam.

Roadways : Rivers in Assam helped the state to develop the cheapest means of transport, i.e., the river transport. Thus the British rulers, in the very initial stage of their rule neglected the development of road. So the Public Works Department (P.W.D.) of the Government was established in 1868 for the construction of road in Assam. Again in 1880 Local Boards were formed for the improvement of roads in rural areas of the state.

After the First World War, Government realised the need for better roads and thus a Road Board was constituted at the provincial level in 1926-27. Again in 1927, a new fund-Tea Rates Road Fund was created by imposing additional local rates on the tea lands for improving roads in the state.

In 1929-30, two more funds were created at the national level for the developments of Roads in British India. These were-- a Special Reserve Fund and a General Road Development Fund. During the period 1929-30 to 1937-38, financial assistance to the extent of Rs. 21.8 lakh from the General Fund and Rs. 36.9 lakh from the Reserve Fund was sanctioned in Assam.

Thus, the British rulers spent only a small amount for the construction of roads which was the main reason behind the backwardness of road transport in the state.

Development of Power : From the very beginning, Assam had a huge potentiality for the development of power. But the utilisation of these potentialities both by the Government and the private sector was very minimum during the pre-independence period.

Generation and supply of electricity in those days was managed by private companies under the license issued by the Government. The first electrical undertaking in the state was installed at Tezpur in the year 1913 for supplying electricity to the people. Similarly, more electrical installation was established in different towns of Assam for the same purpose. Later on, some of these companies were closed down.

Installed capacity of electricity was very low in Assam in comparison to other states both in absolute and relative terms. In 1939, Assam generated only 0.1 per cent of total electricity generated in British India. In Assam, the per capita generation of electricity was as poor as 0.26 Kwh as against 7.27 Kwh in British India

BANK AND OTHER FINANCIAL INSTITUTIONS IN ASSAM

Growth of Banks in Assam

Banking and other institutional financing facilities are an important part of economic infrastructure of a region. Rapid economic development calls for rapid expansion of banking facilities. The growth of banking and institutional credit system in Assam has been tardy. The availability of banking facilities in Assam was quite inadequate few years back. Over the past few years, there had been a rapid expansion in the number of bank offices in Assam as in other parts of the country. Thus it was only during the recent past that the position of Assam in this respect showed some improvement.

As on June, 1969, Assam had only 74 offices of scheduled commercial banks. Thus there was one bank office for every 188 thousand persons in Assam as again the national coverage of 65 thousand persons per bank office in the same year. The following table shows the growth of bank offices and other progress of commercial banking in Assam and the country as a whole over the period 1970 to 1995. (See Table No 11.1)

The table no. 11.1 reveals that the number of commercial bank offices in Assam increased from 95 in June, 1970 to 214 in 1975. This number again increased to 466 in 1980 and then to 507 in 1982. During 1980-81 (July, 1980 to June, 1981) a total of 41 new bank offices were opened in the State of which 33 were established at Unbanked Centre. Total number of bank offices located in the rural areas of the State stood at 283 at the end of June, 1981.

In 1970, a bank office, on an average covered about 153 thousand persons in Assam as against only 53 thousand persons in all-India. But in 1977, one bank office covered nearly 51 thousand persons in Assam as against only 25 thousand persons in all-India. Again with the expansion of new branches of commercial banks in the State the population covered per bank offices in Assam declined to 41 thousand persons in 1980 as against only 17 thousand persons for all India . Thus, at the end of 1982, a bank office, on an average, covered about 35 thousand persons of the State as against only 17 thousand persons in all India. Thus, the State was lagging much behind in this respect compared with position of the country as a whole.

Table No. 11.1

Progress of Commercial banking in Assam and India

Important Indicators,

June,1970

June, 1995

Dec., 1981

June, 1989

March, 1995

 

Assam

India

Assam

India

Assam

India

Assam

India

Assam

India

1

2

3

4

5

6

7

8

9

10

11

1. Number of commercial Bank Office

95

10,131

214

18,730

507

35,707

1094

57,698

1,228

62,346

2. Population per bank Office ( in thousand)

153

53

68

32

31

19

18

12

18.2

13.5

3. Total deposits of scheduled commercial banks (Rs. In crores)

38

5,275

105

12,545

445

44,059

1,769

147160

3,929

36,0008

4. Total credit of scheduled

15

4,213

50

8,955

209

30,153

1,004

89,370

1,495

1,93,386

5. Deposits of scheduled commercial banks per office (Rs. In lakhs)

42

52

50

67

87

123

161

255

320

577

6. Credits of scheduled commercial banks per office Rs. In lakhs.

16

42

24

48

41

84

92

155

121

310

7. Per capita deposit of scheduled commercial banks (Rs.)

26

98

62

210

224

644

790

1,739

1,754

4,255

8 . Per capita credits of scheduled commercial banks (Rs.)

10

78

30

150

105

441

448

1,056

667

2,285

9. Credit-deposit ratio

39.2

79.2

27.4

46.9

68.4

55.4

60.7

60.7

38.0

53.7

Source 1. The progress of Banking in Assam, 1990,P-1.

2. Economic Survey, 1989-90, P-57

3. Statistical Hand Book, Assam 1995, p. 228

4. Economic Survey, India 1995-96 p. S-59.

* Based on estimated, mid-financial year population.

During 1981-82 (July, 1981 to June, 1982) a total of 55 new bank offices were opened in the state, of which 39 offices were opened at under banked Centres. The total number of new offices opened during the corresponding period of the previous year was 41. At the end of March, 1982 the rural areas of Assam had as many as 306 bank offices which constituted nearly 54 per cent of the total.

The new Branch Licensing policy announced by the R.B.I. for the three-year period April 1982 to March 1985 aimed to achieve by the end of March, 1985 one bank office on an average for a population of 17 thousand in the rural and semi-Urban areas of the country on the basis of the 1981 Census. This new policy created much impact in Assam as the State was relatively under-banked state.

During the eighties, the banking infrastructure in Assam has expanded considerably. total number of branches of commercial banks in Assam has increased from 507 in December, 1981 to 1094 in June, 1989 and then to 1227 in march, 1992 and finally to 1228 in March, 1995. Thus, during the eighties, the state saw an impressive 148 per cent growth in the number bank branches as against 82 per cent growth witnessed at all India level during the same period.

Again the total number of rural branches of commercial bank in Assam was 283 in 1981 and then it increase to 826 in March, 1990 which accounted about 71 per cent of the total branches of commercial banks in the state. Again the number of bank branches located in urban and semi-urban areas was of the order of 112 and 216 respectively accounting for 10 per cent and 19 per cent respectively of the state total.

As a result of such rapid expansion of bank branches, the average population covered per bank office in the state has gone down from 31 thousand in December, 1981 to 18 thousand in June, 1989 and then to 17 thousand at the end of March 1990 and then slightly rose to 18.2 thousand at the end of March, 1995. However, despite improvement of the position over the years, Assam continued to lag behind the all India average which worked out to be 12 thousand population per bank office as at the end of March, 1990 and then slightly rose to 13.5 thousand population per bank office at the end of march, 1995.

Again the total number of public sector bank branches in Assam has also increased from 67 in June, 1969 to 823 in September, 1996 which accounted nearly 67.0 per cent of the total bank branches of the State as compared to that of 70.15 per cent for all India.

Growth of deposit, employment of Credit and Credit-deposit ratio of commercial bank in Assam

The volume of deposits and deployment of credit (advance) by scheduled commercial banks in Assam started to show an increasing trend due to gradual expansion of banking facilities in the state. It can be seen from the table (no. 11.1.) that the deposits with the scheduled commercial banks which was only Rs crores in 1970 increased to Rs. 405 crores in June 1973, to Rs. 180 crores in 1977, to Rs. 445 crores in 1981 and then to Rs. 3929 crores in March1995. Likewise, deployment of credit by these banks also grew from just Rs. 15 crores in June 1970 to Rs. 50 crores in June, 1975, to Rs 81 crores in June 1977, to Rs. 209 crores in December, 1981 and then to Rs. 1495 crores in March, 1995. It is also observed that between March 1992 and March 1982, the volume of deposits with the banks displayed an increase of 62.1 per cent while the rise in the deployment of credit over the same period was only 25.6 per cent.

Although nearly 58 per cent of the state’s bank offices were located in rural areas, the share of these offices in the aggregate deposits and gross bank credit have been found to be very poor being only Rs 86 crores (19.3 p.c.) and Rs.41 crores (or 19.6 p.c.) respectively as on March 1982.

Credit-deposit ratio : The credit-deposit ratio of commercial banks in Assam was satisfactory during the period of first and Second five Year Plans. Then there was decline 1966, the credit-deposit ratio of Commercial banks increased to 45.8 but again fell to 34.6 during 1968. But after the nationalisation of commercial banks in 1969, the credit-deposit ratio in Assam started to increase. It can be seen from the table (no. 11.1) that the credit-deposit ratio of commercial banks in Assam which was only 39.2 in June, 1970 as against 79.2 for all-India, gradually increased to 46.9 in June 1981, to 55.4 in December, 1989 as against all-India ratio of 60.7. This credit-deposit ratio of commercial banks in Assam again fell down to only 38.0 in March 1995 as compared to all India ratios of 53.7. this shows that the credit-deposit ratio of commercial banks in Assam was all along poor in comparison to that of all-India ratio.

The table (no. 11.1.) further shows that the deposit of scheduled commercial bank per office increased from Rs. 42 lakhs in June 1970 to Rs. 87 lakhs in December 1991 and then to Rs.320 lakhs in March 1995. The credit of scheduled commercials banks per office which was only Rs. 16 lakhs in June 1970 gradually increased to Rs.41lakhs in December 1981 and then increased to Rs. 121 lakhs in March 1995.

The table (no 11.1) further reveals that the per capita deposits of scheduled commercial banks in Assam, which was only Rs.26 in June 1970 as against Rs.98 for all-India, gradually increased to Rs.224 in June 1987, as against Rs. 644 for all-India and finally increased to Rs. 1754 in March 1995. Again the per capita credits of scheduled commercial bank which was only Rs. 10 in June 1970 as against Rs 78 for all-India, gradually increased to Rs. 105 in June 1981 as against Rs. 441 for all-India and then to Rs.667 in March 1995.

Thus, the difference between the per capita deposit and per capita credit in Assam was quite higher than that of all-India resulting in poor credit-deposit ratio of commercial banks in Assam.

Sectoral deployment of credit : An analysis of sectoral deployment of credit in Assam, as available up to December 1980, reveals the dominance of industry sector in sharing bank credit. Out of the total outstanding bank credit of Rs. 225 crores in December, 1980 the industry sector alone shared about Rs. 105 crores (or 46.5 per cent). Agricultural sector with an outstanding credit of Rs. 50 crores (or 22.4 per cent) occupied the next position. The share of other sector was as follows : Trade (17.3 per cent), personal loans, including consumer durables (2.4 per cent) and all other (4.3.per cent).

In recent years, the data related to occupation wise percentage distribution of outstanding credit of scheduled commercial banks reveals that in Assam., industrial sector occupies the top most position with 38.1 per cent share in the total outstanding credit as at the end of June, 1989 followed by agricultural sector (25.1 percent) and trade (16.3 per cent). The share of tea processing and small scale industry sector was 10.7 per cent and 13.2 per cent respectively of the total deployment of credit. Deployment of credit to other sectors was as follows transport operations 7.3 per cent, personal loan and professional services 7..1 per cent and other activities 6.1 per cent.

Lead bank-scheme and its implementation in Assam

The Reserve Bank of India introduced the "Lead Bank Scheme" in December 1969 which was a Co-ordinated programme for setting up of adequate banking facilities in the underbanked districts of the country. Under this scheme districts were allotted to the State Bank group (State Bank and its 7 subsidiaries), the 14 nationalized banks and to other India banks. A lead bank would be responsible for taking, a leading role in surveying the credit needs, development of branch banking and extension of credit facilities in the districts allotted to the three major banks, viz, the State Bank of India, the united Commercial Bank (UCO Bank) and the United Bank of India, the districts of Nagaon, Sibsagar, lakhimpur and Cachar were allotted to United Bank of India while all the hill districts were allotted to the State Bank of India. With the introduction of lead bank scheme in Assam the expansion of banking facilities through the opening of new offices as well as through functioning of existing offices in a more intensive manner was greatly facilitate.

Regional Rural Banks (RRBs)

In recent years, regional rural banks have been se up all over the country with the objective of meeting the credit needs of the under-privileged sections of the society, residing in rural areas. These Regional rural Banks (RRBs) have been receiving a high degree of importance and attention in the rural credit system.

Considering the gross absence of banking facilities in the rural areas of the country, the Reserves Bank of Bank of India in consultation with the Central Government, State Governments and some major nationalized sponsored banks, had set up some Regional Rural Banks in the late seventies with a view to elevate the economical status of the rural poor as well as to inculcate a habit of saving among the rural masses.

As per the recommendations of the Working Group on Rural Banks, the regional rural banks were established for supplementing the commercial banks and co-operatives in supplying rural credit. The main objective of regional rural banks in India is to advance credit and other facilities, especially to small and marginal farmers, agricultural laborers, artisans and small entrepreneurs in order to develop agriculture, trade, commerce, industry and other usual productive activities in different rural areas of the country.

The share capital of RRB is subscribed in the following manner as the Central government-50 per cent, the State Government concerned – 15 per cent, the sponsoring commercial bank-35 per cent. The regional rural banks are maintaining its special character as their area, of operation is very much limited to a definite region, grant direct loan to rural people at a concessional rates and receive subsidies and concessions from the Reserve Bank and the sponsoring bank.

The concession granted by the Reserve Bank of India is : (a) allowing RRBs to maintain cash reserves ratio at 3 per cent and statutory liquidity ratio at 25 per cent ; (b) providing refinance facilities to RRBs through NABARD.

In the mean time, the regional rural banks have extended this network throughout the country to a considerable extent. At present (in 1995-96), there are 196 regional rural banks operating in 23 states with nearly 14,516 branches. Till June, 1988, these RRBs have been lending annually nearly Rs. 600 crores to the rural people and more than 90 per cent of the loan has been advanced to the weaker sections.

In the late seventies some regional rural banks, were established in Assam under the sponsorship of major nationalized commercial banks. Again during the eighties another two RRBs were set up in Assam. In Assam number of such banks opened up to June, 1982 was only 3, namely, the Pragjyotish Gaonlia Bank, the Lakhimi Gaonlia Bank, and the Cachar Gramin Bank which had altogether 63 branches spread over 6 districts. During January 1982 another regional rural bank namely, "Longpi Dehangi Rural Bank" was opened with headquarters at Diphu which would cater to the credit needs of rural areas of the two hill districts of Assam.

Thereafter, another rural bank, namely, Subansiri Gaonlia Bank was established in the State. Under this Subansiri Gaonlia Bank, the responsibility to create rural banking facilities in Dhemaji, Dibrugarh and Tinsukia districts was assigned.

Out of these five regional rural banks (RRBs) established in the state, the four RRBs, viz., Pragjyotish Gaonlia Bank, Lakhimi Gaonlia Bank, Cachar Gramin Bank and Subansiri Gaonlia Bank were set up under the sponsorship of United Bank of India under public sector and only Longpi-Dehangi rural Bank was set up under the sponsorship of State Bank of India. As per the 6 (1) section of Regional Rural Banks Act, 1996, the share capital of the RRBs in Assam is subscribed in the following manner-Central Government-50 per cent, Sponsor Bank (UBI and SBI)-35 per cent and the Government of Assam-15 per cent. Initially, the Reserve Bank of India in Consultation with the Central Government, the State Government and the Sponsor banks (UBI and SBI) set up these five RRBs in Assam. Accordingly, these five RRBs covered all the 23 districts of the State. The main objectives of these RRBs were to improve the economic conditions of poor people living in rural areas and to inculcate the saving habit among the general masses living in rural areas.

Assam has at present 5 regional rural banks covering all the 23 districts of the State. Till March, 1982 the regional rural banks had a total of 89 branches located in the rural and semi-urban areas of the State as against 63 branches in June, 1981. Total volume of deposits and credit by these banks stood at Rs. 7.21 crores and Rs. 4,000 crores respectively in March, 1982 as against Rs. 2.18 crores and Rs. 1.45 crores respectively in December 1980.

Total number of branches of RRBs in Assam has gradually increased to 137 in January, 1983 and then to 321 at 4 the end of June, 1986. Total volume of deposits and credits of these regional rural banks at end if June, 1986 were Rs. 38.4 crores and Rs. 27.5 crores respectively. The following table shows the detail information about the RRBs of Assam at the end of the June, 1986.

Table No. 11.2

Number of districts Covered, total Number of Branches and Credit-

Deposit Ratio of RRBs in Assam

Regional rural Banks

Number of

Districts Covered

Number of

Branches

Credit-deposit

Ratio

1. Pragjyotish Gaonlia Bank

7

134

63

2. Lakhimi Gaonlia Bank

3

80

85

3. Cachar Gramin Bank

2

40

100

4. Longpi-Dehangi Rural Bank

2

35

82

5. Subansiri Gaonlia Bank

2

32

60

All RRBs

16

321

71.5

Source : State Level Banker’s Committee, SBI, and Guwahati.

The above table reveals that as on June, 1986 Pragjyotish Gaonlia Bank with its head office at Nalbari had 134 branches covering 7 districts of the State. Lakhimi Gaonlia Bank with its head office at Golaghat had 80 branches covering 3 districts of the State. Cachar Gramin Bank after establishing its head office at Silchar opened 40 branches covering 2 districts of the state. Longpi-Dehangi Rural Bank with its head office at Diphu had 35 branches covering 2 districts of the State. Lastly, the Subansiri Gaonlia Bank after establishing its head office at North Lakhimpur had 32 branches covering 2 districts of the State. Moreover the table further shows that the credit- deposit ratio varied between 60 to 100 per cent. Moreover, the average credit-deposit ratio of all the five RRBs of Assam was 71.5 per cent at the end of June, 1986.

In recent years, these RRBs have established more branches in their area of operation and the deposit and credit structure have also been changed. The following table shows the recent position of these regional rural banks in Assam.

Table No. 11.3

Number of Branches, Deposits, Credit and Credit-deposit Ratio of

Regional Rural Banks in Assam

Year

Number of

Branches

Amount of

Deposits

(Rs. Crores)

Amount of

Credit

(Rs. Crores)

Credit-deposit ratio(%)

1

2

3

4

5

1986. (June)

321

38.40

27.50

71.5

1988 (Dec.)

352

74.46

63.73

85.5

1989 (Dec.)

382

96.12

78.56

81.7

1991 (Dec.)

405

126.31

96.61

76.5

1992 (Dec.)

405

146.58

110.69

75.5

1995 (March)

405

272.11

151.35

55.6

Source : 1. Economic Survey, Assam, 1989-90, P-59.

2. Statistical Hand Book, Assam, 1995, P-382.

The above table reveals the development of regional rural banks in Assam. Total number of branches of these five regional rural banks in Assam has increased from 321 in June 1986 to 382 in December in 1989 and then to 405 in March, 1993. The volume of aggregate deposits with these banks was Rs. 38.40 crore in June, 1986. Then this aggregate deposit rose from Rs.55.91 crores in December, 1987 to Rs. 74.46 crores in December 1988 and then to Rs. 96.12 crores in December, 1989. The rate of rise in December 1988 and then to Rs. 96.12 over December 1988 and about 71.9 per cent over December 1987. Again, the aggregate deposit of this RRBs in Assam rose from Rs. 121.31 crores in December, 1991 to Rs. 146.58 crores in December, 10992 and then marginally to Rs. 272.11 crores in March, 1995 showing a growth rate of 70.4 per cent in December, 1994 over December 1993 and only 6.9 per cent in March, 1995 over December, 1994.

Likewise, the gross bank credit by these RRBs also increased from Rs. 27.50 crores in 1986 to Rs. 63.73 crores in December, 1988 and then to Rs. 78.56 crores in December, 1989, registering a growth rate 23.2 per cent in December 1989 over December 1988 as against 35.4 per cent growth recorded in December, 1988 over the previous year. Again the gross bank credit advanced by these RRBs has also increased from Rs. 96.61 crores in December, 1991 to Rs. 110.69 crores in December, 1992 and then to Rs. 151.35 crores in March 1995 recording a growth rate of 19.6 per cent in December, 1994 over December 1993 and only 6.2 per cent in March, 1995 over December, 1994.

Moreover, the credit-deposit ratio of these regional rural banks in Assam increased from 71.5 per cent in 1986 to 85.5 per cent in 1988 and then declined to 56.6 per cent in March, 1995.

Thus it is observed that in recent years, the activities of the regional rural banks in Assam have been progressing at a satisfactory rate. Thus, these RRBs are setting up branches in under banked regions and providing facilities for collection of deposits and advancing credit among the rural people of Assam and thereby providing adequate incentives to the various sectors of the economy of the State. Therefore, with the development these regional rural banks in Assam the rural banking system of the State has advanced considerably in recent years.

 Life Insurance Corporation of India

The Guwahati divisional Office of the Life Insurance Corporation of India (LIC) extends its area of operation to all the seven State of the North Eastern Region. This Corporation is not only introducing business by accepting new life insurance proposals but also investing a good amount of its fund on various investment projects in the State and also offering loans to various organisations in the State.

In 1992-93 the Guwahati, Silchar, Jorhat and Bongaigaon Divisions of LICI introduced 2,28,335 policies with the assured sum of Rs. 915.98 crores.

The LICI is also playing a praiseworthy role in respect of investment and credit in the State. Every year a sizable amount is invested by the Corporation in the State Government securities, Electricity Board Bonds, Financial Corporation’s share/bonds etc. besides issuing loans to State Electricity Board, Government housing schemes, State Road Transport Corporation etc. The following table shows the volume of investment and credit of the LIC in Assam under different heads in 1992-93.

Table No. 11.4

Investment of the Life Insurance Corporation in Assam

Up to 31st March, 1995

(1994-95)

Head

Amount (in lakhs of Rs)

1

2

Investment

1 State Government Securities

2. Land Dev. Bank Debentures

3. Electricity Board Bonds

4. State Financial Corporation Industrial. Dev. Corporation/ICICI/Bonds and shares

 

9092

43

1941

110

Loans to :

1. State Electricity Board

2. State Government for housing Schemes & Co-Housing

3 Municipal Committees for water supply schemes

4. State ,Road Transport Corporation

5. Joint Stock Companies : Debentures and share of Joint Stock Companies

          

                            Total

 

1952

1230

 

193

10

9933

 

24510

Source : Divisional Manager, LIC, Divisional office, Guwahati

The table given above reveals that total amount of investment of LICI in Assam in 1994-95 was to the extent ,of Rs. 24510 lakh.

Industrial Finance Corporation of India

The Industrial Finance Corporation of India is an important Financial institution offering industrial credit to various industrial projects in the country. This Corporation (I.F.C.I) is having a branch office at Guwahati and also offering loans to various industrial projects in the State. The following table shows the amount of financial assistance sanctioned by (I.F.C.I) to industrial projects in Assam During different plan periods.

Table No. 11.5

Net Financial assistance sanctioned by I.F.C.I. to industrial project in

Assam

Plans

Net financial assistance for Assam

Annual average assistance during plans

1

2

3

The First Plan

1956

 

45.00

 

9.0

The Second Plan

1959

1961

Total

 

15.00

150.00

165.00

 

33.85

The Third Plan

1962

1965

Total

 

350.00

13.00

363.00

 

72.6

The Annual Plan

1969

 

78.50

 

26.00

The Fourth Plan

1972

1974

Total

 

100.00

103.00

203.00

 

40.6

The Fifth Plan

1975

1976

1977

Total

Grand Total

 

30.00

216.00

2.50

249.00

1103.79

 

Thus, it is clear that during the First Plan, I.F.C.I sanctioned financial assistance of Rs.45 lakhs to industrial projects in Assam. The assistance increased to Rs. 165.29 lakhs during the Second Plan and to Rs. 363.00 lakhs during the Third Plan in Assam. During the annual Plans assistance was Rs.78.50 lakhs only. During the Fourth Plan the net financial assistance from I.F.C.I to Assam came down to Rs. 203.00 lakhs and to Rs.249.00 lakhs in the Fifth Plan. Thus the aggregate assistance from the I.F.C.I. to Assam was Rs. 1103.79 lakhs.

Further, annual average assistance from I.F.C.I. during the First Plan was only Rs. 9 lakhs, then it increased to Rs. 33.85 lakh and Rs. 72.6 lakh during the Second Plan and Third Plan respectively and then it falls to Rs. 26 lakhs, Rs. 40.8 lakhs and Rs. 49.8 lakhs during Ad-hoc Plan, Fourth Plan and Fifth Plan respectively.

Role of Bank in Assam’s Economy

The commercial banks in Assam are playing an important role for the economic rejuvenation of the State’s economy. In the early period, commercial banks in Assam played a little role in the development of the economy of the State. After the nationalisation of commercial banks and particularly after the expansion of branches, commercial banks have been playing a very responsible role in the upliftment of the economy of the State. The following are the main role of commercial banks in Assam’s economy:

i. Commercial banks in Assam are mobilising a good amount of savings from the people of the State through its various saving schemes.

ii.  Banks in Assam are also advancing a good amount of loan to the various sectors of the State leading to the growth of the State’s economy.

iii. Commercial banking facilities in Assam are also helping in the growth of business and trade in the economy of the State.

iv. Commercial banks in the State are providing liberal finance to farmers leading to the development of the agricultural sector in Assam. But the amount of loan advanced by banks to this sector is not yet sufficient.

v. Banks in Assam are promoting large, medium and small industries in the State providing them with sufficient financial assistance. About 38.1 per cent of the total outstanding credit in Assam is advanced to the industry sector alone.

vi. Commercial banks are also offering financial aid to the export sector of the State leading to the growth of export of various goods.

vii. Banks in the State are also helping the small businessman and the retailer by advancing loans leading to the self employment of huge number of people in the State.

viii. Commercial banks in the State are also helping financially new entrepreneurs, men with ability but having no resources of their own.

ix. Commercial banks in Assam are playing an important role in rectifying regional imbalance of the State by opening branches in backward areas although these branches are not remunerative for some years. This is no doubt an important step towards developing the backward areas of the State both agriculturally and industrially.

In conclusion, we can say that the commercial banks in Assam are playing a very important role for the upliftment of the economy of the State. But what has been done is not sufficient for the State. Thus the Commercial banks will have to undertake more responsibility for the economic upliftment of the State’s economy in future.

 

PRICES IN ASSAM

Introduction

In a developing economy, the study of price trends is very important as the prices influence the allocation of economic resources and affect the level as the prices influence the allocation of economic resources and affect the level of income, cost of production and all other economic variables in an economy.

The price situation in Assam is essentially a manifestation of the all-India phenomenon of rising prices. But the upswing of the price level in the State has been more pronounced due to certain factors like rapid growth of population, transpor5t bottlenecks and a virtual dependence on outside supply for the essential consumer goods.

Price Trends in Assam vis-à-vis all India

In Assam the trend of price recorded a continuous rising trend since the commencement of plan. Thus the price situation in Assam in the context of all India phenomenons of rising prices continued to cause anxiety.

Table No. 13.1

Index number of wholesale prices in Assam and all India

(Base 1953= 0)

Year

Price index in

Assam

Price index in

all India

1953

1955

1960

1963

1965

1969

1971

1981

1985

1989

1990

1991

1992

1993

1994

100.0

103.8

131.2

149.1

176.1

242.5

253.6

559.0

875.0

1108.0

1229.0

1405.0

1560.0

1625.0

1779.0

100.0

92.5

124.9

135.3

165.1

 

 

100.0*

120.1*

154.3*

165.7*

182.&*

207.8*

228.7*

249.8*

Source : Directorate of Economics and Statistics Assam

            * Base 1981-1982= 100

The table given above reveals that the index number of wholesale prices in the State (Base 1953=100) increased from 103.8 in 1955 to 131.2 in 1960 and then to 176.5 in 1965. But the index number of wholesale prices for all-India increased from 92.5 in 1955 to 124.9 in 1960 and then to 176.5 in 1965. But the index number of wholesale prices for all-India increased from 92.5 in 1955 to 124.9 in 1960 and then to 165.1 in 1965. During the period 1953-65, the general price level rose by 76 per cent in Assam as against the increase of 65 per cent in all India. The wholesale price index then jumped to 242.5 in 1969, to 355 in 1976, in 1990, 1405.0 in 1991 and then to 1779 in 1994. During the period 1965-82, the general price level in Assam is increasing at a very high rate since the Third Plan onwards.

One of the encouraging features of the State’s economy in 1982 was that the price rise was contained to reasonable extent during the year. The upsurge in prices, which experienced considerable deceleration during 1981, exhibited further deceleration during 1982 as evident from the movement of wholesale price indices. The annual average wholesale price index displayed a rise of about 5.7 per cent in 1982 over 1981 as compared with a rise of about 6.7 per cent in 1981 over 1980 and about 17 per cent in 1980 over 1979. Item wise, wholesale price index for food items increased by 2.9 per cent in 1982 over 1981. The main contribution to the increase in general index in 1982 thus, resulted from 13 per cent increased in the index of non-food items. In the previous year, the contribution to the total increase was shared equally by both the groups (food and non-food).

In recent years, the wholesale price index in Assam (base 1953=100) has been increasing at a rapid rate. Accordingly the wholesale price index in Assam rose from 875.0 in 1985 to 1229.0 in 1990 showing an increase the price level by 40.4 per cent during 1985-90. Again the wholesale price index in Assam (Base 1953=100) has further rose to 1625.0 in 1993 and then to 1779 in 1994 showing an annual rate of inflation to the extent of 4.2 per cent in 1993 and 9.47 per cent in 1994 over the previous year.

Item wise, wholesale price index for food items increased by 10.9 per cent in 1991 over 1990. The main contribution to the general index in 1991 haw resulted from 19.7 per cent increase in the prices of non-fo0d items. Thus due to increase in the prices of non-food articles, the general price level in Assam has increased considerably in recent years.

In general, the price situation in Assam reflects more or less faithfully the all India phenomenon. However, the price situation sometimes happen to be more sensitive and uncertain in Assam due to a variety of factors like bottleneck in the transport sector, fast expansion of demand, diverging trend in agricultural production, heavy dependence on outside sources of supply of most of the essential consumer goods etc. Price situation in Assam therefore, requires constant vigilance in the shape of maintenance of uninterrupted supply of essential commodities, effective check on malpractices like hoarding and gearing up of the public distribution system throughout the State.

Price level Difference between Assam and all India

Behaviour of prices has no uniformity over time and space. Price of same commodity differs at different points of time at any particular place and from place to place at any particular point time due to various reasons. Variations in demand and supply cost of production and marketing taxation, trade practices, marketing and transportation facilities of different commodities at different times. Some times it is quite difficult to compare prices of even the same commodity in different places due to difference in quality and variety. Finding out the inter-state differences in costliness in much more difficult. The usual consumer price index numbers denote only the movement of consumer price at any particular place or state at different points of time and not between different place or States.

Cost structure in Assam is very high. This is due to existence of higher price level in the State in comparison to other States.

Shri K.K. Bhatia, Director of Labour Bureau Government of India in an article on ‘Comparative Costlines-a New Dimension to consumer Price Index Number” (Published in the Labour Bureau’s Silver Jubilee Souvenir 1940-71” issue) has discussed comparative cost of living and presented two tables worked out on two different methods, viz; (1) Common Commodity Method, and (2) Standard Basket Method, showing preliminary estimate of comparative costliness of selected Centres of different State of India with Delhi as the Base. One of thee two tables, which is basing on standard Basket Method is given below.

Table No. 13.2

Preliminary Estimates of Indices Comparative Costliness of elected

Centres on Delhi base.

 

States and Centres

 

                   Standard Basket                               Method

 

1964

 

1965

 

 1966

 

1967

 

 1968

 

Average for 5 years

1

2

3

4

5

6

7

1  Andhra Pradesh (Hyderabad)

2  Assam (Digboi)

3 Bihar (Jamshedpur)

4 Gujrat (Ahmedabad)

5 Haryana (Yamunanagar)

6 Jammu & Kashmir (Srinagar)

7 Kerala (Alwaye)

8 Madhya Pradesh (Bhopal)

9 Maharashtra (Bombay)

 

10 Mysore (Bangalore)

 

11 Orissa (Sambalpur)

 

12 Punjab (Amritsar)

 

13  Rajasthan (Jaipur)

 

14 Tamil Nadu (Madras)

 

15 Uttar Pradesh (Kanpur)

 

16 West Bengal (Calcutta)

 

86

109

99

117

83

 

65

102

91

126

92

64

96

85

100

94

100

89

106

99

117

84

 

70

106

90

128

97

65

96

84

101

95

97

 

93

120

111

118

89

 

77

108

93

 130

102

73

100

89

103

89

101

86

127

114

121

93

 

61

107

95

 123

96

69

102

92

95

90

98

83

119

105

114

90

 

59

 111

88

 122

93

69

103

85

89

89

99

 

87

 118

107

117

88

 

66

107

91

 126

96

68

99

87

98

91

99

Source: Labour Bureau's Silver Jubilee Souvenir

From the table given above (NO. 13.2), it is seen that the index according to Standard Basket Method for Digboi (Assam) is higher by 18 per cent over Delhi. This index for Digboi is again the Second highest in the country following Bombay. If Digboi is taken to represent Assam, and the average of the 16 centres to represent India, then according to this index (Standard Basket Method) it is 21 per cent higher. It may be noted that those indices are meant for working class population only.

Further, for some minimum consumption standard the per capita annual consumption expenditure of rural population in Assam is Rs. 233 as against Rs. 170 for India as a whole. In Assam (Guwahati) the prices of most essential commodities are generally higher than those in other centres of other centres of other Indian States.

Taking all these into consideration, broadly speaking it is felt that the consumer prices level in Assam may be taken to be about 20 per cent higher than all India average. The cost structure in Assam is thus very high and this has raised the cost of all the projects under different plans.

Causes of Price Rise in Assam

Price situation in Assam happens to be very much sensitive and uncertain. The State is experiencing an upsurge in price since the introduction of planned development process. The basic causes responsible for this increasing trend in prices are the steadily accelerating tempo of investment programme from year to year, insufficient production in relation to demand, deficit financing in the Government sector, expansion of bank credit in the private sector, fast expansion of demand, diverging trend in agricultural production, heavy dependence on outside sources of supply of most of the essential consumer goods, bottlenecks in the transport sector and substantial hoarding etc.

Thus the price rose in Assam as a result of either rise in demand or fall in supply or both.

Following are the main causes of rise in Assam.

1. Increase in Money Supply: Increase in money supply within the state is a very important reason behind the continuous rise in price in the State. Central assistance and overdrafts from Reserve Bank of India, which were the two major inflationary sources for collecting resources for financing plans in Assam, created some impact on the price level of the State. The growing amount of central assistance in the form of loans and grant from the Planning Commission and over-drafts from Reserve Bank raised the inflow of money supply within the State. But as all this amount were not productively utilised and as Assam had to spend much on the preparation of basic economic infrastructure within the State, production could not be raised significantly. Thus, increase in production lagged behind the increased in money supply, which tended towards serious inflationary spiral of price level in Assam.

2. Heavy Investment Expenditure: Investment expenditure in the public sector is increasing day by day in Assam with the growth of plan expenditures resulting in excessive demand for market goods and services which ultimately created an excessive rise in prices in the State.

3. Higher income elasticity of demand: Income elasticity of aggregate demand was more in the case of Assam at the initial stages of development. This was quite natural in a poor state like Assam where the marginal propensity to consume of the people of the State is quite high. Thus any increase in money income is always putting a heavy pressure on the demand side of the market aggravating the already increased price level in the State.

4. Budget Deficits: The State Government is maintaining deficit in its budget every year. Although in certain years revenue budgets were balanced but the maintenance of deficits in its capital budget had experienced inflationary effect. Thus the budgetary deficits have had a pronounced inflationary effect.

5. Growth of Population:  Population pressure in Assam is very heavy. Census data show that Assam has one of the highest demographic growth rates in the country, the growth in the decade 1961-71 and 1971-81 being 34.95 per cent as against 24.80 per cent for all India. This increase in the size of population brought about rise in prices particularly in the prices of food articles.

6.  Decline in Production:  In Assam there has been from time to time setbacks to agricultural and industrial production, which are making the matters still worse. Assam is unfortunately one of these few states, which are every now and then visited by natural calamities such as floods and droughts. Thus the agricultural and industrial production of the State are facing setback every year due to the occurrence of natural calamities which is creating an abnormal increase in the prices of essential goods in the State.

7.  Hoarding and Black Marketing:  In Assam, there is large scale hoarding and black marketing of essential goods by the speculative traders and black marketers, which resulted increase in the prices of these goods. In this respect, black money is playing an important role in speculation and hoarding.

8.  Dependence on outside sources:  Assam is depending heavily on outside sources of supply of the essential consumer goods. Thus any disruption of supply of these goods from outside sources raises their prices.

9.  Transport Bottleneck:  Bottlenecks in the transport sector are also responsible for the increased price level in Assam. During the summer season, transport sector in Assam faced setbacks frequently due to floods leading to increase in the price level in the State.

10.  Changing policy regarding control:   The changing policy of the Government of Assam in connection with controls on prices and goods has been aggravating the problem of soaring prices. Partial controls over the prices and supply of essential goods create black markets and thus raise effective prices of the consumer goods in the State.

 Remedial Measures

Price rise in Assam is to be checked by applying a package of measures directed towards increasing supplies of goods and restraining excess demand. The following measures adopted by the Government to control the level of price in Assam are worth mentioning.

Firstly, steps were taken by the State Government to increase the supply of food grains through larger imports from other States, internal procurement, increased number of fair price shop, and greater releases of stocks in order to secure a better balance between aggregate monetary demand and overall supplies of essential consumer goods especially food grains. Other measures adopted were the ban of forward trading in food grains, restriction on the inter-state movement of food gains, fixation of minimum support prices for increasing availability of food grains.

Secondly, effort was made for increasing agricultural production in the State, which included creation of additional capacity, minimisation of the impact of foreign exchange shortage, incentives to secure larger output and decontrol of certain commodities.

Thirdly, the State Government adopted some taxation measures to curb spending and to provide incentives for saving.

Fourthly, monetary measures were introduced for reducing pressure of excess demand in the State by restricting supply of credit through controls of credit.

The measures adopted for checking rise in price in Assam have not been successful. Price level in the State continued to increase persistently due to disequilibrium between demand and supply. Productions of agricultural and industrial goods are lagging behind the money incomes originating from large Government outlays on development programmes. The state Government also failed to check deficit in its budgets. Activities of hoarders, profiteers and black marketeer are still rampant in the State.

Thus, in the coming years the State Government should try to boost up both agricultural and industrial production through efficient utilization of available resources within the State and should adopt strong measures for curbing antisocial activities of the traders. The State Government should also adopt all the fiscal and monetary tools efficiently for maintaining a balance between the demand and supply of essential goods and services in the State.

STATE FINANCE

Introduction

The Government budget is one of the most important instruments of economic growth of a State or a Country. The budget of the State, which reflects in general the totality of efforts on the part of the Government to discharge both social and economic responsibilities, has recorded manifold increase with the changes in time. Between 1950-51 and 1978-79, the size of budget of the Government of Assam has increase from Rs. 9.3 crores to Rs. 412 crores and then it increased to Rs.905 crores 1980-86 to Rs. 6143 crores in 1993-94 and finally to Rs.6364 crores in 1994-95.

Sources of Revenue

The major two sources of revenue of the Government of Assam include tax and non-tax revenue. Tax is the major source of revenue. Tax is of two types-Direct tax and Indirect tax. Taxes imposed by the Government of Assam may be of three types-(a) Taxes on Land and Income, (b) Taxes on Property, (c) Taxes on Commodities and services. Taxes on land and income include agricultural income tax, land revenue, business tax. Taxes on property tax include stamp and registration fees, urban property tax etc. Taxes on commodities and services include general sales tax, tax on motor spirit, tax on motor vehicles, tax on passengers and goods carried, taxes on jute and leathers, amusement tax, state excise duty, taxes on trade and business, taxes on electricity etc.

Moreover, the Government of Assam is also getting a share of taxes imposed by the Central Government. These shares include share of Central excise duty, share of income tax, share of wealth tax and share of additional excise duties. Moreover, the state government is also getting royalty on mineral resources from the Central.

Assam Government is also getting revenue from non-tax sources. These include-interest, dividend, income from social and community services, income from general services, income from economic services, income from forest, income from irrigation and movement of boats, profits of state public sector enterprises, viz., ASTC, ASEB and other enterprises. Moreover, the government of Assam is also getting various grants from the central government.

Heads of Expenditures

Head of expenditures of the Government of Assam can be divided into two parts-      (a) Revenue expenditures, (b) Capital Expenditure. The revenue expenditures of the government of Assam are four types: (1) General services (2) social and community services (3) economic services and (4) grants and contribution.

General services include administrative expenditure, departmental expenditure, pension, interest payment etc. Head of expenditure on social and community services include expenditure on education, arty, culture, health and family welfare, public health etc. The heads of expenditure on economic services include expenditures on agriculture and allied activities, industry, mines, water resources and power development, transport and communication etc. Grants and contribution include different the different types of recurring and non-recurring grants and contributions to various institutions and organisations.

 The capital expenditure of the state government is broadly divided under general services, social and community services, economic services etc.

Growth of Receipt and Expenditures in the Budget of the Government of Assam

With the growth in the size of the State Government budgets the total expenditure and receipts of the State increased significantly.

On the receipt side, the revenue receipts have increased from Rs. 10.3 crores in 1950-51 to Rs. 37.9 crores in 1960-61 and to Rs. 111.1 crores in 1969-70. Tax receipts have increased from Rs 6.5 crores in 1950-51 to Rs. 47.9 crores in 1969-70. Non-tax receipts increased from Rs. 3.4 crores in 1950-51 to Rs. 63.2 crores in 1969-70. Thus the gross receipts under the consolidated Fund on the State Budget of Assam had increased from Rs. 19.6 crores in 1950-51 to Rs. 54.17 crores in 1960-61 and then to Rs 295 crores in 1970-71.

On the expenditure side, the total gross expenditure (both revenue and Capital) rose from Rs.1890 crores in 1950-51 to Rs.65 crores in 1960-61 and then to Rs. 293 crores in 1970-71. The table given below shows the receipt and expenditure under the consolidated fund of the State Budget during the period 1950-51 to 1994-95.

Table No. 14.1

Receipts and Expenditures from the consolidated Fund of Assam Government Budget (Rs. Lakhs)

Year

 

 

           Receipts                                      Expenditure

 

Surplus(+)

Or Deficit(-)

 

Revenue

Capital

Total

Revenue

Capital

Total

 

1

2

3

4

5

6

7

8

1950-51

1960-61

1970-71

1975-76

1978-79

1980-81

1985-86

1989-90

1990-91

1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

10.29

37.99

1,02.82

20201

30605

43616

93752

150067

177664

255364

284229

331746

331500

337574

429187

444293

9.29

16.18

1,92.05

5106

11322

14450

88214

116554

220057

96452

102956

80233

145241

331667

134420

136204

19.55

54.17

2,94.87

25307

41927

78066

244996

266621

397722

350797

387185

411979

476741

669241

566218

580497

9.65

42.49

1,22.56

17936

27149

34400

94310

177918

192040

231330

253887

290118

324188

357576

457046

482837

9.25

22.62

1,70.58

5500

14037

56070

69073

111857

204384

142232

132997

145325

148119

310049

161644

153311

18.90

65.11

2,93.14

23436

41231

90470

241069

289775

396424

373562

386884

435443

472307

667625

618692

616148

(+) 65

(-) 1092

(+) 173

(+) 1871

(+) 696

(-) 12404

(+) 3936

(-) 23154

(+) 1298

(-) 22765

(+) 301

(-) 23464

(+) 4434

(+) 1616

(-) 52474

(-) 35651

Source :1.  Economic Survey, Assam, 1973-74, 1982-83, 1989-90

12.  Budget at a Glance, Assam, 1950-51 to 1995-96, 1997-98

The table (no. 14.1) reveals further that although the total revenue receipts in the State budget increased from Rs.102.82 crores in 1970-71 to Rs.202 crores in 1975-76 but the total capital receipt of the State declined from Rs.192 crores to Rs108 crores during the same period leading to the fall of total receipt from Rs.294 crores to Rs.253 crore during the above mentioned period. Similarly, the total gross expenditure of the state budget declined from Rs 293 crores in 1970-71 to Rs. 234 crores in 1975-76. The main reason behind these declines in gross receipt and expenditures was the separation of Meghalaya and Mizoram areas from Assam.

The gross receipts from the consolidated fund then gradually started increasing from Rs. 253 crores in 1975-76 to Rs. 392 crores in 1979-80 and then jumped to Rs. 780 crores in 1980-81, which is just doubled within 5 years. The gross receipts then further increased from Rs. 2450 crores in 1985-86 to Rs. 3974 crores in 1990-91 and to Rs. 5662 crores in 1996-97. In the State budget of 1997-98 the gross receipts is fixed at Rs. 5805 crores. This sudden rise in receipt in recent years is attributable to the rise in receipt under revenue, capital and public account.

The total expenditure under the consolidated fund of the state budget also declined from Rs.293 crores in 1970-71 to Rs.234 crores in 1975-76 due to the separation of Meghalaya and Mizoram from the State. Since then the total expenditure rose from Rs. 2410 crores in 1985-86 to Rs. 3964 crores in 1990-91 and then to Rs. 4723 crores in 1994-95. It is seen that the expenditure has significantly increased by Rs. 456 crores in 1993-94 over the previous year. This sudden rise in the expenditure is attributable to the rise in expenditure under revenue account to the tune of Rs. 363.0 crores over the year the year 1992-93. The expenditure under revenue account had gone up gradually from Rs. 1920 crores in 1990-91 to Rs. 4828 crores in 1997-98 (B) showing a rise of 151 per cent during the period of eight years.

The total gross expenditure in Assam then jumped to Rs. 4354 crores in 1993-94 and to Rs.4723 crores in 1994-95 (R.E). In the State budget of 1997-98, the total expenditure is estimated to be Rs.6161 crores. This sudden increase in the gross receipts in recent years is mainly attributable to the significant increase in revenue expenditure, capital expenditure, and outgoings from public account.

Table No. 14.2

Revenue Receipts of the Government of Assam: Tax and Non Tax Revenue

 

Revenue from different Sources

 

 1950-51

 

1960-61

  

1970-71

    

1980-81

    

1990-91

   1995-96

(B.E.)

1.   State     Sources :

1.1  StateTax      

Revenue

1.2  Non-Tax      

Revenue

 

2.    Central         Sources :

2.1   Share of Central         Taxes

 

2.2    Non-tax

         Revenue

 

3.     Total        Revenue

 

   

507

(51.1)

227

(22.8)

 

 

 

  142

(14.3)

 

 

116

  (11.8)

 

992

 

 

1225

(32.8)

738

(19.7)

 

 

 

  446

(11.8)

 

 

1325

  (35.9)

 

3734

 

 

2813

(27.8)

794

(7.85)

 

 

 

  1789

(17.6)

 

 

4723

  (46.6)

 

10119

 

 

7991

(18.3)

26244

(60.2)

 

 

 

  5198

(11.9)

 

 

4182

  (9.6)

 

43615

 

 

40223

(22.6)

27752

(15.6)

 

 

 

  50555

(28.4)

 

 

59134

  (33.3)

 

177664

 

 

79679

(21.3)

44008

(11.7)

 

 

 

  98646

(26.3)

 

 

152081

  (40.7)

 

374414

 

Sources :   (1)  Statistical Hand Book, Assam, 1995.

                  (2)  State Taxation in Assam, p-5

                  (3)  Economic Survey, Assam 1970-80, 1982-83, 1989-90

Note  :  Figures in brackets are the percentage shares of total revenues.

The table (no. 14.2) given above shows that in 1950-51 the revenue of the Government of Assam from State Taxes was only Rs.5.07 crores. Then it rapidly increased to Rs.79.91 crores in 1980-81 and then to Rs.796.8 crores in 1995-96.This was made possible due to levy of new taxes and duties as well as extension of the coverage and enhancement of rates of the existing taxes and duties. Besides, tax base in Assam had also widened due to economic planning.

Although in terms of absolute size taxation increased, in terms of percentage of State’s total receipts it showed a declining trend. In 1950-51, the share was 51.1 per cent of the State’s total revenue but it slid down to 32.8 per cent in 1960-61 and then to 27.8 per cent in 1970.71, 18.3 per cent in 1980-81. But in 1995-96, the share or State taxes declined to 21.3 per cent. This decline in the share of state taxes happened due to heavy increase in the State’s non-tax revenue both from the State and central sources as also of central taxes.

The non-tax revenue of the State rose from Rs. 2.27 crores in 1950-51 to Rs. 7.94 crores in 1970-71 and to Rs. 262.44 crores in 1980-81 but then again raised to Rs. 440.08 crores in 1995-96. Although in terms of absolute size, non-tax revenue increased but in terms of percentage of States total receipts, it declined from 22.8 per cent in 1950-51 to 7.85 percent in 1970-71 but then the share of non-tax revenue suddenly increased to 60.2 per cent in 1980-81 and then it again declined to 11.7 per cent in 1995-96.

The share of Central taxes in absolute size although increased by manifold amount i.e. from Rs. 1.42 crores in 1950-51 to Rs. 41.56 crores in 1970-71 and then to Rs. 986.46 crores in 1995-96 but in terms of percentage of Stage’s total revenue, it increased marginally from 14.3 per cent in 1950-51 to 17.6 per cent in 1970-71 and then to 26.3 per cent in 1995-96.

The non-tax revenue from Central sources, which was only Rs. 1.16 crores in 1950-51 gradually, increased to Rs. 47.23 crores in 1970-71 and then to Rs. 1520.81 crores in 1995-96. In terms of percentage of State’s total revenue receipts also the non-tax revenue from central sources showed an increasing trend. In 1950-51, the share was 11.8 per cent State’s total revenue receipt but it gradually increased to 46.6 per cent in 1970-71 but it declined abruptly to 9.6 per cent in 1980-81 and then it again increased to 40.7 per cent in 1995-96.

Thus, total revenue receipts of the Government of Assam rose from Rs.9.92 crores in 1950-51 to Rs.101.19 crores in 1970-71 showing a rise of 920 per cent. The State revenue receipts then gradually increased to Rs. 436.15 crores in 1980-81 showing a rise of 331 per cent over 1970-71. In 1990-91 the total revenue receipt of the State stood at Rs. 1776.64 crores but then it increased to Rs.2553.0 crores in 1991-92 and then to Rs. 3944.14 crores in 1995-96 showing a rise of 110.7 per cent overt 1990-91. In the budget estimates of 1997-98, the total revenue receipt of Assam is estimated at Rs. 4442.93 crores.

Assam Government Budget, 1987-88 The Assam budget for 1987-88 was presented in the Assam Assembly on February 10, 1987 showed an overall deficit of Rs. 69.58 crores despite proposal to levy fresh sale tax on tea and enhancement in the rate of taxation in certain other commodities. The following table gives bird’s eye view of the Assam budget, 1987-88.

Table No. 14.3

Government of Assam Budget, 1987-88-A Summary

(In Lakh of Rs.)

Heads

Budget Estimates

Opening Balance

A.      Receipts

Revenue Receipts

Capital Receipts

Receipts under contingency Fund

Receipts under Public

Account

Total Receipts

Grand Total

(-) 49,66,92

 

1256,42.36

1021,99.28

200.00

 

690,20.00

 

2970,61.64

2920,94.72

B.      Expenditure

Expenditure  on Revenue

Account

Capital Expenditure

Expenditure under

contingency Fund

Outgoings From Public

Account

Total Expenditure

Closing Balance

Grand Total

 

1259,59.08

 

1052,84.62

-

 

678,09.00

 

2990,52.70

(-)69,57.98

2920,94.72

C.     Net Result

Revenue Account

Outside the revenue

Account

Net Surplus (+) or

Deficit (-)

 

(-)3,16.72

(-)16,74.34

 

(-)19,91.06

Source : Budget at a Glance, Government of Assam.

The Table (no. 14.3) showing the budget estimates, 1987-88 of the Government of Assam, reveals that total receipts during the year 1987-88 is estimated at 297.61 crores against the total estimated expenditure of 2,99.52 crores thus leaving a net deficit of Rs. 19.91 crores. Taking into account the opening deficit of Rs. 19.91 crores. Taking into account the opening deficit of Rs. 49.67 crores, the budget for 1987-88 shows an overall deficit of Rs. 69.58 crores. However, the net accrual of about Rs. 4.15 crores from the proposed taxation measures will ultimately reduce the deficit to the extent leaving an uncovered gap of Rs. 65.4 crores.

It is proposed to enhance the rates of sales tax from the existing 10 per cent to 15 per cent in case of aviation fuel, from 12 per cent to 13 per cent in respect of arms and ammunition, clock and watches, iron safe and almirahs, refrigerators, air conditioners, carpets, plastic and rubber products, cosmetics and some toilet requisites and from the existing 3 per cent to 6 per cent on manufactured tea. It is also proposed in the budget to enhance the rates of entertainment tax from the existing 25 per cent to 30 per cent and to levy sale tax at the rate of 1 per cent on tea sold in auction at Guwahati hitherto exempted from sales tax.

The State budget proposed to reduce the rates of sales tax applicable to bicycle and most kinds of medicines from the existing level of 7 per cent to 4 per cent. The reduction in sales tax on the said items will result in loss of revenue to the tune of Rs. 80 Lakhs while the new tax proposals at enhanced rates are expected to yield net additional revenue to the extent of  Rs.415 crores

Assam Government Budget, 1993-94, 1994-95 and 1995-96

In recent years, the budgets of the Government of Assam have been experiencing considerable changes. In March 22, 1993, 1994 and 1995, the Government of Assam presented its budgets for the year 1993-94, 1994-95 and 1995-96. The following table gives a bird’s eye view of three budgets of Assam.

Table No. 14.4

Budget at a Glance of Government of Assam

1993-94, 1994-95 and 1995-96

(In lakhs of Rupees)

 

Actual

1993-94

Budget

Estimates

1994-95

Revised Estimates

1994-95

Budget

Estimates

1995-96

A.     RECEIPTS:

I.        Consolidated Fund Revenue Account Capital Account  

                       Total

II.   Contingency Fund

Account

III.  Public Account

         Total(I+II+III)

 

 

33,17,46

8,02,33

41,19,79

 

1.48

19,23,65

60,44,92

 

 

35,83,07

11,50,97

47,34,04

 

 

16,91,50

64,25,54

 

 

33,15,00

14,52,41

47,67,41

 

 

16,91,50

64,58,91

 

 

37,44,14

12,81,92

50,26,06

 

 

19,36,00

69,62,06

B.     EXPENDITURE :

I.   Consolidated Fund

Revenue Account

Capital Account

           Total

II.    Contingency Fund

Account

III.     Public Account

            Total(I+II+III)

 

 

29,01,18

14,53,25

43,54,43

 

0,04

17,88,59

61,43,06

 

 

31,41,78

14,67,97

46,09,75

 

 

16,40,61

62,50,36

 

 

32,41,88

14,81,19

47,23,07

 

 

16,40,61

63,63,68

 

 

37,17,16

14,82,76

51,99,92

 

 

18,84,60

70,84,52

C.     TRANSACTIONS   DURING THE YEAR :

Surplus(+)

Deficit (-)

 

 

 

98,14

 

 

1,75,18

 

 

95,23

 

 

 

1,22,46

D.   OPENING BALANCE:

Surplus(+)

Deficit (-)

 

 

1,60,15

 

 

3,52,12

 

 

2,58,29

 

 

1,63,06

E.   CLOSING BALANCE

Surplus(+)

Deficit (-)

 

 

2,58,29

 

 

1,76,94

 

 

1,63,06

 

 

2,85,52

Source : Budget at a glance, 1995-96, Government of Assam

Actuals of Budgetary Position of 1993-94 :

The table (no. 14.4) reveals the actuals of the budget of 1993-94 of the Government of Assam. The actual figures show that the actual revenue receipts and capital receipts of the Government of Assam were Rs. 3317.46 crores and Rs. 802.33 crores respectively. Including the other sources of receipts total receipts of the Government of Assam in 1993-94 was Rs. 6044.92 crores. In this year, total revenue expenditure and capital expenditure of the Government of Assam stood at Rs.2901.18 crores and Rs.1453.25 crores respectively. Covering the other expenditure, total expenditure of 1993-94 stood at Rs. 6143.06 crores. Thus the actual transaction during the year shows a net deficit of Rs.94.14 crores and including the opening balance of deficit worth Rs. 160.15 crores, the net closing deficit balance in 1993-94 stood at ,Rs. 258.29 crores.

Revised estimates of the Assam Budget, 1994-95 :

Again the revised estimates of the receipts and expenditures of Assam budget, 1994-95 shows that the total revenue receipts and capital receipts during the year were Rs. 3315.00 crores and Rs. 1452.41 crores respectively. Including the other sources of receipts, total receipts of the Government of Assam in 1994-95 was Rs.6458.91 crores in 1994-95. During this year, total revenue expenditure and capital expenditure of the Government of Assam stood at Rs. 3241.88 crores and Rs. 1481.19 crores respectively. Covering the other heads .88 crores and Rs. 1481.19 crores respectively. Covering the other heads of expenditure, total expenditure in 1994-95 stood at Rs. 95.23 crores and including the opening deficit balance of  Rs. 258.29 crores, the net closing deficit balance stood at Rs. 163.06 crores in 1994-95 thereby improving the progressive and up-to-date position of the situation at the end of 1994-95 by Rs. 95.23 crores.

Budget Estimates of Assam Budget, 1995-96 :

The budget estimates of the Assam Budget for the year 1995-96 was presented in Assam Assembly on 22nd March 1995. The Budget estimate shows that the total revenue receipts and capitals and capital receipts of the Government of Assam are estimated at Rs. 3444.14 crores and Rs. 1281.92 crores respectively. Including the other source of receipts, total receipts of the Government of Assam is estimated at Rs. 6962.62 crores in 1995-96. Thus the budget for 1995-96 envisaged improvement in receipts to the extent of Rs. 543.15 crores over that of the revised estimates for 1994-95.

Again, in this year, the total revenue expenditure and capital expenditure of the Government of Assam in 1995-96 are estimated at Rs. 3717.16 crores and Rs. 1482.76 crores respectively. Covering the other heads of expenditures, total expenditure of 1995-96 is estimated at Rs. 7084.52 crores. Thus on the expenditure side, however, there would be an estimated increase of Rs. 720.84 crores over that of revised estimates for 1994-95.

Thus the actual transaction during the year shows an estimated deficit of Rs. 122.46 crores with an anticipated opening deficit balance of Rs. 163.06 crores, the year 1995-96 was anticipated to close with a deficit of Rs 282.52 crores. This huge amount of closing deficit balance is not a welcome trend. However, the Government assured the House that this deficit would be bridged by better mobilisation of tax and non-tax revenue, economization in expenditures and overall better financial management.

The current budget did not makes any fresh attempt to impose any fresh taxes rather announced exemption of sales taxes on wax candles, polythene-lined jute bags, sindoor, kumkum, low cost foot wear costing Rs. 20 or less, educational accessories like charts, maps, globes, dusters etc. and UNICEF cards and mangal sutras costing not more than Rs. 1000. The budget also mentioned that at the end of 1994-95, the estimated public debt amount stood at Rs.4798.41 crores out of which the main debt obligation would be towards the Centre.

Appraisal :

The Assam Budget for 1995-96 can be termed as a moral exercise on fiscal fronts where drastic attempts have been made for the betterment of the State’s economy.

The Assam budget does not propose any fresh tax and what is more, it has reduced the existing rates of taxes on some commodities and exempted some non-essential items from sales tax, which as a whole may be guided by populist move. Moreover, the chances of additional resource mobilization during the year are also remote.

While the State’s annual plan expenditure has been fixed at Rs. 1418 crores, the annual budget proposes to spend Rs. 7048.52 crores during 1995-96. Whatever may be the proportion of plan and non-Plan expenditure of the State the Finance Minister of the State honestly admitted that a “big chunk of our non-Plan expenditure” is eaten up by the head such as establishment expenditures, including pensioner liabilities. Moreover, expenditures on law and order, relief and rehabilitation and annual debt servicing by way of payment of installment of principal and interest on loan from central Government and institutional loans also swallow a considerable amount of non-Plan budget. Due to this high non-Plan budget, the developmental works of the State is being starved to paucity of funds. While more emphasis should have been laid on certain fronts viz., flood control, irrigation, security measures in border areas and their development and industrialization of the State, but the Budget (1995-96) has only made pathetically low provisions for these heads.

But this budget has included certain popular measures such as - (a) monthly pension to age-old farmers, (b) monthly pension to old widows, (c) widening the scope of unemployment allowance to educated unemployed, (d) Extension of the coverage of scheme of Rs. 2 per Kg. Rice to 15.33 lakh families from the present 4 lakh families, (e0 provision of dwelling houses for poor families, (f) creation of job potentials for more than 23 lakh unemployed youths etc. Which is expected to benefit the socially and economically backward classes? But the success of these schemes depends how far these schemes can reach the target groups.

Another welcome feature of the current budget is the introduction of the 8-year period Rs. 480 crore would Bank Project of Rural Infrastructure and Agricultural service, which in scheduled to commence from 1995-96 with the present budget provision of Rs.44.64 crores. If properly implemented, this type of schemes can certainly develop rural infrastructures such as roads, irrigation etc.

One of the important snags in the current budget is the closing deficit balance of Rs. 285.52 crores including the last years closing deficit of Rs. 163.06 crores. In the absence of any initiative for additional resource mobilisation, this deficit even might increase.

Finally, the budget does not reflect a better growth either in the agricultural or industrial sector in future and put least stress on the industrial infrastructure, power supply and also removing regional imbalance within the States.

Assam Government Budget, 1996-97 and 1997-98

In recent years, the budgets of the Government of Assam have been experiencing considerable changes. On 14th December 1996 and on 14th March 1997, the Government of Assam presented its budgets for the year 1996-97 and 1997-98. The following table gives a bird’s eye-view of two budgets.

Table 14.5

Budget at a Glance of Government of Assam

(Rupees in Crores)

 

Actuals

 

Budget

Estimates

1995-96

Revised

Estimates

1996-97

 

Budget

Estimates

1996-97

Budget

Estimates

1997-98

A.  RECEIPTS :

I.  Consolidated  Fund

Revenue Account

Capital Account

TOTAL

 

I.        Contingency Fund Account

 

III.  Public Account

      [TOTAL (I+II+III)]

 

 

  3375.74

3316.67

6692.41

 

0.91

 

2299.09

8992.41

 

 

 

  4291.87

1370.31

5662.18

 

-

 

1821.03

7483.21

 

 

  4273.50

1344.20

5617.70

 

-

 

1821.03

7438.73

 

 

  442.93

1362.04

5004.97

 

-

 

 1509.28

7314.25

B.   EXPENDITURE :

I. Consolidated Fund 

Revenue Account

Capital Account

       TOTAL

 

II Contingency Fund Account

 

III.  Public Account

    TOTAL (I+II+III)

 

 

 

  3575.76

3100.49

6676.25

 

-

 

  1938.72

861.97

 

 

  4570.48

1616.44

6186.92

 

-

 

  1767.06

7953.98

 

 

4325.84

1569.42

5895.26

 

-

 

1916.96

7812.22

 

 

4628.37

1533.11

6161.48

 

-

 

1434.92

7596.40

C.TRANSACTIONS DURING THE YEAR :

Surplus(+)

Deficit (-)

 

 

    (+)377.44

 

  -

(-)470.77

 

 -

(-)373.49

 

        -

(-)282.15

 D.OPENING BALANCE:

Surplus(+)

 

Deficit (-)

 

 

 

 

 

 

(-)358.38

 

 

-

(-)295.52

 

 

(+)19.06

-

 

 

-

(-)354.43

 E. CLOSING BALANCE

Surplus(+)

Deficit (-)

 

 

 

(+)19.06

 

 

-

(-)766.29

 

 

-

(-)354.43

 

 

-

(-)636.58

Source : Budget at a glance, 1997-98, Government of Assam

Revised Estimates Assam Budget 1996-97 :

The Revised estimates of the receipts and expenditures of Assam budget, 1996-97 shows that the total revenue receipts and capital receipts during the year were Rs. 1370.31 crores and Rs. 5662.18 crores respectively. Including the other sources of receipts, total receipts of the Government of Assam in 1996-97 was Rs. 5662.18 crore. During the Years, total revenue expenditure and capital expenditure of the Government of Assam stood at Rs. 4570.48 crore and Rs. 1616.44 crore respectively. Covering the other heads of expenditure, the total expenditure in 1996-97 was Rs 7953.96 crore. Thus the transaction during the year shows a deficit of Rs. 470.77 crore, including opening deficit balance of Rs. 295.52 crore and closing deficit balance of Rs. 766.29 crore.

Budget Estimate of Assam Budget, 1997-98

The budget estimates of the Assam Budget for the year 1997-98 was presented in Assam Assembly on 14th March 1997. This budget estimate shows that the total revenue receipts and capital receipts of the Government of Assam is estimated at Rs. 4442.93 crore and Rs. 1362.04 crore respectively. Including the other sources of receipts, total receipts of the Government of Assam are estimated at Rs. 5804.97 crore in 1997-98. Thus the budget for 1997-98 envisaged improvement in receipts to the extent of Rs. 142.79 crore over that of the revised estimates for 1996-97.

Again, in this budget, total revenue expenditure and capital expenditure of the Government of Assam in 1997-98 are estimated at Rs. 4628.37 crore and Rs. 1538.11 crore respectively covering the other heads of expenditures, total expenditure of 1997-98 is estimated at Rs. 6161.48 crore. Thus on the expenditure side, however, these would be an estimated decrease of Rs. 25.44 crore over that of revised estimate for 1996-97

Thus the actual transaction during the year shows an estimated deficit of Rs. 282.15 crore with an anticipated opening deficit balance of Rs. 354.43 crore. The year 1997-98 is estimated to close with a deficit of Rs. 636.58 crore. This huge amount of closing deficit balance is not healthy trend. However, the Government assured the House that this deficit would be bridges by better mobilisation of tax and non-tax revenue, additional revenue mobilisation from the hike of sales tax, increased rate of tax on specified tea growing land, better tax compliance and economization of  expenditure and overall better financial management.

The current budget imposed a 10 per cent luxury tax on cigarettes, scented tobacco, including zarda, expensive mill made textiles and two to four per cent increase in taxes on food items like confectionaries, tinned food, hair dye materials, pressure cookers, music systems, shaving sets, mineral water, sanitary fitting, vegetables sold in sealed containers to augment more revenue.

Appraisal :

The Assam Budget for 1997-98 can be termed as a moral exercise fiscal fronts where some vital measures have been taken to augment additional resources worth Rs. 79 crores by imposing fresh taxes of luxury items, increase in sales tax in varying rates from two per cent of four per cent on 22 items and a 12 paisa increase on tax on specified land where tea is grown.

The budget also offers the biggest concession in the tea industry in the form of reduction of agricultural income tax from 60 to 45 per cent which the tea industry has been crying for long to bring the tax rate on par with the corporate tax. The budget expects that as a result of this measure, responsive tea market and higher growth in production would lead to increase in tax revenues. This is no doubt a good step to encourage the tea industry and also to attain a better tax compliance from this industry.

The total expenditure of the Government has been estimated at Rs. 6161.48 crore which is Rs. 25.44 crore less than the revised estimates of expenditure in 196-97. This is a welcome trend.

The large budgetary deficit of Rs. 636.58 crore, which is the highest so far, is really a cause of concern, which must be bridged at any cost. Attaining financial discipline should be the first agenda in this direction. However, the State Government expects that the fresh tax proposals and additional likely receipts to accrue from “enhanced oil royalty, reimbursement of security related expenditure, increase in the divisible pool of shared central taxes and duties and relief in debt payment” would help the Government to bridge its budgetary deficit.

It is quite important to note that such high scale of budgetary deficit must be contained at any cost otherwise the poor financial management of the Government would eventually bring the State in a whirlpool of financial bankruptcy.

However, the Budget has taken some important steps to mobilise additional resources and also allocated additional funds to some poverty alleviation schemes, which is no doubt welcome step.

Finally, the budget failed to reflect a better growth either in agriculture or industrial sector in future and put least stress on the industrial infrastructure, power supply and also to remove regional imbalance prevailing within the state.

 

 

RESOURCES

 

Nature was kind enough while blessing Assam with various natural resources. The total deposit of various natural resources indicates that Assam is quite rich in this respect. Natural resources in Assam include mineral resources, power resources and forest resources.

Mineral Resources

Minerals are the pre-requisite to industrial progress as they provide the raw materials to heavy industries, engineering, chemical and other industries, Assam, being a leading state of the north-eastern region of India, is well endowed with some of the important mineral resources. But mineral resources of the State have not yet been completely assessed. Following are the main mineral resources available in Assam.

Coal: Coal is an important mineral product in Assam. Coal provides fuel to households and industries in Assam along with other by-products. Coalfields in Assam are situated at Makum, Margherita, Nazira, Lankadaman, Jaipur, Ledo, Namdum etc. Total coal reserves (both proved and indicated inferred sources) of Assam is 295.2 million tonnes as per GSI assessment as on January 1,1994. Again the total coal reserves of some of the main coal fields in Assam are estimated to be 235.6 million tonnes for Makum, 30.0 million tonnes for Dilli-joypura, 2.5 million tonnes for Janji-Disai (Nazira) and 0.6 million tonnes for Koliajan in Karbi Anglong district. Total production of coal in Assam, which was 5.22 lakh tonnes in 1970, gradually increased to 5.82 lakh tonnes in 1975 and then to 6.49 lakh tonnes in 1978. In 1979-80, the production of coal in Assam came down to 5.84 lakh tonnes and then increased to 6.51 lakh tonnes in 1981. In 1989, total production of coal in Assam has increased to 8.4 lakh tonnes and then to 9.82 lakh tonnes and 12.92 lakh tonnes in March 1991 and 1994 respectively. In 1994, total production of coal in Assam constituted 0.49 per cent of the total coal production of the country as a whole.

Crude Oil : Petroleum (Crude) is the most important mineral product of Assam. Total production of petroleum crude in Assam accounts for nearly 50 per cent of country’s total petroleum output till 1970. The amount of production of petroleum (Crude) in Assam varied marginally between 44.7 lakh tonnes in 1977, 40.8 lakh tonnes 1978 and 44.5 lakh tonnes during 1979-80 as against 86.9 lakh tonnes in 1977 for all India. Total production of petroleum then fell down to 10.6 lakh tonnes in 1980 and then again increased to 51.5 lakh tonnes in 1986. Total production of petroleum crude in Assam further rose to 54.09 lakh tonnes in 1989 and then it slowly declined to 48.61 lakh tonnes in 1994. In 1994-95, Assam produced about 15.1 per cent of total petroleum crude (32.24 million tonnes) produced in India. Total reserve of crude oil at Sibsagar and Dibrugarh area is estimated to be 70.46 million tonnes. Oil deposits in Assam are found in Naharkatiya, Moran, Hugrizan, Rudrasagar, Galeky, Lakwa, Nazira, Teok etc. The first oil refinery in Assam was established at Digboi and then two other refineries were established at Guwahati and Bongaigaon. The main products of these refineries are petrol, high-speed diesel, Kerosene, Carbon, Wax, Naphtha, petro-chemicals etc. In 1981, total production of these three refineries in Assam was 15.7 lakh tonnes and then it increased to 25.3 lakh tonnes in 1989. In the mean time, the construction works of the 4th refinery had already started in Numuligarh of Golaghat District.

Natural Gas : Assam is well blessed by nature in respect of natural gas. Total reserve of natural gas in Assam is estimated to be 23,000 million cubic metres. This is available at Naharkatiya and Moran area. The quantity of natural gas utilised in Assam, however, increased from 848 million cubic metres in 1976 to 942 million cubic metres in 1979. In 1980, there was an abrupt fall in its utilisation to only 455 million cubic metres and then its utilization increased to 869 million metres in 1981. Total amount of natural gas utilized in India was 1,545 million cubic metres and thus Assam’s utilization of natural gas accounts for 59.8 per cent of the total utilisation in the country. Namrup Fertilizer plant and Namrup Gas Thermal Power Project are the main two projects using natural gas in Assam.

Moreover, in recent years, total amount of natural gas utilized in Assam has increased to 1030 million cubic metres in 1992 and then declined to 893 million cubic metres in 1994. But in India total production of natural gas in 1990-91 was 18.0 billion cubic metres. In the various Oil fields of Assam run by Oil India about 3.5 to 4 million sq. metres of natural gas are being emissioned daily. Out of which only 1.5 million sq. metres of natural gas are being utilised in the various industries of Assam and the remaining portion of natural gas are being flared up daily, leading to a huge loss of scarce resources. Assam Gas Company is also supplying natural gas to various tea gardens of Assam. Steps have also been taken to install one fertilizer factory at Mezeva near Nazira when natural gas available in the Sibsagar district will be commercially utilised. In BRPL of Bongaigaon, a good amount of natural gas is also being utilised. Moreover, recently steps have been taken to start a gas Cracker Project in Assam for suitable utilisation of huge amount of natural gas in the state. Moreover, the Assam Gas Based Power Project (AGBPP) at Kathalguri is all set to generate 100 MW of power in March, 1995 and will have a total installed capacity of 291 MW of electricity from six gas and three waste heat steam turbines.

Lime Stone : Lime Stone is also an important mineral product of Assam. It is used as an important raw-material for the production of Cement. Lime stone mines in Assam are available at Garampani and Koliajan in the district of Karbi Anglong and North Cachar Hills. Total reserves of limestone in Garampani and Koliajan area are estimated to be 78 million tonnes and 81 million tonnes respectively. Limestone in Assam is of cement grade. Koliajan reserves of limestone are being mined by Cement Corporation of India for Bokajan Cement Factory. Total production of limestone in Assam has been increased from 88 thousand tonnes in 1975-76 to 143 thousand tonnes in 1978 and then 289 thousand tonnes in 1979-80 and then followed by 269 thousand tonnes in 1981.

Again in 1984 total production of limestone in Assam has declined to 209 thousand tonnes and then it increased to 297 thousand tonnes in 1990 and then again gradually increased to 338 thousand  tonnes in 1994. Recently, steps have been taken for the establishment of some mini cement plant in Assam for the increasing use of its limestone reserves. Accordingly, the Karbi Anglong Chemicals Ltd. is going to establish a 100TPD mini Cement plant in the village of Amlokhi in Diphu.

Probable reserves of other minerals : Some other mineral resources are also located in Assam, which include Fire Clay, Kaoline, Iron Ore, Fullers Earth, Feldspar. Fire Clay is  available in Selvetta, Koliajan and Namdeng (Ledo) areas of Assam and their probable reserves are 2.10 million tonnes. Kaoline is available at Selvetta and Jaijuri area and its reserves are estimated to be 0.58 million tonnes. Iron ore is also found in Assam in the Chandardings, Lengupara and Kumari area of Goalpara district and also in Mahim area of Kamrup district and its probable reserves are estimated to be 17.6 million tonnes. Average content of iron ore in Assam varies between 40.12% and 46.45%. Both Fullers Earth and Feldspur are available at Kamrup district of Assam and its reserves are estimated to be 17.0 million tonnes and 0.02 million tonnes respectively.

Moreover, as per the exploration survey conducted by the Assam Mineral Development Corporation (AMDC) during 1994-95, the whole Gaurinagar Hillock, situated within the four walls of Nalbari Reserved Forest in Goalpara district is full of rocks mainly in abundance with the granites (dolerites). The granite is a very hard rock composed of feldspar, quartz and mica which is used as building materials and the exploration of the Gaurnagar granite is the best of its kind with  black colour granites.

Thus, it is found that Assam is quite rich with its deposit of some of the basic mineral resources which will provide ample scope for industrialization through fuller utilization of these vast mineral resources.

Forest Resources :

Assam has its rich potential for the development of forest. The upper Brahmaputra Valley along with two hill districts is covered by ever green forests and the lower Brahmaputra valley is covered by tropical deciduous forests. Total area covered by forests in Assam is 30,807 sq.kms. (1991-92) which is 39.2 percent of the total geographical area of the State. But reserved forest area covers 22 percent of the total geographical area of the state. National forest policy prescribed national minimum of 33.3 per cent under the productive forest and Assam’s percentage of forest area is lower in this respect.

The forests of Assam can be classified under certain broad classes, namely, evergreen, semi-evergreen, tropical evergreen, mixed deciduous, sal forest, riverine forest and moist and dry savannah. The climate in Assam facilitates the growth and regeneration of plant species with a great diversion from evergreen to dry savannah type. Reserved forests in Assam are divided into six circles and 25 divisions and the areas under wildlife are divided into eight divisions including state zoo. Under the principal chief conservator of forests, the department of forest, Assam, engaged more than 11,000 man power to look after this large area under forest cover. For smooth functioning, the department of forest is divided into two group-(a) general forestry and(b) social forestry. Tribal sub-plan and scheduled castes components are also included into the social forestry division.

In 1992-93, out of the total forest area of 30,807 sq.kms., reserved forests covered 17,567 sq.kms., forests under District Councils covered 3589 sq. kms. and unclassified forest covered 5731 sq.kms. (including other community forests) Thus 57.02 per cent of the total forest area is covered by reserved forest, 12.72 per cent is covered by the proposed reserved forest area, 11.64 per cent is covered by forest under district council and the rest 18.6 per cent is covered by unclassified forests. Among all he district of the state, Karbi Anglong and North Cachar Hills possess highest concentration of forests in the state and its area constitute 40.2 per cent of the total forest area of the state.

At the end of 1994-95, total forest area in Assam was 21.86 lakh hectares(excluding unclassed state forest), out of which reserved forest covered 14.9 lakh hectares and the proposed reserve forest area covered 3.93 lakh hectares. Thus out of total forest area of Assam, reserved forest covered 81.88 percent and the remaining 18.12 percent is covered by the proposed reserved forest area.

Due to rapid urbanisation process and consequent factors degradation of forest is also occurring which is estimated (1991-92) at 2352.77 sq. kms. and classified as forest waste land.

To facilitate the green movement, the state forest department also distributes various seedlings of economically important plant species to the general public raised in the social forestry nursery free of cost. During 1991-92 such seedlings amounted to 18,60,569 in number.

At present a total of 611 mills and factories, including paper, match and plywood factories are running, depending upon the forest products in the state.

In the plain districts of Assam, State Forest Department manages the forest while in the hill districts, districts council manages it.

Total out turn from forest in Assam

Output from forest in Assam is composed of timber, fuel wood and some minor forest products, viz., bamboo, cane etc. Total out turn of timber in thousand cubic metres, were 447 in 1973-74,557 in 1974-75, 480 in 1977-78 and 351 in 1978-79 which revealed an increasing trend in the beginning and then followed by a declining trend. Total output of timber in rough poles was 607 thousand running metres. Total production of fuel from forests in Assam, in thousand stack cubic metres, were 270 in 1973-74, 136 in 1974-75, 289 in 1976-77 and 154 in 1978-79. The value of minor forest products which includes bamboos and cane, was Rs.72 lakhs in 1970-71 and then increased to Rs. 143 lakhs in 1976-77.

In recent years, total out-turn of timber and fuel-wood from forests in Assam has declined considerably in recent years. Total out-turn of industrial timber from forests in Assam which was 78.6 thousand cubic metres in 1988-89, gradually declined to 6.91 thousand cubic metres in 1989-90 and then it again slightly increased to 76.8 thousand cubic metres in 1993-94. Total out-turn of fuel-wood in Assam which was only 30.06 thousand stack cubic metre in 1988-89 gradually increased to 44.2 thousand stack cubic metre in 1993-94.

The net product from forestry and logging at current prices was estimated at Rs.27.4 crores in 1976-77 as against Rs.22.8 crores in 1975-76.

Again net product at current prices from forestry and logging has increased from 34.7 crores in 1980-81 to Rs. 156.9 crores 1993-94. Again, the net product from forestry and logging at constant (1980-81) prices declined from Rs.34.7 crores (1.5 per cent of SDP) in 1980-81 to Rs.34.4 crores (0.7 per cent of SDP) in 1993-94.

Revenue receipts from forests in Assam

Forest in Assam has contributed only Rs.57 lakh in 1950-51 to the revenue of Assam Government and its contribution rose to Rs. 966 lakh in 1977-78, Rs. 1,110 lakh in 1978-79, Rs. 1,221 lakh in 1980-81 and finally to Rs. 16.9 crores in 1994-95. The forest revenue, which was only Rs. 70 lakh during the First Plan period gradually increased to Rs. 1,956 lakh during the Fourth Plan period. This shows a significant rise in the forest revenue in absolute terms in the state. Forest revenue as in percentage of total revenue of Assam was only 0.93 per cent during the First Plan and then gradually increased to 4.09 per cent and 4.4 per cent during the Second Plan and the Third Plan respectively and then it fell down the 3.5 per cent and 3.4 per cent during the Ad-hoc plans and the Fourth Plan period. In recent years, the share of the forestry sector in the State’s net domestic product is not of much significance as it barely constitutes 1 per cent of the total SDP.

Problem of Deforestation or Degradation of Forest in Assam-Afforestation and Tree planning Activities

In Assam, the problem of deforestation or degradation of forest is quite acute. Total area under forests has been gradually declining in Assam due to its total mismanagement. Due to rapid, urbanisation process and consequent factors, degradation of forest is also occurring which is estimated (1991-92) at 2352.77 sq.kms and classified as forest waste land. The factors which are largely responsible for large-scale deforestation include-growing demand for raw materials for forest-based industries and increasing demand for state revenue from forest. From the very beginning state Governments were very much interested to collect a big volume of revenue by selling timber and other forest produce. Moreover, forest bureaucracy allowed illegal felling of trees with the sole intention to get illegal gratification. Besides, indiscriminate cutting of trees standing in the forest adjacent to the village by the villagers is also responsible for massive deforestation in the country. Again a good number of landless poor are regularly cutting trees and setting firewood for earning their livelihood. In this way, the pace of deforestation has been intensified since independence.

As the forest management’s prescribed yield fell for short of the requirement, thus political pressure, muscle flattening, money power, political patronage played their roles to meet the requirement. The forest officers who tried to resist and refuse were humiliated, shifted, by-passed and ignored. Those who tried to compromise and finally obliged, smooth sailed at the crest of developing waves.

Assam is also having a good number of forest based industries. In 1995, Assam was having 565 saw mills, 76 plywood and Veneer mills, 3 paper mills, 1 match factory, 1 match splint factory, 3 timber treating plants, 1000 odd brick kilns, tile factories potteries, bakeries, cane, bamboo industries besides developments in the field of industry, agriculture, surface and air transport and communications, power, energy, industrial plantation, trade and commerce. Moreover, with the increase in the size of population, ethnic movements are also in the rise with the rise of unemployment, shelter, health, poverty and shortage of food. In order to sustain all these above mentioned activities and also to meet the requirements of different forest based industries, the forest cover in the state is gradually shrinking and the crop density is gradually being thinned. The per capita forest area in the state has declined considerably and stood at 0.13 hectare in recent years. As per the current Forests Survey of India (FSI), total forest area under encroachments is 2477 sq. kms. Total area of reserved forests partially wiped out of forests covers estimated at 1483.38 sq.kms. Reserved forests partially wiped out of forests cover  in the State are also estimated at 1260.34 sq.kms.

The estimated demands of forest produce to sustain the current estimated requirements of the state include saw logs 0.3 m mt., plywood logs 0.092 m mt., timber 0.0401 mmt, matchwood logs 0.008 mmt., fuel wood 3.0 mmt. and bamboo for pulp 13.5 m mt. A sample survey of outside supply of forest produce from North Eastern states showed that 3780 trucks load of forest produce were transported from the region within 28 days and of these, 438 truck loads were carried from Assam. These statistics shows the extent of large scale deforestation going on in Assam along with the other North-eastern states.

The forest management in Assam has become the target of frontal attack for quite sometime. Large scale deforestation, rapid disappearance of forest cover, diminishing wild life population, scarcity of commercial timber, acute shortage of fuel wood, recurrence of flood, environmental disaster etc. are all attributing to the mismanagement of forest resources in the state.

The forest is a living organism and like other organism it needs proper and adequate care and congenial conditions for growth. The forest is a slowly growing organism and thus requires tender and adequate treatment. The ill treatments that have been meted out to the forest in Assam, subverting the forest management for the last two decades, have denuded the forest cover in the state at a large scale. As per the recent Forest Survey of India report, 50 per cent of the forest cover is still dense and more than 25 per cent of the cover is having below 40 percent density and only 447 sq.kms of area has been transformed into scrub or no forest cover, even after such onslaught on forests. In spite of all odds, the present situation demands a strict adherence to the forest management policy. Managing a living organism is quite difficult. Without having any fencing, the forests are open to grazing, pilferage, poaching and biotic interference. All these have made the forest management a difficult task, particularly in the days of lawlessness.

This sort of continuous large scale deforestation is directly responsible for soil erosion, greater frequency and intensity of floods, continuous heavy siltation of costly dams and river banks, change in climate conditions and ecological imbalance. Moreover, deforestation has resulted in huge sufferings to the landless cultivators and marginal farmers in the form of loss of fuel wood and fodder for their cattle. This in turn is responsible for loss of valuable organic manure as cow dung which is now-a-days largely being used as fuel. Thus deforestation has created both ecological and socio-economic problems in the state.

In the mean time, though the states and forest department tried to check deforestation but they become successful only to protect the forests from poor people and miserably failed to protect forests from the clutches of industries and illegal timber traders. Even the social forestry programme and other schemes as incorporated in our forest policy have miserably failed to check deforestation which is progressing on a large scale. Thus under this present situation proper steps must be taken for the conservation and development of forest resources in the state.

Afforestation and Tree Planting Activities :

Considering the gravity of the problem of large scale deforestation or denudation of forest in the state, both the central as well as the State Government have undertaken a long standing strategy of afforestation and tree planting throughout the state under its various schemes. As per this programme of afforestation and tree planting, the Assam forests had created 2906.23 sq.kms of plantation, i.e. 1311.92 sq. kms of area under social forestry and 1594.31 sq. social forestry had planted 37.98 million seedlings, distributed 7.38 lakh fodder plants, 6.27 lakh fruit plants and 4.94 lakh Ornamental plants. In 1994-95, about 5626 hectares of land were brought under social forestry and about 140.7 lakh seedlings were planted.

Although massive steps have been taken by the government agencies in this direction, but it needs to be mentioned here that a big chunk of such afforestation and tree panting activities has gone into waste due to lack of its proper maintenance. Under such a situation, various State Government agencies should take up these schemes and afforestation activities with utmost sincerity and should take necessary steps for continuous maintenance of those areas at least in the initial stages.

In May, 1996, the Assam Government  imposed a total ban on felling of trees in a bid to save its forest from environmental degradation. Accordingly, no new permit would be issued to cut down trees in any forest reserve. In order to check the deforestation activities, the Forest Department has been asked to provide a detailed report of destruction of forest resource from all the reserve forests of Assam and to ascertain the involvement of any officials in it. Meanwhile a vigilance cell, headed by the Chief Conservator of Forest (CCF), had been formed to check illegal activities like destruction of forests. This is, no doubt, a welcome step.

Finally, people in general, should realise the potent dangers of deforestation and should take active interest and co-operation in the successful implementation of these afforestation and free planting schemes as a continuous process so as to increase green coverage of the state for the betterment of the life of their future generations.

Allocation of Fund, Target and Achievements in respect of Development of Forestry under the Plans in Assam

The Five Year Plans in Assam has been allocating a good amount of fund regularly for the development of forest in Assam. The following table shows the allocation of funds under various Five Year Plans and their achievements.

It is revealed that the State Government under its various plans has been allocating a good amount of fund for the development of forestry. These amounts of fund varied from Rs. 6.43 lakh during the First Plan to Rs. 450.28 lakh during the Fourth Plan, to Rs. 5581.54 lakh in Sixth Plan, Rs. 11,296.25 lakh in the Seventh Plan and then finally to Rs. 22752.21 lakh during the Eight Plan.

Moreover, the area covered under the development of forestry in Assam during various plans has also increased from 2283 hectares during the First Plan to 13867 hectares during the Third Plan, 45710 hectare during the Sixth Plan and to 38278 hectares during the Seventh Plan. The state department of forests has fixed the target of 1 lakh hectares of land to be covered during the Eighth Five Year Plan period started from 1992-93 under production forestry scheme covering the fields like Plantation of economic and commercial plants, plantation of quick growing species, farm forestry, social forestry and fuel and fodder projects. During the first two year of the Eighth Plan (1992-94), a total of 14,207 hectares of land has been covered and 12,520 hectares of land is being targeted to cover during 1994-95.

Wild Life Protection : The state forest department has distributed a good number of rare and endangered flora and fauna species throughout the state forests. To protect and preserve all these species fruitfully the forest department of Assam has undertaken some important steps by dividing the whole forest area into eight circles. Thirteen national parks and wild life sanctuaries have also been formed including the game sanctuaries. Government enacted several legislation relating to it to enforce, the protection and preservation campaign successfully. Under the auspices of the state department of forests, several voluntary organisation and social workers, mass awareness programme has also been started.

Moreover, the state forest department has developed 31 parks in selected sites to enhance tourist attraction. A Forest Protection Force has also been raised to facilitate the progress of green movement in Assam.

Importance of forest resources in the economy of Assam

Forest resources are having its strategic importance to the economy of Assam. About 22 per cent of the total land area of Assam is covered with reserve forest. Assam is favoured with its south western monsoon which helped her to grow various valuable trees and plants. Forest in Assam is composed of evergreen forests and tropical deciduous forests. This huge forests in Assam contribute its economy in many respect.

Forest provides timber like Sal, Bansam, Teak or Chegun, Sishu, Gamari etc. which are very much valuable for furniture making and construction works. Thus forests provide not only timber but also excellent employment opportunities to thousand engaged with this furniture making and construction works. Forests also provide fuel for household and other amenities, which is comparatively cheaper. Many people are getting their livelihood by supplying fuel, in the form of fire wood, from forests.

Forests in Assam provide raw materials for various industries like plywood industry, match industry, paper and paper pulp industry etc. In 1991, there were 655 registered factories engaged in the manufacture of wood and wood products, Furnitures and Fixtures in Assam. Timber which are required for the production of plywood are sufficiently available in the forests of Assam and this led to the growth of many plywood factories in Assam which generated employment  to the extent of 5,658 nos. and producing 33 million sq. metres of plywood. The availability of soft wood facilitates the establishment of match industry in Assam. Soft woods are being used for the preparation of match sticks and boxes. There are at present 1 match factory and 2 match splint factory in Assam which generated employment to the extent of 1,117 nos. The availability of bamboo and soft wood in the forest of Assam provides sufficient raw materials for paper and paper pulp industries situated within and outside Assam. There are at present 3 paper mills in Assam. Ashok paper Mill was established in Jogighopa in the Goalpara district in 1972-73 which employed 451 persons with its capacity to produce 16 thousand metric tonnes of paper. But the company ceased its production since 1983 and became a sick industrial unit. In 1st March, 1995, the Government of Assam signed a Memorandum of Understanding (MOU) with the Sanghi Group Of Industries, Hyderabad, for the revival of the sick Ashok Paper Mill Limited at Joghighopa. There is also one specialised paper manufacturing factory at Guwahati. Considering the huge potentiality of the growth of paper industry in Assam, two more paper mills were set up at Nagaon and Cachar in the public sector. Forests in Assam provide raw materials, in the form of log to 459 saw mills which produce timber. Total employment generation in these mills is 3,407 numbers.

Besides, forest products like cane and reeds provide excellent opportunity for the growth of small scale industry producing cane furnitures etc. Mulbery trees available in the forest of Assam have enabled rearing and developing muga and silk industry in the State. The other forest based industries in Assam are two timber treating plant (one at Makum and other at Naharkatiya), one hard board factory at Panikhaite, 18 bidi factories and 6 Ivory industries.

Forest in Assam also provides sand and stone chips for construction purposes which are available in plenty in the side of forest streams and rivers.

Among the wild animals available in the forest of Assam, elephant, tiger, deer, bear, one horned-rhino are quite famous. The Government of Assam is preserving these animals by maintaining several forest sanctuaries. Government is getting a good amount of revenue as these sanctuaries are visited by tourist both, home and foreign. Assam has supplied one horned rhino to different Zoos of the world along with other animals. There are different types of rare birds in the forest of Assam.

Thus, forest resources in Assam are providing huge amount of revenue to the Government besides creating scope for development of various types of industries and employment to numerous persons. Considering its importance the programme of forest development has placed emphasis on creation of large scale economic plantations to meet growing demand of forest based industries and demand for timber for construction purposes, etc. In 1974, the Assam Plantation Crops Development Corporation was formed for intensive regeneration and plantation of economic crops like coffee, rubber, black pepper etc. on commercial basis and to rehabilitate the jhumiyas in the hills. The Corporation had its authorised capital to the extent of Rs. 500 lakhs as on 31st March, 1976. The company has created 10 coffee estates and 6 rubber estates. About 625 acres of land has been brought under rubber plantation. Total direct employment generation by this corporation was to the extent of 129.

Moreover, Assam and its people are deriving following indirect benefits from the forest :

(a) forest helps in attracting rains ;

(b) it maintains ecological balance ;

(c)forest restricts the flood water during summer and helps to squeeze adequate quantity of water ;

(d) it helps to protect the land from erosion of soil by water and wind ;

(e) dry leaves in the forest raises the fertility power of our land ;

(f) forest protects the state from dry and cold wind ;

(g) forest provides shelter to animals and birds of the state.

(h) forestry enhances the natural beauty of the state.

Thus, we have seen that forest resources are occupying a very important place in the economy of Assam. There is much scope for the development of forest resources which will provide ample scope for the development of forest-based industries in Assam.

Forest Policy of Assam, 1988

The Forest Policy of Assam, 1988 was announced in the State Assembly by the Chief Minister of Assam 31st March, 1988. In this policy it was stated, among other things, that it would be the constant endeavour of the Government to clear all reserved forest lands of encroachments. The lawful settlers would be reorganised with a view of giving them allotment certificates akin to revenue pattas, conferring all rights excepting the right of alienation to the forest villagers which would help them to obtain bank loan and other financial assistance and contribute to improve the standard of living. All effective measures would also be taken to ensure that no new encroachment in reserved forest land take place and illegal felling of trees be stopped.

The new forest policy has revealed that massive afforestation programme would be launched and regeneration of superior and other indigenous species with minimum disturbances to the existing forest would be stepped up to improve productivity and eco-balance both quantitatively and qualitatively.

The international standard suggests that one-third of any geographical area should be under forests. With more than 3 percent reserved forest areas under forest villages and more than 10 percent under encroachments, Assam has never even the minimum requirement of forest cover. The growing menace of large scale poaching, illegal felling of valuable trees and unchecked deforestation have created a big problem for the conservation of forest in Assam.

The following are the salient features of the new forest policy of Assam :

(i) Active participation of District Councils will be encouraged in all matters of forestry in the hill areas also in the matter of elimination of Jhum system in phases.

(ii) Working plan prescription including silvicultural methods will be followed more strictly and extensively for scientific management of forestry. Preservation of diversified plant genetic resources will be encouraged.

(iii) The new policy envisaged that rare and endangered species of plants and animals will be identified, classified, enlisted and all effort will be made to rehabilitate, develop and preserve them. Due importance and support will be given to the preservation of the eco-system to develop and reconstruct the same giving due importance to living and non-living components upon which the very existence and continued survival and development of mankind depends.

(iv) Export/import of forest produce of plant and wildlife origin to and from the State will be controlled keeping in view the need of the local consumers.

(v) More area of wildlife importance will be declared as wildlife sanctuaries. Some of the existing wildlife sanctuaries shall be upgraded after proper study to National parks to emphasize their importance. Additional recreational facilities will be provided with more parks, way side and highway parks, restaurants, nurseries, wilderness trails and nature preserves.

(vi) The new-policy suggests that all poaching and other illegal activities will be completely stopped by taking effective measures and particularly by expanding the strength of the Assam Forest Protection Force as may be required from time to time in a phased manner, so that the pressure on police force is reduced to the extent possible.

(vii) Use of Wireless sets, transport facilities in both surface and water, establishment of more number of posts and better trained manpower will be ensured in the battle against poaching and other illegal forest activities.

(viii) Endeavour will be made to plant even small blocks as mini forests in community lands, scattered wasteland, institutional lands etc. so that each village or a group of people become self sufficient in fuel, fodder, thatch grass, ikras, bamboo, medicinal and other products. Such community forests would act as a measure to boost up village economy.

(ix) Public awareness to the need of forestry for our survival and for the survival of the posterity will be aroused by making sufficient arrangements for publicity and public relations.

(x) All concessions offered to plywood mills and saw mills will be suitably reviewed.

(xi) Smuggling and clandestine deals in timber and other forest products will be effectively combated.

(xii) Issue of new license to industries will be duly regulated so that the local, particularly, the tribal people are mostly benefited.

(xiii) The new policy proposes to examine, standardise and extend some concessions to all the tribals living near the reserved forests.

(xiv) As per the new forest policy, formation of co-operatives will be encouraged by offering preferential treatment in matters of forest contract, subsidiary silvicultural operations, mechanised carpentry and looms, labour contracts, marketing of forest products etc.

(xv) The weaker sections of the people including the tribal people residing in the neighbourhood of forests and the local educated unemployed youths will be encouraged to form co-operatives to run sand, stone, fish, cane and other mahals of the forest department.

(xvi) Conversion of timber for Government use will be done in a phased manner in the Government saw mills by increasing the number and capacity of such saw mills. The co-operative sector shall be encouraged to take over such operations.

(xvii) As a part of the process of linkage of forestry with industry an assessment of the need and viability of existing units, pricing policy of inputs and outputs, employment pattern and employment generating potentialities and location of headquarters of such industries will be made and corrective steps be taken.

To help mitigate the unemployment problem to the extent possible is one of the basic objectives of new forest policy. All effective steps will be taken to improve forest administration and new Management tools will be utilised to the extent possible for the same purpose in all areas of forestry.

Conservation of reserved forests falling in the inter-state boundaries will be more vigorously carried out within the bounds of the existing inter-state agreements. Necessary literature and books on forestry will be produced for use in schools and colleges.

With a view to enlarge the scope and contain research and to apply any proven developed new technique in forestry, the universities and other institutions situated within the state will be approached and helped financially.

Further, the existing laws and rules are reviewed to ensure speedy and deterrent punishment to forest offenders charged with serious crimes.

Water Resources of Assam and its Utilisation

Among all the natural resources of Assam, water resources are considered as one of the most important resources of the state. Water can sustain all human, animal and plant life on earth. Water is essential for the survival of all these objects. Besides water in adequate quantity is very much important for the development of agriculture, fishery, animal husbandry and also for industrial development.

As agriculture is the main occupation of the people of Assam, regular and assured supply of water in adequate quantity is very much important for the development of agricultural sector. Water is no doubt the most important single requirement for the growth of various types of plants.

Sources of Water Resources

Water is available from both from over ground (surface run water) and under ground sources. The success in raising a good agricultural crops as well as running of allied activities depend upon the availability of adequate quantity of surface run water or from under ground storage of water. It would be better to study these sources of water resources in detail.

1.Surface or over ground water resources : Rainfall and rivers are the two major sources of surface run water. Rain water : The major portion of surface run water or over ground water in Assam is derived from rainfall. Assam is well known as a heavy rainfall area. Rainfall in Assam is usually heavy due to its peculiar geographical position. The annual rainfall ranges from 70" in the plains to 250" or more in the hill areas of Assam. The Kopili Valley, lying between the Khasia-Jaintia Hills and Mikir hill in Nagaon district is the only area where average rainfall is 43" and, therefore, may be called the driest area in the state.

In Assam, the rainfall is not fairly widespread throughout the year. Rather 90 percent of the total rainfall occurs during the monsoon periods. The monsoon usually starts in June and lasts till  the end of October. The rainfall rapidly diminishes after October and December is usually the driest period of the year throughout the state. Moreover, the state faces vagaries of monsoon due to its late arrival or early termination in different years. A prolonged break in rainfall during the monsoon period causes severe drought condition in the state. Further, there are some regions under rain shadow in the south-eastern part of Nagaon districts, south western part of Golaghat sub-division of Jorhat district and the adjoining areas of Karbi-Anglong district, where rainfall is found to be very meager in quantity. Thus average rainfall and the condition of soil may indicate the availability of water in a particular area in different periods of time.

River water : Another important source of surface water in Assam is the major river of the state. In Assam there are huge number of rivers, ponds and wet land which are providing water in the various parts of the state throughout the year. Brahmaputra and Barak are the two major rivers of Assam which has 35 and 9 tributaries respectively, each of which has considerable hill catchment. Brahmaputra is the major river of Assam which  links all the plain districts excepting Cachar. The river is entering the state in the Lakhimpur district in the east and flowing out of the state through the Dhubri district in the west . The river, by and large, does not exercise its fertilising influence in its upper reaches due to rapidity of its current but it does so in its lower reaches. The other major river Barak is flowing through the undivided Cachar district of Assam. During the monsoon, both of these rivers along with their tributaries spill over their banks at frequent intervals and inundate large areas with all their consequences. Further, the terrains, in the Brahmaputra valley are very steep, where retention of water during the monsoon months in paddy fields, even for sali paddy, causes a great problem. Even after the monsoon a major part of the plain areas remain water-logged for varying period, depending upon the depth of the depression. Considering these problems, it is quite important to undertake scientific river management plan in Assam. The establishment of Brahmaputra Board has raised a high hope in this direction. Moreover, a River Planning Commission is established with the purpose of flood control, electricity generation, irrigation and fishery development.

2. Under-ground Water Resources : The under-ground water potential in Assam is also quite high. Out of the total area worthy of ground water exploration, nearly two-third of this potential has already been covered. As per reconnaissance estimate, there are about 16 billion cubic metres of ground water available for exploitation. This water potential could be utilised for providing irrigation facilities to 1.6 billion hectares of land adequately. It is also estimated that under-ground water resources of the state can provide assured irrigation water to 30 to 40 per cent of its total requirement. But unfortunately, the utilisation of ground water for irrigation purposes in Assam is very less. Moreover, there is scarcity of potable drinking water both in the urban and rural areas of the state.

A survey conducted by the North-east branch of the central Ground water Board revealed that of the 50 million hectare metres of ground water potential, the dynamic ground water resources of the state in shallow phreatic zones has been computed to be about 24,719 million cubic metre (MCM). Recently, the replemishable ground water resources of Assam are estimated at 2.47 million hectare metres peryear and its rank among all the states is 7th. This dynamic ground water resources can be used for development in the agricultural sector as it is recharged in a very short period. However, only 0.1 million hectare metre of ground water potential has so far been developed for irrigation. According to the Survey out of the total geographical area of 78,438 sq.kms, the State has a gross cropped area of 34.60 lakh hectares. Against this 34.60 lakh hectare of cultivatable land, 21.01 lakh hectare of land can be brought under assured irrigation by way of using dynamic ground water resources.

Among all the north-eastern states, Assam has the highest groundwater potential and a proper utilization of this potential can usher in a radical change in the state’s agricultural scenario. However, only 941 million cubic metres of ground water resources have been utilised so far. Besides Assam, the ground water potential in other north-eastern states has been computed as follows : Meghalaya- 593.30 MCM, Tripura-663.74 MCM, Manipur- 3153.67 MCM, Nagaland- 723.58 MCM and Arunachal Pradesh- 2222.53 MCM. This abundant ground water resource can be used to ensure rapid development in the agricultural sector, particularly in the plain areas of the hill states. The main reasons behind keeping such vast ground water resources of the states unutilised are severe shortage of electric power for harnessing groundwater in a big way and excess iron content in over 30 per cent area of the state.

It is very unfortunate that schemes for development of groundwater potential could not be taken up for shortage in electric power. While the region has potential of producing 41, 441.5 MW. of electricity which is about 41 per cent of the country’s total power requirement.

Utilisation of Water Resources in Assam

The water resources of Assam are being utilised to a limited extent. In spite of having huge potential for the utilisation of water resources, Assam could utilise only a limited portion. The following are some of the important purposes for which water resources in Assam are being utilised.

1. Irrigation : Assam being one of the agricultural state is facing the problem of irregularity in the arrival of monsoon leading to devastation of crops due to either flood or drought arising out of scarce rainfall. Under such a situation, there is immense importance of assured water supply in the agricultural fields of the state through irrigation system.

Assam is blessed with huge natural irrigation potential which remains largely neglected. It is only recently that irrigation has been given its due importance for the development of irrigation projects and for its optimum utilisation. Water necessary for irrigation facilities may be made available both from surface water and underground water sources. In order to use surface water, multipurpose river valley projects may be constructed along with the construction of reservoirs, dams and also field channels. But these are long term projects and requires huge amount of capital for its realisation. Therefore, in the short run, the lift irrigation system may be more suitable where pump sets are being utilised to draw water from perennial river sources. Again in order to utilise underground water sources, the use of deep and shallow tube wells can also provide irrigation water to the agricultural field of Assam if the under-ground level is high. In Assam, most of the irrigation projects are being operated either by lift irrigation or by tube well irrigation system. But, the use of canal irrigation system is mostly restricted to Jamuna Irrigation Project situated at Nagaon district and also at Sukla irrigation project at Darrang and Kamrup district. At the end of Fourth Plan total irrigation potential in Assam was of the order of 2.8 lakh hectares out of which only 30 to 35 per cent of the above potential are utilised. Till the end of the fifth Plan, total irrigation potential created in Assam as in percentage of ultimate potential was 11.0 per cent only as against 48.7 per cent for all India. The irrigation programme being carried on in Assam consists of (a) major and medium irrigation programme and (b) minor irrigation programme. Total irrigation potential created in Assam up to the end of March 1993 was 4.58 lakh hectares out of which only 2.21 lakh hectares worth irrigation potential was utilised during 1991-92 , which is nearly 48.2 per cent of the ultimate potential created in the state.

2. Hydro-electric Power Generation : Assam is a store house of huge hydro-electric power potential. The meteorological, topographical and hydrological factors contribute to such a huge potential. Assam alone has 28 percent of the total hydro power potential of the country which remains largely under-utilised. As per our estimate of C.W.P.C. in the late fifties, rivers in Assam provide the possibilities of 14 million K.W. of hydro power. There can be no better alternative than the available water resources for power generation, particularly in a situation of sharply increasing cost and rapidly decreasing reserve of oil and coal. Moreover, hydro-electric plants can be established at any place in varying sizes considering local requirements.

But this hydro-potential has not yet been properly utilised. This is mainly due to the problems connected with the location of the project sites and the possible reservoirs in the foothills bordering the state. Most of these reservoirs are situated in Arunachal Pradesh, Meghalaya and Nagaland for which joint efforts by these states are very much essential for the execution of these projects.

After independence the Government of Assam put much importance on the development of hydro-electric projects considering huge hydro-power potential of the state. Accordingly Barapani Hydel Project and Umium Hydel Project at Sumer were commissioned for generating a huge volume of hydro power. But after the partition of Meghalaya from Assam both of these two projects went in favour of Meghalaya leading to a huge deficit in power generation within the state. Later on, Assam State Electricity Board has undertaken ambitious programmes for the development of some hydel projects, viz., Lower Barapani Hydel Project (250MW) etc. In the mean time, some of these projects are completed and some other remains still in incomplete stage. Karbi-Longpi Project is one of them.

In the mean time, investigations of Subansiri Dam Project, Dehang Dam Project, Dhansiri Reservoir Project, Pagladiya Detention Dam Project and Barak Dam Project have already been completed but works on none of these Projects have  been started due to paucity financial resources.

3. Development of Water ways : Water ways is the cheapest mode of transport as it provides readymade route and it does not require any maintenance expenditure. Through water ways, a huge volume of cargo can be easily transported over long distances. There are unique opportunities for developing inland water transport in Assam. In Assam, there are two rivers systems, i.e., the Brahmaputra and the Barak-Kushiara and their tributaries in the south. Besides, country boats carry a good amount cargo and passengers through different rivers of the state. Assam has a total navigable water ways to the extent of 4,065.6 kms. Out of which only 2,193.6 kms. Are navigable throughout the year and the rest 1,872 kms. are navigable only during the monsoons. Thus water resources of Assam are also being utilised for navigation purposes to a great extent.

Low Degree of Utilisation of Water Resources

In spite of having huge water resources, Assam could not utilise these valuable resources satisfactorily. The ground water potential in Assam is quite high and about 50 per cent of the total area of the state is found suitable for the exploration of ground water. As per the reconnaissance estimate in the late fifties, there are about 16 billion cubic metres of ground water available for exploitation in this region. Such a huge volume of ground water can be utilised for irrigating nearly 1.6 billion hectares of land. But unfortunately, utilisation of ground water potential for irrigation purposes is very less in Assam. At the end of March, 1993. Only 13.2 per cent of the total cropped area of the state was irrigated. This shows really a dismal picture in respect of the utilisation of water resources for the development of agricultural sector of the state.

In respect of generation of the hydro-electricity, the situation is worse. In spite of having huge Hydro-power potential, only a very small percentage of this potential has been harnessed. Similar is also the case in respect of water transport. Although the state has a huge natural navigable routes for internal transport, but these routes are not being  utilised properly and efficiently. Thus in this way, the cheapest mode of transportation facilities in Assam has been thoroughly neglected in the days of oil crisis and escalating transportation costs.

Remedial Measures

Under the present context, various measures should be undertaken for the utilisation and conservation of these water resources in Assam. Firstly, there is paramount need for proper assessment of water resources in the state in the light of its present requirement. Moreover, utmost care and prudence must be exercised in respect of the utilisation of water resources in the State, so as to avoid its wastage which can result in disastrous consequences. For ensuring economy and efficiency in the use of water resources, conservation of these resources is very important. Proper steps must be taken to develop those irrigation projects which can provide maximum benefits at a cheaper cost. In order to tide over the present power crisis prevailing in the state, more hydro-electric projects should be developed in varying sizes. Similarly proper steps should be taken to develop a regular and efficient inland water transport system in the state, provide the cheapest mode of transport facilities to the people in general. Thus, a comprehensive programme must be taken to cover the main three aspects, i.e., proper assessment of water resources, estimate the present and future needs of water resources and preparation of suitable projects for the best utilisation of these water resources in order to meet the different needs of the people of the state.

Problems of Flood in Assam and the Government Strategy to Control it- Brahmaputra Board

Assam is unfortunately one of those few states which are every now and then visited by floods. Experience and a study of the problem connected with the Brahmaputra and its tributaries suggest that it will be a long time before the problems of flood are adequately tackled. The two main, rivers, i.e., Brahmaputra and Barak are mostly responsible for the continuous problem of flood faced by the state. The catchment areas of the Brahmaputra and its main tributaries Sankosh, Gangadhar, Hel, Gadahar, Champabati, Saralbhanga, Pagladia, Barnadi, Aie, Manas etc. are mostly located in Arunachal Pradesh, Bhutan, Tibet, Meghalaya and Nagaland. Again the catchment areas of the Barak and its main tributaries Sonai, Katakhal, Rukni, Longai, Singla, Dhaleswari etc. are located in Mizoram and Manipur. Thus the task of flood control does not solely rests on Assam alone. Rather it requires co-ordination and co-operation among neighbouring states and also requires a long span of time and huge fund to contain this problem.

Floods in Assam are a regular phenomenon. Every year, a huge area of the state is liable to floods. As per the data collected during the period from 1953 to 1978 and excluding the area protected till 1978, the total area liable to floods in Assam is around 31.5 lakh hectares as compared to that of 335.16 lakh hectares for the country as a whole which constitutes about 9.4 per cent of the total flood prone area of the country. In respect of flood prone area, the rank of Assam is fifth.

As per the memorandum submitted by the state government of Assam to the Central Government, in August 28. 1996, it found that the recurrent floods in Assam since 1953 have so far caused damages worth Rs. 3348.50 crore in the state.Out of these, damage to the public utilities stands at Rs. 832.42 crore, the rest was caused to crops, houses and livestock resources. During this period, a total of 1,650 human lives were lost, 4,25,450 cattle were perished and 31.32 lakh dwelling houses worth Rs. 265.45 crore were damaged. Floods also affected 92.50 million people in an expanse of 40.52 million hectares. Moreover, crops spread over an area of 4.53 million hectares were also damaged by flood during this period.

This memorandum observed that "The problem of recurrent floods in the State is a major constraint and deterrent to development. For Assam, although the river Brahmaputra and Barak represent the very essence of life of our people, it could not provide the desired yield due to inadequate utilization of the potentials. Unfortunately, these rivers have become more ‘liability’ than ‘asset’ to the people of Assam". The annual average loss on account of floods had been estimated to be over Rs. 200 crore.

The representation further observed that the maximum flood depredation were caused in 1988 when about 1.24 crore people of 16 districts were reeling under floods . The 1988 deluge claimed 226 human lives, perished 1.08 lakh cattle and destroyed 4.89 lakh houses. Floods engulfed 51.02 lakh hectares of land and breached about 85 embankments.

In 1996, floods in Assam have resulted in loss of 38 human lives and 372 livestock, damaged 7,848 huts/houses and damaged crop area to the extent of 2.0 lakh hectares.

As the tremendous potential water resources of the Brahmaputra and Barak are not manageable to proper use for profitable purpose, it goes berserk in every rains devastating the state and the state has been experiencing an annual loss of Rs. 250 to 300 crore worth natural wealth and crops. This has also necessitated undertaking of relief , rescue, rehabilitation and repair work, to the extent of Rs. 500 to 600 crore every year.

In order to tackle the flood problem, about 4,500 Kilometers of embankments had been constructed as short-term measure. These preventive steps had offered protection to only 16 lakh hectares of land, thus exposing the rest(out of 31.5 lakh hectares of flood prove areas) to inundation. But even these embankments, constructed during the early fifties and the sixties are in dire need of improvement and modernization . Unless such steps are taken, even the now guarded land might soon fall to flood fury.

A scientific solution to the problem of flood erosion has to be discovered as constructing embankments had not solved the problem in the last four decades. In Brahmaputra, about 3,450 km. length of embankment (940 km. on the main river and 2,510 km. on various tributaries) has been constructed. However, these embankments have failed to meet the requirements, and these are also inadequately maintained for lack of financial resources on the part of the state.

Future Strategy for Controlling Flood :

Assam is a problem state, whose production and income are facing set backs in every year due to recurrent floods. Total damages to crops, cattle, houses and public institutions in Assam has been increasing year by year, i.e., from Rs. 13.2 crores in 1970 to 24.6 crores in 1972 and from Rs.11.98 crore in 1976 to Rs. 39.80 crores in 1980 and then to Rs. 306.6 crore in 1989. Moreover, floods in Assam have also necessitated undertaking of relief, rescue, rehabilitation and repair works for which a huge amount of revenue are being diverted. Total amount of such diversion varies between Rs. 500 to 600 crore every year. Thus a good volume of state’s resources has been diverted for making repairs and for giving relief to the flood victims. Had there been no such burden, this amount of resources would have been available for development plan purpose. Further, natural calamities in Assam make speedy implementation of plant difficult.

Thus, it is high time that the problems of floods in Assam be tackled adequately. By tackling this problem of flood, such a valuable water resources can be converted from liabilities into assets. To manage this water resources, it is necessary to construct hydel projects with the co-operation of other north-eastern states. These hydel projects will cost not less than Rs.2,10,000 crore (70,000 MW. of power @ three crore per MW) and will require a span of time of 10 to 15 years without adopting any further flood control measures. Thus the works assuaging flood hazards should be carried out by the state with its own resources and also with adequate flow of central assistance and assistance from international development institutions like World Bank. Judicious management of water and soil only can assuage flood hazards in Assam.

In the mean time, three master plants have been prepared by the government agencies at a cost of over Rs. 35,000 in order to control annual flood havoc in the entire north-eastern region. These master plans were also being updated following the advice of the centre and North-Eastern States.

The Brahmaputra Board has prepared master plan (part one) for main stem of the Brahmaputra river costing Rs. 32,000 crore and it was sent to seven basin states in June 1987 for comments as also to other concerned central agencies. The Central Water Commission, after examining the master plan, had observed that the problem of main stem of Brahmaputra was closely interlinked with those of its tributaries and therefore decided that the overall plan would be examined on the basis of an integrated picture of the main river and tributaries so as to provided optimum flood moderation and other benefits by the various multi-purpose projects proposed in the master plan.

The master plan (part two) for Bank sub-basin costing Rs. 2,500 crore had also been prepared and sent to seven N.E. states and other appraising agencies. Based on comments received from these agencies and seven sister states, the master plan was being updated. The master plan (part two) prepared by the Brahmaputra Board Covers flood management plans of thirty eight major tributaries in the Brahmaputra Valley and eight major tributaries in Tripura and it was also being updated following the comments and suggestion received from the appraising agencies and seven state Governments.

The Centre has allocated Rs. 43.80 crore in the Current Eight Plan for Brahmaputra Board and Rs. 25 crore for Tripaimukh and Pagladiya projects. Eight major projects have been undertaken for detailed investigation by the Board. These are Dihang, Subansiri, Pagladiya, Tiparimukh, Lohit, Kulsi, Jadukata and Someswari. The Brahmaputra Board has also undertaken construction of Hydraulic Research Institute for conducting model studies related to river morphology, floods, bank erosion and drainage congestion. The Brahmaputra Board in their master plans for preparing detailed flood management schemes within the overall framework of these plans. These master plans have identified the main reasons for frequent floods in the north-eastern region. These reason are-- the narrowness of the valleys, high rainfall, heavy encroachment of the forest land owing to increasing pressure of population. Frequent earthquakes in the region have also seriously disturbed the drainage of the Brahmaputra Valley.

The report observed that the acutely braided nature of Brahmaputra coupled with slit and sand strata of its banks, comparatively steeper slopes in Assam and high sediment loads are among the main causes of its excessive erosive activity in the valley. Moreover, the river Barak, which traverses through Mizoram, Manipur and Southern-Assam has also similar characteristics as those of the Brahmaputra river, but its carrying capacity and intensity of flooding is much lower. However, both these rivers rise and fall outside the boundaries of the country.

Brahmaputra Board :

The problem of floods in Assam, along with the entire north-eastern region is quite acute. Recognizing the magnitude and complexity of the problem, the Union Government constituted the Brahmaputra Board in December 1981 under the Brahmaputra Board Act, 1980 for planning and implementation of measures for the management of floods and bank erosion in the Brahmaputra valley. Recently, the Brahmaputra Board has been revitalized in 1997 with the appointment of all the key officials. It is only a positive indication that the new dispensation in the Centre would like to see an end to the protest by the people of Assam that very little had been done to tame Brahmaputra, tap its huge resources and control the floods. Thus the revamping of the Board is, no doubt, a good step in this direction. The new dispensation in the Board should ensure that at least the low-cost projects prepared by the Board and pending sanction from the centre are cleared first. Such steps must be taken within the reasonable time frame.

In August 1996, the centre has agreed to convert the Rs. 6 crore annual loan for implementing flood control schemes in Assam into grants from the 1996-97 fiscal year. Several long pending flood control projects have also received the go-ahead signal. The ambitious Tipaimukh dam project on the trijunction of south-Assam, Manipur and Mizoram has also received green signal to the Union Water Resources Ministry and this would help in checking recurrence of floods in the Barak basin. The Centre had also provided the techno-economic and environmental clearance for the Rs. 2988 crore project. The Arunachal Pradesh Government had also cleared the proposal to build inter-state dams on the Dibang and Subansiri rivers. This projects, if implemented would minimize floods in Assam by about 50 per cent and that be outlay for the two projects had been pegged at Rs. 37,000 crores. The Centre was considering funding of the projects with the help of loans from the world bank.

Again on 27th October, 1996, the Prime Minister H.d. Deve Gowda announced a comprehensive economic package for the development of the North-east. While announcing a comprehensive water management and flood control measures, the Prime Minister announced that the Brahmaputra Board will be immediately activated to prepare a list of projects relevant for flood control, power generation and water management. Dredging operations will be launched to make inland waterways more efficient in the discharge of water and for transport. All the Brahmaputra flood control projects works henceforth will receive 100 percent grant from the centre. This is no doubt a positive step taken by the Centre and it has readily accepted the long pending demand of the state government and the people of Assam that the Central assistance for Brahmaputra flood control be turned to 100 percent grant and the Centre should take up the measures for controlling the flood in Brahmaputra. Accordingly, the centre has provided Rs.25 crore as grant in 1996-97 and Rs. 10.68 crore grant-in-aid to the Brahmaputra Board under the new central scheme to provide hundred percent grant for controlling the floods of river Brahmaputra.

The survey and investigation for construction of dam projects are going on at Jadukata, Someswari, Umnigot, Debang, Kulsi, Nao-dihing, Bhairabi and Kameng. Alternative sites for siang and subansiri dam projects were also being looked into investments Clearance for the Pagladiya dam projects built at a cost of Rs. 479.21 crore and inter-state clearance from Manipur, Mizoram and Assam for the Tipaimukh dam project were awaited. Moreover, in the mean time modifications of nine master plans of the Brahmaputra Board have been completed and submitted to the Ministry of Water Resources for its approval.

However, providing 100 percent grant for all Brahmaputra flood control projects is a great boon for Assam. Till now, the state Government was getting Rs. 25 crore as loan, which, after deduction, came to only Rs. 3 crore. However, in 1996-97, Rs. 25 crore was given as grant in aid.

Moreover, Rs. 500 crore sanctioned by the centre in the Ninth Five Year Plan for Brahmaputra flood control will be spent on Pagladiya project, Tipaimukh and Harang drainages and development schemes in Barak Valley. Of the Rs. 500 crore, Rs. 351 crore in for Pagladiya Project, Rs. 84 crore for Tipaimukh, Rs. 50 crore for preconstruction of Pagladia and Tipaimukh Projects and Rs. 10.85 crore for Harang development scheme.

The estimated cost of the four multi-purpose projects viz., Pagladia, Subansiri, Dihang and Tipaimukh is Rs. 39.323 crore with a combined installed capacity of order of 22,203 MW.

Power Resources

Power is an essential pre-requisite for industrial development. Assam is generously blessed by nature with its huge power potential based on water, natural gas, Coal and Oil. Assam alone has 28 percent of the total hydro power potential of the country, which remains under-utilised. In spite of having huge power potential, Assam is lagging behind most of the other states of India in respect of installed capacity as well as per capita consumption of electricity. In 1975-76, the state accounted for less than one percent of the total installed capacity of the country. In 1979-80, total installed capacity of the power projects in Assam was 151.5 MW with two major generation stations viz., Chandrapur thermal (30 Mw) and Namrup thermal (111.5 Mw) and a few isolated diesel generation stations. This capacity has increased to 201.5 Mw at the end of 1980-81 following the commissioning of the first unit of Bongaigaon Thermal Power Station (60Mw) with effect from 26 th February, 1981. Further, during 1981-82 total installed capacity increased to 312.5 M.W. as against the load demand of 462 M.W.

Again in 1993-94, total installed capacity of power projects in Assam gradually increased to 534.4 M.W. Moreover, total units of electricity generated were 1068.3 million unit in 1992-93.

In Assam power is utilised mostly for domestic, commercial, industrial and for public lighting purposes. In 1950-51, per capita consumption of electricity in Assam was 0.58 Kilowatt as compared with 13.3 Kilowatt for all India. In 1989-90 the per capita consumption of electricity in Assam gradually increased to 78 Kilowatt as compared with that of 1236 kilowatt for all India.

Time bound programme was taken up in the state to generate 585 M.W. of power by 1983-84 for making the state self sufficient in power. The Lakwa Thermal projects and Bongaigaon Thermal Power Station (120 M.W.) have already inaugurated and started commercial production. In the mean time, works of 150 M.W. Kopily Hydel Project has been completed and till February, 1993, this project has generated 790 M.U. of electricity. The power supply position in Assam is expected to be improved with the completion of the following projects, viz., Namrup waste Heat Power project (22 M.W.) extension of Chandrapur Thermal power Station (30 M.W.), Lakwa Gas Turbine (45 M.W.), Lower Barapani (Kamrup) Hydel Project and Karbi Longpi Hydro-Electric Project (250 M.W.) Kathalguri gas project based project (291 M.W.) and extension of Kopily hydel project (100 MW.) Kopily Hydel (250 M.W.) and Logtak (Manipu) Project has also improved the power position in Assam substantially.

Moreover, the work of Assam Gas-based power project undertaken by NEEPCO at Kathalguri has been completed and the project in Commission in 24th March, 1995. This project will ultimately generate 291 M.W. of power by utilising one million standard cubic metre of natural gas per day.

Total generation of electricity which was 658 million Kilowatt in 1978-79, gradually declined to 465 Kilowatt in 1980-81 and then gradually increased to 1079 Kwh and 939.9 Kwh in 1991-92 and 1993-94 respectively.

Thus, Assam has its rich power potential which still largely remains under-utilised, In the coming future we can hope that more power projects mainly based on natural gas, water and coal, will be commissioned in different parts of Assam. In the mean time, the Government of Assam has taken steps to establish some new power projects based on natural gas and water in the private sector.

Other Economic Resources

Economic resources are those which can be used without much conversion in its shape and character. Although all natural resources are also termed as economic resources after its processing but some resources are readily available and can be used directly both for production and consumption purposes without any processing. The two most important type of other economic resources include live stock resources and fishery resources.

Livestock Resources

Livestock is a kind of reproducible biological resources. Livestock population includes cattle, buffalos, sheep, goat, pigs, duck, etc. In Assam, a good number of rural people accepted the rearing of livestock as a secondary occupation side by side with their principal occupation. Moreover, a limited number of population in Assam, particularly dwellers in hilly slopes are practicing livestock farming as a whole time occupation.

As per the livestock census of 1988 in Assam, there are nearly 72.7 lakh cattle, 6.2 lakh buffaloes, 67 thousand sheep, 21.3 lakh goats, 13.5 thousand horses, 6.4 pigs, 84.6 lakh fowls and 29.9 lakh ducks. As per census report it is found that the livestock population is comparatively much higher in the districts like Dibrugarh and Tinsukia, undivided Cachar, Lakhimpur and Barpeta.

In order to attain a higher yield from livestock farming for longer duration, exotic varieties of cattle, goats, fowls, ducks etc. must be introduced. In the mean time steps have been taken to enrich the livestock resources of the state through rural development schemes like IRDP.

Fishery Resources

Fish is another water born resources. A considerable proportion of rural people in Assam, belonging to landless and economically backward section particularly are meeting their own requirement of fish by own catch. Moreover, a small section of population has accepted fishery activities on commercial basis and also earns a good amount of income from fishery. But the fishery resources in Assam remains totally neglected inspire of having a huge potential for its development.

Fishery Potential :

Assam is endowed with huge fishery potential. Assam possesses immense fishery resources in the form of rivers, beds, swamps, ponds, tanks, forest, fisheries and paddy fields. The twin river system of the Brahmaputra Valley and the Barak Valley bring enough fresh water to almost all over the state through innumerable tributaries. The ecological condition of the state is also quite favourable for pisciculture along with its subtropical humidity and coolness of climate.

Fishery is considered as one of the important sectors for the development of rural economy of the state. Two major rivers of India,  viz., the Brahmaputra and the Barak flow through the state. The Brahmaputra flows from East to West and runs through a distance of 730 Kms., having 42 tributaries of which 27 are in the North bank and 15 on the south bank. In its upper reaches, for a length of about 530 Kms till Guwahati, the gradient is steep and the strong surface and underwater current render commercial fishing impossible with the indigenoeous methods of fishing. The remaining 230 Kms stretch from Guwahati to Dhubri is exploited commercially for fishing.

The other major river, the Barak, flows from North to South in the Southern region of the state, for a total length of 400 Kms. It has 13 tributaries, 7 of which are in the North bank and the 6 of them are in the south Bank. Commercial fishing is practiced across the entire river. The state has two newly constructed reservoirs in North Cachar Hills District constructed by Kapilee Hydro Electric Project. The process of developing these reserves into fisheries shall continue in the coming years. Total fishery potential of the state under different heads is given below.

There are a good number of fisheries in Assam. Total number of registered beels and unregistered beels in Assam were 430 and 766 respectively in 1992-93. Moreover, there is a huge number of swamps and low-lying area (1192 and ponds and tanks (1.85 lakh). All these fisheries are covering a huge area of land. Moreover, there are a good number of river fisheries in Assam for approximately 4820 kms. of length and varied width. In 1994-95, there were 177 registered river fisheries in Assam. But unfortunately, these huge volume of fishery resources of Assam largely remains under-utilised. The introduction of scientific management practices on these huge fishery resources is very much essential in the present context. If such scientific practices can be introduced then Assam will be able to boost the production fish within the shortest possible time.

Seed Production :The state being deficit in fish production, efforts have been made towards increasing production of fish in the state. Fish seed being the primary input in the production of labh fish, maximum emphasis has been laid in the production of the required quantity of fish seed in the state. The state is now almost self-sufficient in the production of fish seed, considering the present requirement. But in order to utilise the unutilised water area of the state, the production of fish seed must be increased further.

The first step towards making the state self-sufficient in the production of fish seed, was the establishment of Eco-Hatcheries in the private sector. Construction of some more Eco-Hatcheries in the private sector have been taken up by the Fish Farmer Development Agencies (FFDA), the construction of which is in progress. There are also three departmental Eco-Hatcheries and two more are now under construction. Besides, there are potable Hatcheries, Glass jar Hatcheries and Mini Brinds in the Departmental Fish farms. Under modern technology, induced breeding method has been adopted. The state had set a target of producing 2000 millions of Fish seed (both under public and private sector) during the year 1993-94 against which it had produced 2170 million of fish seed.

Fish Production : Fish being one of the main items of food for most of the people in Assam, the demand for fish is very high in the state. About 90 per cent of the people in the state are fish eaters. Calculated on the basis of average nutritional consumption of 11 kgs. of fish per head per year, the requirement of fish for the state per year comes to 2,21,000 Metric tonnes (MT) on the basis of the population of 1991 Census. The Fishery Department has set a target of production of 1,40,000 Mts. during the same year.

The main traditional varieties of fish which are available for commercial purposes include rohu, mrigal, hilsa, catla etc. and exotic varities like grass carp, common carp and silver carp. Moreover, air breeding varieties such as magur, singee, garai etc. are also found in beels and swamps. Total production of fish seed in Assam was 2386 million nos. and total production of fish in Assam was 1,53,029 metric tonnes in 1994-95.

In Assam, the demand for fish has been continuously increasing in recent years. Due to deficiency in production, the prices of fish have recorded a rapid increase. In order to meet such short fall in domestic supply, the state is importing a huge quantity of fish from other states like Andhra Pradesh, West Bengal, Orissa, Uttar Pradesh etc.

In 1993-94, the total amount of fish imported to the state was 20, 549 Metric tonnes.

Fish Farmers Development Agency (FFDA) :

The Fish Farmers Development Agency is one of the agencies through which the Department had taken up the task of development of the existing water bodies, creation of new water bodies and to increase production of fish by adoption of modern technology.

FFDA is a centrally sponsored Agency for the development of fresh water Aquaculture, its jurisdiction being coterminous with a district. The FFDA meets two basic needs of the Fish farmers, i.e., (a) technical support including extension support and (b) financial support.

A prime objective of the aquaculture development through FFDA is to alleviate rural poverty through generation of employment among the weaker section of the society, marginal farmers etc. FFDA provides training to the fish farmers. The trained fish farmers are provided with subsidy with or without institutional finance.

During 1993-94, the FFDA subsidy has been de-linked from the bank loan. Now a fish farmer can avail FFDA subsidy without Bank loan, if he can meet the requirement of fund beyond the subsidy amount out of his own sources. During 1993-94, the Government of India sanctioned 8 (eight) more FFDAs for eight different districts of Assam, i.e. Hailakandi, Bongaigaon, Nalbari, Morigaon, Dhemaji, Golaghat, Tinsukia and N.C. Hills. With the eight new FFDAs, the total number of FFDAs in Assam comes to 23. Thus there is one FFDA in each of the 23 district of Assam. The first FFDA in Assam was set up in Kamrup District in 1995-96. Up to 1991-92, the total number of FFDAs in the State was 12. The number of FFDAs in the state rose to 15 in 1992-93 and now the state has 23 FFDAs.

The performance of the FFDAs shows that during 1993-94. Total water areas developed by FFDAs were 1108. 98 hectares and total number of beneficiaries covered by the FFDAs was 4107. During the year 1993-94, the Fisheries Department had realised Rs. 247.89 lakhs to the FFDAs, of which the central share was Rs. 82.00 lakhs.

Other Steps :

In order to harness the fishery potential of the state, the Fishery department has undertaken various other steps in the following manners.

(a) Development of Derelict water Bodies : There are many derelict water bodies in the state. The Department has taken up a scheme to develop the derelict water bodies to make them suitable for fish culture. But the step taken by the state is not adequate and much more is to be done for developing the huge derelict water bodies.

(b) Assam Fisheries Development Corporation Ltd : The Assam Fisheries Development Corporation Ltd. (AFDC) was set up in 1977, with the prime objective to develop the natural fisheries and thereby improve the socio-economic condition of the poor and scheduled caste fishermen and the Maimal Community of the Cachar district. The AFDC has taken the onus of development of Beel Fisheries under the World Food Programme. Till 1993-94, the Fishery Department had given an amount of Rs. 521.00 lakh to the AFDC for the development of bed Fisheries in the state.

(c) Assam College of Fisheries : In order to develop proper manpower and technology for the utilisation of huge fishery potential of the state, The Assam College of Fishery was established in 1998 at Rah in the Nagaon district. The college is under the Assam Agriculture. University, where B.F.Sc. Course is being taught in this college.

(d) Training Programme : In order to provide practical training to the fish farmers, some training programmes are being undertaken by different agencies. There is a Regional Fisheries Training Institute (RFTI) at Amranga in the Kamrup District, which is about 35 Kms. from Guwahati. The Institute was set up with the funds provided by the North Eastern council. It provides refresher course training to the in-service personnel of the North Eastern states. The duration of the course is nine months. It also organises short term Fishery Training courses for the fish farmers of Assam and other North-Eastern States.

Between 1987 and 1993-94, the RFTI has given training to 330 Fishery Officers and fish farmers.

There are two more training institutes, one at Joysagar in Sibsagar district the other at Guwahati. They provide training courses for the fishery demonstrators and also for the fish farmers. During 1993-94, both the Institutes provided training to 66 Fishery Demonstration and fish farmers.

Moreover, FFDAs are also conducting short duration training course for fish farmers who are selected for taking up implementation of various schemes under FFDAs for their self-employment. During 1993-94, the 23 FFDAs trained about 3090 fish farmers in the state.

But the training programmes undertaken so far are not adequate considering the huge fishery potential of the state and the number of persons involved in it. Thus adequate steps must be taken to arrange fruitful training programmes for those persons.

In order to draw maximum benefits from the fishery sector, the Directorate of Fisheries has taken a series of measures like production of quality fish seeds both in Government and private sectors with establishment of modern infrastructures which include-development of eco-hatcheries and fish seeds farms, supplying adequate volume of fish seeds to fish farmers, development agencies, extension services, making provision for training and research etc.

As a result of these measures, the production of fish in Assam had increased to nearly 1.55 lakh mt. in 1996-97. The state Government is initiating series of ambitious programmes for increasing the production of fish and also for harvesting the additional and unutilised fishery potential areas of the state.

Fishery Development under Assam Rural Infrastructure and Agriculture Service Project (ARISAP) :

In recent years, a new programme entitled "Assam Rural Infrastructure and Agriculture service project (ARIASP) is undertaken with the assistance of the World Bank. Under this project, the Department of Fisheries, Assam has secured a total of Rs. 28.37 crore in order to increase the production of fish from the present level of 1.55 lakh mt. to the projected requirement of 2.21 lakh mt. including adequate provision of allied infrastructure facilities. This project (ARIASP) will continue for a span eight years since it has started from 1995-96.

Out of the total allocation of Rs. 28.37 crore on this project, a sum of Rs. 21.70 lakh has been earmarked for fish seed production. Rs. 72.20 lakh for mobile fish health clinic, Rs. 820.00 lakh for development of farmers community tanks and ponds, Rs. 124.40 lakh for open water fisheries, Rs. 841.80 lakh for beel fisheries development, Rs. 335.90 lakh for fisheries research, Rs. 449.60 lakh for fisheries extension, education and training and Rs. 72 lakh for project monitoring call. All these earmarked amount would be spent during the span of eight years.

Under this project, an eco-hatchery with other infrastructural facilities is proposed to be established at Assam Agricultural University, Jorhat for the production of fish seeds. Six ambulatory vans with accessories have been proposed to be procured for rendering services related to fish health care. Moreover, about 800 nos. of fish farmers’ ponds, 150 nos. of Community tanks will be developed with in the stipulated period of eight years. Besides, about 5000 hectares of natural beel areas and 500 hectares of open water fisheries have been taken up for the promotion of pisciculture so as to enhance the production of fish and to uplift the socio-economic condition of the fishermen community. Education and training to fish farmers and in service and in-service personnel in latest technology in the field of aquaculture are proposed to be intensified at the university and department level. Accordingly, Fisheries research activities in Raha and Jorhat are augmented. A project monitoring cell will also be established for meticulous planning and programming in this sub-sector.

Since after the introduction of ARIASP, the achievements of the fishery sector took a new turn with the development of large number of farmers’ ponds, beel fisheries etc.

During 1996-97, the extent of progress made in the fishery sector was quite encouraging. During this year 220 nos. of farmers’ ponds and 57 community tanks were developed. Moreover, 44 nos. of farmers ponds were brought under intensive fish culture with horticulture and 25 nos. of ponds were also developed under pig-cum-fish culture. Besides, 16 nos. of vehicles were procured while trainings were imparted to around 200 nos. of farmers and 34 nos. of in service officers. Apart from these, civil work , for construction of four training centres at Tezpur, Barpeta Road, Joysagar and Amranga has already been completed. Total amount of expenditure incurred in the fishery sector during 1996-97 was nearly Rs. 2.38 crores.

ARIASP project is no doubt an important project for the intensive development of the fishery sector of the state. Considering the huge fishery potential of the state, the officials of the Fishery  department should try to implement this project with utmost sincerity so that instead of ritual, the project is implemented for the benefit of the general fish farmers of the state.

Thus, in spite of having a huge fishery development potential the state is lagging behind some other similarly placed states in respect of production of fish. Under such a situation, Department of Fishery, Assam should take adequate steps to modernise the fishery sector by adopting scientific practice through its viable schemes. Some of the districts of Assam which are having a huge potential for the development of fishery resources include Dhubri, Barpeta, Kamrup, Nagaon, Morigaon, Sonitpur, Sibsagar, Karimganj and Cachar. Thus the Government of Assam should take adequate steps to develop fishery resources in these district and local educated youths should come forward to develop this fishery resources of the state on a commercial basis.

 

 

INDUSTRY

 

Introduction

Assam is situated at the North-eastern Himalayan Sub-region of India. In spite of having huge development potential, the economy of Assam remained underdeveloped as it is characterized by poverty, under-utilized man power and untapped natural resources. The economy of the state is depending too much on agriculture. In Assam, cultivators and agricultural labourers together account for 64.0 percent of the total working population, whereas workers of manufacturing and other household industries constitute only 2.8 percent of the total workers of the state.

Assam is one of the industrially backward states of the country. In spite of being blessed with a high potential for development of resource-based and demand-based industries in the state, the pace of industrialisation in Assam had not been satisfactory. The industrial sector in the state had been centralised around some particular sectors, like tea, petroleum, coal, jute and forests.

Industries in Assam can be broadly classified into four heads:

(a) Agro-based industry,

(b) Mineral-based industry,

(c) Forest-based industry, and

(d) Other industries.

Agro-based industries of Assam include-Tea industry, Sugar industry, Grain mill products industry-(Rice, Oil and Flour Mill), Food processing industry and Textile industry.

Mineral-based industries of Assam includes-Railway workshop, Engineering industry, Re-rolling mill, Steel Works, Motor Vehicle Workshop, Galvanized wire units, cycle factory, Aluminum utensils industry, Cycle spare parts, Steel Trunk, Tube well pipe, Steel wire net, Barbed wire, cement industry etc. Moreover, the non-metal based industries include oil industry, Natural Gas-based industry etc.

Forest-based industries of Assam include-Plywood industry, sawing mill, Paper and Paper-pulp industry, match industry, Leather industry, Hard board industry etc.

Other industries of Assam include-Power industry, Fertiliser industry, Printing Press, Brick and Tiles industry, Chemical industry etc. Shyness of capital due to high cost of production, vulnerability of the region, inadequate economic and basic infrastructural facilities, dearth of technical personnel, lack of entrepreneurial motivation on the part of local people and low level of central sector investment etc. are responsible for poor industrial development of the State. During the decade of planning the industrial sector practically remained stagnant. It was during the Third Plan that the industrial development programmes were accelerated along with the development of infrastructural facilities. It is also encouraging that over the past few years persistent efforts are being made for increasing and improving various infrastructural facilities which are paving the way for gradual industrialisation in the State. Besides, the State Government is also providing technical training undertaking surveys and investigation of raw materials, developing industrial sites and participating in the share capital of private enterprise. These developments created a favourable climate for industrial investment in the State.

Trends of Industrial Production

Industrial production in Assam has been increasing at a slow rate. Major industrial products in Assam include Tea, Coal, Matches, Plywood, Sugar, Fertilizer, Jute Textiles, Petroleum Crude, Refinery Products, Wheat Flour, Paper and Cement. The following table shows the production of some important industries in Assam:

Production of some important industries in Assam

Item

Unit

 

Production in

 

 

 

 

 

1975

1981

1985

1991

1994

1. Tea

2. Sugar

3. Jute Textile

4. Fertiliser

5. Refinery

Products

6. Petroleum

Crude

7. Plywood

 

8. Match

 

9. Cement

10. Paper

11. Wheat Flour

12. Coal

Million Kg.

‘000’ M.T.

‘000’ M.T.

‘00’ M.T.

‘000’ M.T.

 

‘000’ Tonnes

 

Million Sq.

Meters

Million gross Boxes

‘000’ M.T.

‘000’ M.T.

‘000’ Tonnes

‘000’ Tonnes

263

7

4

141

1295

 

__

 

23

 

4

 

110

__

__

__

305

6

6

204

1566

 

4386

 

31

 

5.4

 

197

14

149

651

352

3

6

187

1910

 

4791

 

42

 

5

 

169

0.5*

337

835

388

4.2

5.3

326

2531

 

4838

 

26

 

4.7

 

179

__

283

946

399

1.5

5.0

129

__

 

4861

 

42.7

 

4.1

 

275

__

249

1292

Source : 1. Economic Survey, Assam, 1981-82, 1985-86 and 1989-90

2. Statistical Hand Book, Assam, 1993 and 1995

3. Figure related to 1983

The above table reveals the trend of production of some important industries of Assam in recent years. Production of Tea, which was 263 million Kg. in 1975 gradually increased to 352 million Kg. in 1985 and then fell to 390 Million Kg. in 1994. Production of sugar stood at 1.5 thousand M.T. in 1992 as against 6 thousand MT in 1975. Production of Jute Textiles shows an increasing trend from 4 thousand M.T. in 1975 to 6 thousand M.T. in 1985and then declined to 5.0 thousand M.T. in 1994. Fertiliser production in Assam which reached the peak level of 32.6 thousand M.T. in 1991 gradually declined to 12.9 thousand M.T. in1994. The volume of refinery products in Assam gradually increased from 1295 thousand M.T. in 1975 to 2531 thousand M.T. in 1991. Production of plywood in Assam also increased from 23 million sq. metre in 1975 to 43 million sq. metre in 1994. Production of match which reached the peak level of 6 million gross Boxes in 1979, gradually declined to 4.4 million gross boxes in 1994.

In the case of Cement industry, total production gradually increased from 110 thousand M.T. in 1975 to 275 thousand M.T. in 1994. It is also expected that total production of Cement will also increase further in the coming years. Total production of paper which reached the peak level at 17 thousand M.T. in 1978 gradually declined to 11 thousand M.T. in 1980 due to the closure of Ashok Paper Mill at Jogighopa. In 1983 total production of paper again declined to 0.5 thousand M.T. in 1983 and it declines further in recent years due to near sick condition of two paper mills of Hindustan Paper Corporation.

Total production of coal in Assam also maintained an increasing trend i.e., from 584 thousand tonnes in 1979, the production increased to 1292 thousand tonnes in 1994.

Index of Industrial Production in Assam

The Directorate of Economics and Statistics (Assam) has been preparing an index of industrial production, with base 1970=100, based on 25 items of products representing 13 industry groups at 3 digit level of National Industrial classification (NIC) 1970. These 13 industrial groups accounted for 81.9% of the value added by Manufacture in the registered factory sector in 1970. The following table shows the index of industrial production for the period 1971 to 1994.

Table No. 8.2

Index of Industrial production in Assam (Base 1970=100)

Industry Group

1971

1976

1981

1991

1994

1.Grain Mill products

2.Manf. and refining of sugar

3.Manf.of other edible oils and fats

4.Tea processing

5.Manf. of Cotton textiles

6.Manf.of Jute textiles

7.Manf. of veneer plywood & their products

8.Sawing & planking of wood (other than ply)

9.Petroleum refineries

10.Manf. of products of petroleum not elsewhere classified

11. Manf. of Fertilizers and pesticides

12. Manf. of Matches

13. Aluminum manufacturing

14. All Industries combined

 

 

 

 

 

 

92.34

 

 72.54

 

101.78

105.49

62.35

 

104.98

 

 

120.43

 

 

147.53

92.79

 

 

108.70

 

117.29

96.85

 

96.15

 

103.57

 

 

99

 

76

 

103

130

 

89

 

266

 

 

175

 

 

130

106

 

 

85

 

189

104

 

119

 

124

64

 

54

 

76

145

 

119

 

275

 

 

315

 

 

152

136

 

 

36

 

382

100

 

198

 

145

114

 

40

 

159

183

 

128

 

353

 

 

278

 

 

144

238

 

 

71

 

72

87

 

122

 

190

98

 

15

 

57

188

 

107

 

302

 

 

454

 

 

115

265

 

 

77

 

47

76

 

188

 

204

Source : Directorate of Economics and Statistics, Assam.

The above table reveals that the industrial production in Assam evidenced a continuous upward trend since 1971, the annual rate of growth being about 4 percent. But the increase in the industrial production varies in different years. The index of industrial production (base 1970=100) in the registered factories increased by over 20 percent during 1970-77. The increase in 1976 over 1975 was 6 percent while that in 1977 over 1976 has been estimated at 2 percent. The table further shows that the indices of I industrial production (Base 1970=100) of the industrial groups like-grain Mills product, Manufacture and refining of Sugar, Manufacture of other edible oils and fats and Manufacture of products of petroleum not elsewhere classified have been gradually declining and reached the level of 64, 54, 76 and 36 respectively in the year 1981. Again in 1991, the same indices changed to 114, 40, 159 and 71 and in 1994, these indices again reached the level of 98, 15, 57 and 17 respectively.

But the indices of industrial production of the industrial groups like Manufacture of Jute textiles. Manufacture of veneer plywood and their product, Manufacture of Fertilizers and pesticides and Aluminum manufacturing have been increasing satisfactorily and reached the level of 275, 315, 382 and 198 respectively in the year 1981. In the 1991, these same indices increased to 353, 278, 716 and 122 and in 1994, these indices again increased to 302, 454, 47 and 188 respectively. The indices of other industrial groups like Tea processing, Sawing and planking, Petroleum refineries, Manufacture of Cotton textiles have been increasing at a slow rate and reached the level of 145, 152, 136 and 119 respectively in the year 1981 whereas the indices of production of Match industry remained more or less stationary. In 1994, these same indices again increased to 188, 115, 265 and 107 respectively.

It is also observed that the indices of production (Base=1970) of All industries combined in the State gradually increases to 133 in 1979 and then to 145 in 1981. Again in 1991, the indices of production of all industries increased to 190 and in 1994, the same indices further rose to 204. The index also reveals that the index was lower by 7.5 percent in 1980 over 1979 and 8.9 percent in 1979 over 1978. But the production performance in the manufacturing sector of the State which suffered a slowing down in the year 1979 and 1980 has regained the lost ground in the year 1981. Again, the indices of industrial production (all industries combined) has recorded an 3.8 percent increase in 1991 over 1990 and recorded a marginal increase of 1.5 percent in 1994 over 1993. It is also evident from the available data that during 1981 production of fertilizer, refinery products, jute textiles, Plywood and Cement have increased in varying proportions as compared with the preceding year. Production of sugar fertilizer, paper and match displayed some fall during the year.

Role of Organized and Unorganized Industries in Assam

Assam got its berth in the industrial map of India since the pre independences period. During the British period, the process of industrialisation was initiated in Assam with the growth of tea and oil industry. With the development of these two industries, the industrialisation process gained its momentum in the last half of the British period and subsequently after independence.

The industries in Assam can be broadly classified into- (a) Organized industries and (b) Unorganized industries. The organized industries of Assam include Tea, Petroleum, Paper, Cement, Plywood, Coal, Jute, Sugar etc. The unorganized industries of the state include the small and cottage industries, Khadi and village industries etc. Both the organized and unorganized industries are playing a very important role in the economy of the state. Tea and Petroleum industries are the two important organized industries of the State which has been playing an important role of sustain the economic development process of the State. Moreover, the other organized industries along with unorganized industries like various small and cottage industries and the Khadi and village industries are also playing a very important role in the state, especially, in the rural economy of the state. The following are some of the important roles played by these organized and unorganized industries of the state :

1. Utilisation of huge volume of natural resources has become possible with the development of these various types of organized and unorganized industries in the State. Assam still possesses a huge volume of various types of mineral, forest and agro-based resources which are mostly remain unutilised. Development of these industries can tap these resources to the fullest extent.

2. Development of these industries would increase the job opportunities for huge number of population of the State. Agro-based industries and the unorgansed industries, being labour intensive, are providing a huge number of employment opportunities in the state. Tea industry aloe provides direct employment to more than 5 lakhs of persons daily. If more such industries materialize fully, the problem of unemployment could be solved easily in the state.

3. Organised and unorganised industries are contributing a good portion state income. The manufacturing industries have contributed 15.5 percent of the total state income in 1993-94.

4. Organised industry like tea industry of Assam is supplementing a good volume of export requirement of the country. Assam’s share of tea export was more than 55.0 percent of the country’s total sales abroad. Similarly, the petroleum and Petro-chemical industry of Assam has also a considerable import-substitute component.

5. Development of organised industries has led to the growth of a good number of ancillary industries in the state.

6. Development of these different industries has to the development of markets for various raw materials and finished product in the state.

7. Finally, development of various organised and unorganised industries will help well in the creation of industrial climate in the State. The expansion of tea industry in Assam has led to the growth of many small industries viz, industries producing tea machineries and implements, tea chests plywood industry etc.

Contribution of Manufacturing Sector to State Income

The manufacturing sector of Assam is very poor in its size. Thus its contribution to state income is also very poor. Being industrially poor, the State’s economy cannot expect sufficient income out of this sector. The percentage of income derived from manufacturing (including tea processing, factory establishments and small enterprises) out of total state income remained at a poor level as the economy of the state is mainly an agrarian one.

In 1950-51, contribution of the manufacturing sector to the state income was around 15.6 percent and then its contribution increases to 17.2 percent in 1955-56 and further to 17.7 percent in 1960-61. In 1965-66 the contribution of the manufacturing sector the state income (at 1948-49 prices) stood at Rs. 64.6 crores which came around 17.4 percent of the total state income. In 1969-70, the contribution of this sector although increased marginally to Rs. 77.4 crores but its contribution declined to 15.1% of the total state income.

From 1970-71, the state income has been calculated at 1970-71 (constant) prices. Taking the manufacturing, construction, Electricity, Gas and Water supply within a particular group its share in the state income of 1970-71 was to the tune of Rs. 108.0 crores, contributing 13.9 percent of the total state income of Assam. In 1973-74 although its share remained at the same level of Rs. 108.7 crores but its contribution declined to 12.5 percent of the state income. In 1977-78 the share of this manufacturing and allied sector gradually increased to Rs. 130 .0 crores but its contribution remained at the same level of 12.7 percent of the state income.

The contribution of the manufacturing sector alone to the state income of Assam (at 1970-71 prices) was Rs. 92.4 crores in 1977-78 then it increased to Rs. 98.7 crores in 1978-79 and then gradually declined to Rs. 97.8 crores in 1979-80 and Rs. 92.0 crores in 1980-81. Further, the share increased to the level of Rs. 104.9 crores in 1981-82 (provisional). The shares of this manufacturing sector alone to the total state income of Assam were 9.8 percent in 1978-79, 10.0 percent in 1979-80, 8.4 percent in 1980-81 and 9.4 percent in 1981-82

The share of manufacturing sector to the net state domestic product at current prices has increased from 6.9 percent in 1980-81 to 10.2 percent in 1990-91 and to 10.56 percent in 1991-92. The same share at constant prices(1980-81) has also increased from6.9 percent in 1980-81 to 13.37 percent in 1990-91 and then to 15.50 percent in 1993-94.

Again the contribution of the entire secondary sector which includes manufacturing industry, construction, electricity, gas and water supply to the net state domestic product of Assam at 1980-81 prices has increased from 11.8 percent in 1980-81 to 19.45 percent in 1990-91 and then to 23.00 percent in 1993-94.

Thus from the above fact it reveals that the contribution of this manufacturing sector to the State income of Assam has been gradually increasing at a slow rate. The reason behind this trend is that the manufacturing sector could not expand at a desired rate and thus the agricultural sector is still dominating the show accounting 33.5 percent of the total state income of Assam. Thus the economy of the State is yet to be diversified. This required that the industrial sector should expand at a rapid scale and new industries both large and small scale, should be developed on the basis of available natural endowments.

Plan wise Achievements of Industrial Sector

During British period the industrial development in Assam was very poor. Even the basic infrastructural facilities which were essential for industrial development were more or less absent. After independence, although planning started in Assam along-with the other states of the country but the aims of the State plan were tilled towards the development of agricultural sector neglecting the industrial sector.

During the first decade of planning the industrial sector practically remained stagnant. It was during the Third Plan that the industrial development programmes were accelerated to provide much needed boost to the growth-including factors. The State Government also directed its vigorous efforts with its limited resources towards creation and development of adequate infrastructure like expansion of the facilities of power, transport, providing technical training, and also undertaking surveys and investigation of raw materials, developing industrial sites, and participation in the share capital of private enterprise. Thus a favourable climate for investment in industries had been created with all these development. But the response of the private investment was not so much encouraging. Public investment of the central sector in the State was also meager. But prospect has brightened with the decision taken later by the Government of India to set up number of resource based industries in the State.

Towards the latter part of the Second Plan and the early part of the Third Plan a number of new industries, namely a bicycle factory, a spun silk mill, two cotton spinning mills, a house service meter factory, some re-rolling and fabrication units, a mixed fertiliser plant, a Jax board factory, a hard board factory, a sugar mill (a Co-operative enterprise) and a fruit-processing plant were set up in the small or medium scale sector. The capacity of the existing industries notably in plywood and saw mills, flour and oil mills, motor repairing and general engineering was also expanded.

Besides two major projects viz : Noonmati Refinery (Third Plan) and Namrup Fertiliser Plant ( spilled over to Annual Ad-hoc plans) both in the central Government sector and the third, the Gas Distribution Project- Assam Gas Company in the State Government sector were established. All these above mentioned projects are resource-based which supported a number of ancillary and subsidiary units. The most prominent among these is India carbon products Limited (based on Noonmati Refinery). Late in the Third Plan, the State Government took over from the private sector, implementation of the Cherra Cement Projects which started production in 1966.

During the Fourth Plan, the pace of industrialisation in the State was accelerated with the establishment of number of resource-based industries mostly in the public sector located in some of the relatively backward areas of the state. During the Fourth Plan, some new industries were set up which included Assam Co-operative Jute Mill at Silghat, Assam Alkali Allied and Chemicals Ltd., at Jogighopa, Ashok Paper Mill at Jogighopa. Further, some of the existing industries in the State were also expanded during this plan period. Among those included was the Cherrapunjee Cement Factory whose production capacity was expanded from 250 tonnes to 850 tonnes per day. The Assam Gas Company has laid down another pipeline connecting Moran Gas grid with Namrup to meet the requirement of natural gas of the Namrup Fertiliser Plant for its expansion. The production capacity of the Namrup Fertiliser Plant has also been increased by three times in terms of ammonia production.

The setting up of Assam Co-operative Jute Mill at Silghat in Nowgong district at a cost of Rs.1.65 crores with 150 looms, sufficient to produce 7,000 tonnes of Jute Products was an important step towards industrialisation of Assam. Then the Ashok Paper Mill was set up at Jogighopa with production capacity of 120 tonnes of pulp and 90 tonnes of paper per day at the cost of Rs.15 crores. But due to mismanagement this mill incurred a huge amount of loss and now the mill is closed. A huge mechanised company is gradually being wasted due to lack of maintenance. Along with this the Assam Alkali Allied and Chemicals Limited was also set up at Jogighopa as a captive unit for the Ashok Paper Mills Limited at a cost of Rs. 2.5 crores. But the fate of the company is also similar to that of Ashok Paper Mill.

Further, the Assam Petro-Chemicals Limited was set up at Namrup with Japanese Collaboration at cost of Rs. 5 crores. This project is based on natural gas for manufacture of methanol formaldehyde, urea formaldehyde, resins etc. A sugar mill was also set up at Cachar at cost of Rs. 2.60 crores.

Thus during 19 years of planning till the Fourth Plan the number of registered factories in Assam increased from 911 in 1951 to 1588 in 1969 and employment in these factories increased from 65.1 thousand to 79.4 thousand over the same period. The backwardness of the State in industrial sector can be gauged from the fact that her share in the total national net output from manufacturing industries which was barely 2.35 percent in 1960-61 gradually came down to 1.68 percent in 1965-66 and then to 1.62 percent in 1968-69.

Some of the important industries which were commissioned during 1976-77 and 1977-78 i.e., during Fifth Plan are the Bokajan Cement Factory belonging to the Cement Corporation of India, the Assam Petro-chemical complex, Namrup and the Cachar Sugar Mills Limited . Among the factories registered during 1978 are the Bongaigaon Refinery and Petro-chemicals Limited (BRPL) which has the highest number of employees (1000) . It was proposed to establish a cement plant at Garampani, a spinning mill of 25,000spindles-based on BRPL polyester fibre at Bongaigaon. It was also envisaged to set up a vanaspati plant, a finished leather project, a drug formulation project of IDPL . In the mean time the vanaspati plant has started its commercial production in 1985.

The State Government of Assam is not only patronising establishment of industries in the private sector but also increasingly involved itself in undertaking many industrial venture of its own . Due to these efforts, a few important resource and demand-based industries have come up in the state in the recent past and a few more are in the offing.

Recently, the state government has identified five sectors for state investment and major thrust areas in the coming years. The five sectors are down stream units of the gas-cracker project, plastic-based industries, textile industries, lime-stone based industries and the electronic sector. The state government has also formed an Industrial Advisory Committee to guide the state government in formulating its policy for the development of industrial infrastructure, identifying priority sector for generation of maximum employment and other field f industrial development in the state.

Registered Factories in Assam

Total number of industrial factories registered in Assam is also an important Indicator for the progress of industrialisation in the state. The following table shows the total number of registered factories in Assam since 1971.

Table No. 8.3

Number Registered Factories in Assam

 

Year

Number of Factories

 

1971

1975

1980

1985

1986

1987

1988

1989

1990

1991

1993

1604

1715

1987

2462

2503

2604

2523

2567

2677

2670

2438

 

 

 

 

 

 

 

Source: Chief of Factories, Assam.

The table given above reveals that over the past few years there have been a steady increase in the number of registered factories in the state. Total number of such factories in the State which was 1604 in 1971 increased to 1897 in 1980 and then to 2462 in 1985. Since then again the number of registered factories started to increase during the Seventh Plan and accordingly the total number increased from 2503 in 1986 to 2523 in 1986 to 2523 in 1988 and then to 2567 in 1989. Another set of 110 new factories were registered in the year 1990 bringing the total number of registered factories in the state to 2677 at end of the year 1990. In 1994, total number of registered factories declined to 2438. Total number of workers employed in these factories has increased to 90.1 thousand in 1988 as against the number of 90.7 thousand in 1981 and about 87.7 thousand in 1980. There are very few large scale employment-oriented industries in the state.

There are, at present only four factories which employ 1000or more workers. Tea factories account for about one-fourth of the total registered factories in the state. Total number of tea factories in Assam was 570 in 1990 and average number of labourers employed daily in tea industry was 5.42 lakhs.

Further, for accelerating the process of industrial development in the state a host of organisations have been set up by the state Government viz.; the Assam Industrial Development Corporation, the Assam Small Industries Corporation, the Assam Small Industries Development Corporation etc. During the first year (i.e.1980) of the Sixth Plan a new organisation under the name of the Assam Industrial Promotion and Infrastructure Corporation has been set up for developing infrastructural facilities in the state. Besides, another organisation, viz ; the Assam State Textile Corporation Ltd. has recently been incorporated as a Government Company for promoting textile industries based incorporated polyester staple fibre made available from the Bongaigaon Refinery and Petro-Chemicals Ltd.

Assam Industrial Development Corporation (AIDC)

The Assam Industrial Development Corporation (AIDC) was established on 21st April, 1965,i.e., during the Third Plan. The main objective of this corporation is to accelerate the pace of industrial development in Assam. The AIDC, which is a State Government undertaking, is reported to be taking various steps for the promotion and development of large and medium scale industries in the state, Till February 1990, the AIDC is reported to have provided financial assistance to 61 number of projects under the IDBI refinance scheme, of which 32 projects reported completion and 28 projects under implementation. The volume of term loan and seed capital sanctioned by AIDC under the aforesaid scheme amounted to Rs. 44.36 crores and Rs. 1.12 crores respectively up to the end of February, 1990. According to the information available from the Directorate of Industries, Assam, a total of 15 large and medium scale industrial units and 285 number of SSI units were assisted by sanctioning capital investment subsidy to the tune of Rs. 91.62 lakhs and Rs. 4.95 crores respectively during 1988-89.

The Assam Industrial Development Corporation has taken the following industrial Projects in the State : (a) Spinning mill, (b) Phthalic Anhydride Project, (c) Methanol Expansion Project (d) Expansion of Assam Gas Company etc. Construction work of some of these projects has already been started during the Seventh Plan. Works on the rest of these projects are now being taken during the Seventh and Eight Plan.

In the mean time, the area and the size of operation of AIDC has been enlarged to a large extent. The construction and installation works of some industrial Projects completed by this Corporation include-Assam Petro-chemicals Limited, Fertichem Limited, Cachar Sugar Mill, Assam Syntex Limited etc.

Functions : In recent times, the AIDC is performing the following functions :

1. Identification, implementation and promotion of large and medium scale industrial projects in the state both of state public sector and joint sector.

2. To Participate in the equity capital of private sector industrial units so as to provide them financial assistance.

3. Implementation of package scheme of incentives like disbursement of capital subsidy and transport subsidy for the benefit of entrepreneurs.

4. Providing term loan assistance to medium scale entrepreneurs under IDBI’s Refinance Scheme.

5. Providing Seed Capital Assistance to new entrepreneurs.

6. Management and rehabilitation of sick industrial units.

7. Development of Industrial area and Growth Centres.

8. Imparting in-plant training to educated unemployed youths.

9. Operation of Udyog Sahayak.

AIDC is now working with the following industries which are at various stages of implementation and planning :

1. A 2000 TPA Polyester Film Plant.

2. A 15000 TPA Polyester Filament Yarn Plant.

3. A 35000 TPA Galvanised Plain and Corrugated Sheet Plant.

4. Weaving Complex.

5. Sack Kraft (Extensible Paper) Project.

6. Textile Processing Unit.

7. Sponge Iron Project.

8. One million tonne Cement Plant.

9. Finished Leather Project.

10. A Jute Mill

11. A Gas Separation-cum-Cracker Project (including Petro-chemical Project).

12 A Drug Formulation Unit.

Thus AIDC has been contributing a lot in respect of industrialisation in Assam.

Task Force

The Government of India set up a Task Force in October 1980 and it identified a number of Projects based on down stream products of BRPL. The Task Force suggested establishments of 20 spinning mills in the State exclusively for producing blended yarn and also for full use of 30 thousand tonnes per annum of polyester staple fibre produced, at BRPL. If these projects materialise during the Seventh and Eight Plan, the process of industrialisation in Assam is expected to get a boost besides generating employment avenues for about 1. lakh persons. Already work for setting up 6 spinning mills both in the public and Co-operative sectors in the State are progressing satisfactory. Among hose mills, three mills, will have the capacity to produce 25,000 metres of cloth daily. Thus we can hope that if everything runs suitably, industrial development in Assam will have a boost in near future.

But in the mean time, the spinning mill established at Noapara under the Bongaigaon district and which was sponsored by AIDC has already transferred to the private sector after incurring a huge loss due to its organisational problems.

The Task Force set up by the Government of Assam (as per clause no.7 of Assam Accord) submitted its report on 5th April, 1988. The suggestions forwarded by this Task Force for the industrialisation of the State Include- to set up a highly sophisticated electronic industry in Assam, to establish ancillary industries which are directly and indirectly related to tea and petroleum industry, to establish domestic and government demand based industrial projects and to set up agro-based industries. Moreover, this Task Force suggested establishing a new industrial development centre- "Industrial Town" having 2000 hectares of land and other infrastructural facilities in the central part of the state.

Prospect of Industrial Development during the Seventh and Eight and Ninth Five Year Plan in Assam

In respect of Industrial development, Assam is lagging far behind the other industrially developed states of India. Although Assam is endowed with different types of natural resources but its utilisation are miserably poor. Until and Unless these natural resources are being used within the territory of the State, the State cannot expect a boost in the level of development in its economy.

Industries developed till the end of the Sixth Plan in Assam are not at all satisfactory considering the degree of economic problems faced by the State. Traditional Tea industries and oil industries are still dominating the economy of Assam. If we want to develop the economy of the State, the industrial diversification on the basis of natural endowments of Assam.

The Government of Assam had taken a decision in February, 1985, to set up one industrial area in each district headquarter of Assam during the Seventh Five Year Plan. Thus the schemes have been prepared and the following places ‘Lolabari’ and ‘Bihupuria’ of North Lakshimpur district, ‘Malinibil’ of Cachar district, ‘Rani’ of Kamrup district and ‘Lahowal’ of Dibrugarh district have been selected for the purpose.

Further, the Government of Assam has also selected some Petro-chemicals Project for its successful installation during the Seventh Plan period. These projects include :

(a) Polyester filament yarn project

(b) Polyester film project

(c) Phthalic anhydride project

(d) Methanol Project

In their memorandum, submitted earlier to the Central Government, the State Government demanded establishment of another oil refinery and a Gas processing unit. Besides, the Plan to establish one ‘Gas grid’ and a ‘sponge’ iron project’ based on natural gas was also examined.

The Government of Assam and the Central Government has also examined another plan to develop ‘Assam Electronics Development Corporation’, for producing various types of electronic goods. This Corporation will produce various electrical inputs for tea industry, drug industry and for agricultural sector of Assam. In the mean time, this corporation has started its production.

Further, the State Government of Assam has also taken a decision to establish one mini-steel industry in which they have planned to establish one ‘Sheet Plant’ in Assam during the Seventh Plan period.

Besides, the work of establishment of six spins mills, which started during the Sixth Plan Period, are now progressing well. Some of these mills have started their commercial production during the Seventh Plan period and some others are expected to do so during the Eight Plan. With the Commissioning of the petro-chemical Section of B.R.P.L. many new small textile units will come up on the basis of polyester fibre produced by B.R.P.L.

Prospect of the development of many downstream industries on the basis of the petro-chemicals from B.R.P.L. is quite bright. This includes the products like plastic, pesticides, photo film, resin, detergent, P.V.C. compound etc. The prospect of developing other industries in Assam includes forest based industry, mineral-based industry, agro-based industry and textile industry. It is expected that some of these projects will be developed during the Eight and Ninth Plan period.

In the mean time, the Numaligarh Refinery Limited under the join sector has started its construction works. On 22nd April, 1993, this company was formed officially. As per the primary estimate, total investment of this company would be around Rs. 2000 crores and the total refining capacity would be around 2 million tonnes. Moreover, it has been decided that the State Government will hold 10 percent of the equity capital, Indo-Burma Petroleum Company will hold 51 percent of the equity and the remaining 39 percent equity capital will be collected from the primary market.

Moreover, the efforts to set up a Gas Craker Project in Assam have been progressing satisfactorily. Again, the expansion programme of Bongaigaon Refinery and Petrochemicals Limited has been almost completed in May, 1995. With the completion of this expansion programme the refining capacity will just double from the present level of 1.35 million tonnes per annum to 2.7 million tonnes per annum. The Government of India approved this expansion programme for the BRPL on 31st December, 1991 and allotted Rs. 223 crores for the project, which has already been completed in May, 1995, Moreover, the Central Government has taken steps for the modernisation of Digboi refinery and Namrup fertilizer unit.

Moreover, the State Government has identified five sectors for state investment and major thrust areas in the coming years. The five sectors are down stream units of the gas- Cracker project, Plastic based Industries, textile industries, lime-stone base industries and the electronics sector. The state government has also formed an Industrial Advisory Committee to guide state government in formulating its policy for the development of industrial infrastructure, identifying priority sector for generation of maximum employment and other fields of industrial development in the state.

Moreover, under the present scenario of economic reforms introduced throughout the country, the state government has been exploring the possibilities of disinvestment and privatisation of some of the existing state public sector undertakings. In the mean time, a few state public sector undertakings have already privatised by the State Government.

Besides, the State Government and Central Government are also trying to develop some resource-based industries during the ensuring Ninth Plan with the participation of some Indian private sector companies and some foreign companies. Thus if a conducive atmosphere can be created for the industrialisation of the State, then the benefit of economic reforms, which has not yet been reached the state, can be expected to prevail upon during the Ninth Plan. This needs an all-out efforts from difficult angles.

Industrial Policy of Assam

Industrial Policy of Assam,1986

In December, 1986 the new Industrial Policy of Assam was announced by the A.G.P. Government for serving the local interests. The new policy aims at encouraging growth and promotion of all industries based on local resources, local demands, local scarcity conditions and local environment. In this new Policy, the State Government attaches priority to speedy industrial development of the state as well as generation of adequate employment opportunities through self-employment opportunities through self-employment in the industrial sector.

In the new industrial policy, special provisions have been made to protect the interests of the local people by making the state incentive schemes available in the case of the small sector. In order to become eligible for the benefits under the state incentive scheme there should be hundred percent employment of local people in the small industry sector. In the medium and large industry sector, local employment would have to be ensured in 80 percent in the managerial cadre and 90 percent in the non-managerial cadre. Over a period of five years from the date of commencement of production, these medium and large units would have to take effective steps to ensure 100 percent employment of local people in the non-managerial cadre and least 90 percent in the managerial cadre.

In the new industrial Policy, the State Government has announced a package of incentives for the benefit of the entrepreneurs to start industries in Assam. The package of incentives include subsidy, allotment of factory sheds to small sector industrial units, manpower development of local entrepreneurs, equity participation in assisted sector, exemption of stamp duty, sales tax exemption, reduction of Assam Finance Tax, Power subsidy, subsidy on drawal of power lines, rehabilitation of viable sick industrial units, contribution to feasibility study cost, subsidy on generating set, risk capital formation, special incentives for industries being set up in no industries district and for electronic industries.

The new industrial policy makes provision for single windows facilities through "Udyog Sahayaks", This "Udyog Sahayaks" has been created at each District Industries Centre and in Directorate of Industries sector and at the Assam Industrial Development Corporation for medium and large scale industrial sectors. The Udyog Sahayaks provide single window facilities to entrepreneurs and also ensure expeditious identification of entrepreneurs and projects, registration, processing and forwarding of financial proposals to the agencies concerned, issue eligibility certificates coordination, sanction, delivery of incentives and follow up steps for rapid implementation of projects.

It is now expected that the prospect of speedy industrialization in Assam will be brightened with the various industrial projects coming up during the Seventh Plan Period in the public sector, Joint Sector, Co-operative sector, assisted and private sector. This prospect will be further brightened with the development of industrial infrastructure in the State in a phased manner and also with the Central Government setting up major industrial and other projects in a big way.

Industrial Policy of Assam, 1991

After the announcement of new industrial policy in July, 1991 by the Narasimha Rao Government at the Centre, the Government of Assam has also announced its new industrial policy keeping conformity with the Central policy. Although the initial notification of the policy was made on 6th April, 1991 but the final notification of the Policy was made on 1st July, 1992. While framing this new policy, although the state Government has followed the central policy directions but it has also duly considered the local issues and problems faced by the State.

Policy Guidelines and Objectives

The new industrial policy (1991) has set certain definite policy guidelines and objectives to meet its requirement of industrial development along with generation of employment opportunities. In view of the priorities attached by the Government to the speedy industrial development of the state as well as generation of adequate employment opportunities through self employment in the industrial sector, it had been considered necessary to review and revise the existing industrial policy and incentive scheme which became operative from 1st January, 1987.

The New policy has been formulated with the experience of the 1986 policy and keeping in view the shortcomings of the 1986 policy which have come to notice. While framing the new policy, recommendations made in a seminar held in February, 1990 to review the 1986 policy have also been kept in view so that the genuine aspirations of the people can be met within a time frame through economic and industrial development of the State. The new policy aims at encouraging growth and promotion of all industries based on local scarcity condition, local environment and to the extent possible by utilising locally available raw materials.

In the new industrial policy, 1991, the Government of Assam has accepted the following policy guidelines and objectives :

1. To ensure balanced regional development through rapid promotion of a host of Khadi and Village industry, cottage industry, tiny, small and ancillary industries throughout the state on the basis of techno-economic potential surveys.

2. To set up/promote setting up of Medium and Large Industries in the State/Joint/Co-operative/Assisted and Private Sectors, using the advantage of local availability of Petroleum, Natural gas, Coal, lime-stone and other minerals, agricultural products and other resources of the State. High priority will be given to the utilisation of natural gas for setting up gas-based industries which have a high downstream potential.

3. To create a suitable environment by taking effective steps for the development of basic infrastructure facilities for industrial development.

4. To ensure that there is proper development of local skills and entrepreneurship through intensive publicity, motivation and training programmes at district, sub-division and block level.

5. To promote and protect the interests of the people of Assam by making the various incentives available on the condition of the unit satisfying certain laid down conditions of a minimum percentage of employment of the people of Assam.

6. To ensure that local entrepreneurship is given preference in setting up medium and large industrial units under the Refinance Scheme of I.D.B.I. as well as under the "Assisted Sector" Scheme which is being operated by the A.I.D.C. Ltd.

7. To encourage the traditional artisan and handicraft sector covering items, such as, cane and bamboo products, brass and bell metal, etc. by providing common facilities service centers, raw-materials, marketing, technical and other supports, as may be required from time to time.

8. To ensure viable growth and to give positive guidance to local entrepreneurs, by building up a data bank at the Directorate of Industries and at A.I.D.C. with a shelf of specific project profiles and other vital information.

9. To give a special attention to the less developed districts and the Hill Districts in developing the industrial infrastructures and establishment of medium and major projects.

10. To extend all possible assistance for shifting of the Head Offices of the Tea Companies to Assam for ensuring continued growth of the tea industry and additional employment avenues for unemployed youth. The Inland Container Depot, Guwahati Tea Auction Centre and Guwahati Stock Exchange would be encouraged and supported in their efforts for industrialisation and creation of employment opportunities for local people.

11. To provide for a single windows clearance agency at each District Industries Centre for the small sector and at A.I.D.C. for the medium and large sector.

12. To provide for the revival of viable sick units through proper identification and provision of comprehensive package of assistance and to take steps for periodical and regular monitoring and guidance to new units to avoid sickness.

Definitions and Criteria for Eligibility in the Incentive Scheme as Incorporated in the New Industrial Policy

The new industrial policy has finalised its incentive scheme and its eligibility limit for the successful implementation of the policy. The new package of incentives herein after referred to as ‘1991 Incentive Scheme’ shall remain in operation for a period of 5(five) years commencing from 1.4.1991 or till such time as the Government may consider fit and proper.

Effective Date : The effective for 1991 Incentive Scheme is 1.4.1991 and from this date the 1986 Incentive Scheme and 1982 Incentive Scheme under the 1986. 1982 and other relevant Industrial Policy resolutions will cease to be operative unless otherwise provided for.

Units enlisted under 1986 Incentive Scheme but completing final effective steps after the effective date of 1991 Incentive Scheme will be governed by the 1991 scheme.

All industries which are to be notified as non eligible by the Government will be entitled to assistance under the 1991 scheme. Incentive under the 1991 scheme will be available to eligible units in the Private Sector. Assisted Sector, Joint Sector, State Public Sector and the Co-operative Sector Central Public sector undertakings will not be considered as eligible for incentive under the scheme either for their own ventures or for their joint ventures. Such units will however be eligible for manpower development subsidy.

Eligible Unit :

Only new units set up on or after 1.4.1991 and existing units, undertaking expansion, modernisation or diversification at the same location or at any other place in the State of Assam will be eligible for incentives under 1991 Scheme provided that the following conditions are fulfilled :

(I) A unit shall have employment of 80 percent people of Assam in the managerial cadre and 90 percent people of Assam in the non-managerial cadre and that over a period of 5 years from the commencement of production such units would take all effective steps to ensure 100 percent employment of people of Assam in non-managerial and at least 90 percent in managerial posts. They would further give an undertaking that if these conditions are violated, the State Government Subsidies/Incentives so availed by them would be fully refunded.

(ii) In exceptional cases where the industrial units can prove to the satisfaction of the State Level Committee that persons with required skill and expertise are not locally available, relaxation of the above clause will be allowed by the State Level Committee as deemed fit.

(iii) The location of the registered office shall be within the State of Assam.

New Unit :

An industrial unit which has taken all the initial effective steps on or after 1.4.91 would be considered as a new unit.

Existing Unit :

A unit which is or was in commercial production at any time prior to 1.4.91 will be considered as an existing unit for the purpose of the 1991 Scheme.

Expansion/Modernisation/Diversification :

Expansion/ Modernisation/Diversification of an existing industrial unit will also be eligible for all incentives if the total capital investment on plant and machinery in the expansion/modernisation or diversification, as the case may be, is more than 25 percent of the total fixed capital investment of the existing unit. For the purpose of calculation, Gross value of all the capital investments made on land, building, plant and machinery of an existing unit will be taken into consideration. Expansion modernisation diversification will imply an increase of at least 25% in the existing installed capacity as well as increase of additional employment at least by 10%.

The fact that existing unit has availed itself of incentives will not disqualify the expansion/modernisation/diversification project to get incentives for the extra investment made.

Sick Unit :

A unit declared as sick unit by the State Govt. under Assam Industries Relief undertaking (Special Provision) Act, 1984 (Assam Act No. VII of 1984) from time to time.

Effective Steps :

Effective steps will comprise of initial effective steps and Final effective steps.

A unit will be deemed to complete the initial effective steps if all the following conditions have been achieved :

(a) effective possession of land.

(b) registration of the firm or the company or the society or the trust with the appropriate authority.

(c) provisional SI registration/SLA registration or any other statutory registration with the appropriate authority.

(d) project Report has been prepared.

(e) power has been sanctioned.

(f) the means of finance for the project is completed including sanction of term loan.

A unit will be deemed to have completed the final effective steps if the following targets have been achieved :

(a) Disbursement of term Loan to the full extent.

(b) Mechanical completion of the plant.

(c) Receipt of all relevant approvals and clearances from the appropriate authorities e.g. pollution clearance C.G. clearance, Explosive clearance, Municipal clearance etc.

(d) Connection of power.

(e) Allotment of raw materials wherever applicable.

(f) Sanction of working capital.

(g) Commissioning of the plant.

(h) Receipt of local employment certificate.

No right or claim for any incentive under the scheme shall be deemed to have been conferred by the scheme merely by virtue of the fact that the unit has fulfilled on its part the conditions of the scheme. The incentives under the Scheme cannot be claimed unless the Eligibility Certificate has been issued under the Scheme by the implementing Agency concerned and the unit has complied with the stipulations/conditions of Eligibility.

Eligibility Certificate :

Eligibility Certificate is the certificate which will be issued by the Udyog Sahayak of the Directorate of Industries/District Industries Centre for the SSI sector and Assam Industrial Development Corporation Ltd. (AIDC LTD.) for the medium and large sector. This will be issued after ensuring that all the norms for eligibility have been fulfilled.

Certificate of local employment will be issued by the Officer in charge of the concerned implementing agency.

Completion of initial effective steps will qualify the unit for issue of a provisional eligibility certificate based on which disbursement of contribution of feasibility study cost as well as development subsidy can be made.

Completion of the final effective steps will be required for issue of a final eligibility certificate and disbursement of the remaining incentives of the subsidy.

Implementing Agencies :

The implementing agency for the 1991 Incentive Scheme in respect of the SSI Sector will be the Directorate of Industries and for the medium and large sector the implementing agency will be the Assam Industrial Development Corporation Ltd. (AIDC).

Incentive Scheme under the Industrial Policy, 1991

The new Industrial Policy of Assam, 1991 has incorporated various incentive schemes for the establishment of different types of new industries in the State. The following are some of these incentive schemes included in this policy :

Subsidy on Infrastructural Facilities :

(A) Developed land will be allotted on long term basis for initial 30 years, subject to payment of rent as fixed by the Govt. from time to time renewable for subsequent period as deemed fit by the Govt. The lease land will be permitted to be utilised by the unit for mortgage/hypothecation for obtaining loans from the banks and financial institutions.

(B) In appropriate cases, developed land will be allotted on hire purchase basis also. The cost of land including cost of development and cost of creating the infrastructural facilities like, Power Water and approach road will be recovered in equal annual installments over 15 years from the date of handling over of the land, with a moratorium of five years. Such land will be permitted to be utilised by the unit for mortgage/hypothecation for obtaining loans from banks & financial institutions.

In case developed land as stated in (A) above is not available for allotment the entrepreneurs will be allotted undeveloped land. In such case, actual land development cost will be provided as an interest free loan to the eligible units.

The above loan and cost of land will be recovered in equal annual installments from the date of disbursal of loan over a period of 15 years with a moratorium five years.

Allotment of Factory Sheds to SSI Units :

For new small scale industrial units, built up factory sheds would be allotted to the entrepreneurs on annual rental basis and the State Govt. will subsidise 50% of the economic rent for a period of five years from the date of allotment of the shed. While allotting industrial areas/industrial shed, preference would be given to entrepreneurs of Assam.

Manpower Development of Local Entrepreneurs :

Subsidy on manpower development will be provided in respect of local persons trained and employed in the industrial units at the following rates, to compensate for the amount spend on training :-

For Management Personnel Rs. 7500 per person

For Supervisory Categories Rs. 5000 per person

For Skilled Category Rs. 3000 per person

For Unskilled Categories Rs. 1500 per person

This is subject to the following ceilings :-

Unit with investment                                          Total ceiling

Up to Rs. 2 crores                                               Rs. 75,000

Rs. 2 crores to 5 crores                                     Rs, 1,00,000

Rs. 5 crores to 10 crores                                   Rs. 2,00,000

Above Rs. 10 crores                                          Rs. 5,00,000

Eligibility Certificate for the above subsidy will be issued on the basis of initial effective steps taken by the unit but disbursal will be after final effective steps.

Equity Participation in the Assisted Sector :

Assam Industrial Development Corporation Ltd. (AIDC)/ Assam Small Industries Development Corporation Ltd. (ASIDC) would participate in the equity contribution up to 15 percent of the issued capital of the company subject to a ceiling of Rs. 15 lakhs in any viable project where the project cost does not exceed Rs. 5 crores. Preference would be given to the company floated by entrepreneurs of Assam. AIDC would participate in the equity share in respect of medium and large scale and ASIDC in respect of SSI sector.

Interest Subsidy :

Entrepreneurs will be provided interest subsidy on working capital above 8 percent and subject to maximum of 5% for SSI and Sick Industrial Unit for such loans taken from banks and financial institutions. This benefit will be available for the first three years from the date of commercial production/revival of the unit respectively.

Sales Tax Exemption :

Sales Tax will be exempted on purchase of raw materials and sales of finished products for a period of seven years.

Reduction of Assam Finance Tax :

To encourage the local manufactures, Assam Finance Tax will be lowered from 12% to 4% bringing it at per with 4% CST so that such manufacturers can compete with products coming from outside the State. Such reductions will be limited to certain selected items which are being manufactured locally within the State and the same will be identified by a committee to be constituted for the purpose.

The committee will review the list of items to be brought under the provision of these incentives from time to time, at least once in a year. Further, the above incentives will be made available to those units which are either non-eligible for incentives under Sales Tax Exemption  above or have already availed the incentives under Sales Tax Exemption  above.

Power Subsidy :

Rehabilitation of Viable Sick Industrial Units:

All incentives under 1991 Incentive Scheme declared for the new industrial units will also be available for revival of the viable sick industrial units.

Contribution to Feasibility Study Cost :

In the case of medium and large scale industries, AIDC will provide 90% contribution towards the cost of preparation of Feasibility Report prepared by Agencies approved by the State Government/ respective Udyog Sahayak subject to a ceiling of Rs. 2,00,000/- in each case. The contribution shall be treated as an interest free loan for a period of five years from the date of commercial production or from the date of disbursal of the loan, whichever is later. If the project is not implemented within the prescribed period. Feasibility Report shall become the property of AIDC and the Entrepreneur for whom it was prepared shall have no right to  the Report or any part thereon.

For small scale units the cost of Feasibility Report prepared by an Agency approved by the Directorate/Udyog Sahayak will be subsidised to the extent of 100% in case of projects whose total project cost is within Rs. 10 lakhs and 90% in case of projects above Rs. 10 lakhs. Ceiling of Subsidy will be Rs. 20,000/- in each case. The project Report will become the property of the Government if the project is not implemented within the prescribed time.

Subsidy on Generating Set :

The Subsidy on the Generating Set including non-conventional energy generating sets will be given @ 50% of the cost of the Generator, subject to a ceiling of Rs. 10 lakhs (Rs. 10,00,000/-) per industrial unit.

Development Subsidy :

Development Subsidy up to an extent of 10% of the fixed capital investment subject to a ceiling of Rs. 3 lakhs per unit, or the actual expenditures on the item listed below, whichever is the least, will be paid to the eligible unit to cover the following expenses :

(I) Stamp Duty paid for purchasing or taking lease of land for the unit.

(ii) Stamp Duty paid for registration of documents for availing of loans.

(iii) Cost payable to Assam State Electricity Board for drawal of HT/LT line up to the premises of the unit and installation of Transformer for power supply to the unit.

(iv) Charges payable to local body, Municipal Board, Panchayats etc. or any statutory body for any permission or registration .

(v) Fees payable for conversion of land from annual patta to periodic patta.

(vi) 50% of the fees (excluding recurring royalty) paid for procurement of Know-how from National Research & Development Agency, recognised by the Udyog Sahayak.

(vii) Cost of pollution control and Monitoring equipments and quality control measures etc.

The Development Subsidy shall be released only after actual expenditure is made by the unit. The above is applicable for all sectors of industries where fixed investment does not exceed Rs. 5 crores.

Drawal of Power Line :

In case of projects located in areas which require drawal of power line of 66 KV and above, such line, including associated transformers, will be drawn at the cost of the Government subject to the condition that the location of the unit as such area is approved by the Government.

State Capital Investment Subsidy :

A special State Capital Investment Subsidy @ 30% of the cost of land and building and plant & machinery subject to a ceiling of Rs. 10 lakhs will be made available till the Central Capital Investment Subsidy Scheme is reintroduced or till such time Govt. may decide to continue State Capital Investment Subsidy Scheme which ever is earlier.

Pioneer Unit :

A new unit with fixed capital Investment exceeding Rs. 3 crores set up in a District where there is no Medium or Large Scale Industries will be given pioneer status. Such unit will be eligible for additional State Capital Investment Subsidy of 5% of fixed capital investment subject to a ceiling of Rs. 10 lakhs.

Implementing Agencies for the Implementation of New Industrial Policy of Assam, 1991.

In order to implement the various clauses as well as incentive schemes under the new industrial policy, 1991, the Government of Assam has introduced the following implementing agencies.

1. Udyog Sahayak :

In order to provide single window clearance facilities which will ensure proper delivery of all services, a separate wing known as "UDYOG SAHAYAK" is already functioning and this will continue.

The primary objective is to provide single window facility to the entrepreneurs and to ensure expeditious identification of entrepreneurs and projects, registration, processing and forwarding of financial proposals to concerned agencies, issue of eligibility certificates, co-ordination, sanction, delivery of incentives and follow-up steps for rapid implementation of projects.

2. In order to ensure effective and proper implementation of the 1986 Incentives Scheme, committees have been constituted at the Divisional level as well as the State Level. Such Committees will continue under the 1991 Scheme.

3. The implementing agency for the small and tiny sector would be Directorate of Industries through the District Industries Centres and for the medium and major sector it would be the Assam Industrial Development Corporation Ltd. (AIDC).

4. A separate wing in the Directorate of Industries has been opened known as "UDYOG SAHAYAK".

4.1. The "Udyog Sahayak" in the Head Quarter will continue to be under an Additional/Joint Director of Industries, with one Deputy Director and two other officers at the ADI level with necessary supporting staff.

4.2. The "Udyog Sahayak" shall continue to have a similar cell in each District Industries Centre and a Functional Manager will be in charge of such a cell.

5. For large and medium sector industries, AIDC is having a separate Division known as "Udyog Sahayak" for implementation of the 1991 Incentive Schemes.

6. All administrative Departments shall refer all issues related to the implementation of 1991 Incentives scheme to the Udyog Sahayak and keep the Udyog Sahayak appraised of all actions taken in this regard.

Accordingly, all administrative departments shall issue Instructions to all Heads of Departments/Officers/Corporations/Boards under their administrative control to co-ordinate effectively with the Udyog Sahayak in the implementation of the 1991 Incentive Scheme.

7. Functions of "Udyog Sahayak" :

"Udyog Sahayak" will perform the following functions :

(a) Proper and adequate publicity of the Incentives Scheme 1991 as well as render all assistance to the entrepreneurs to avail of the same.

(b) Identification of prospective entrepreneurs, building up of a data bank to guide and motivate the potential entrepreneurs. This shelf of specific project reports would take into account the market potentialities of the product availability of raw materials and technical man power as well as the investment required for the project. Viable project reports would be prepared in different categories of investment.

(c) Enlistment of application and issue of eligibility certificates.

(d) Co-ordination with the connected agencies/administrative department, including processing and forwarding of financial Proposals.

(e) Proper and effective Implementation of all incentive schemes and issue of sanctions thereof.

(f) To refer all relevant issues to the Divisional Committee State Level Committee which require clearance/approval at their levels and or any other matter connected with implementation of the Policy.

(g) To keep the two committees well apprised of the progress of implementation of the incentive schemes.

8.Industrial Infrastructure Development Corporation :

An Industrial Infrastructure Development Corporation would be created which shall be the Nodal agency regarding provision of infrastructural facilities such as land (both developed and undeveloped), water, power and build-up industrial sheds. All existing Industrial estates, industrial areas, commercial estates, growth centres etc. shall be transferred to this Corporation.

9. Divisional Committee :

Govt. will constitute Divisional Committee for the following purpose.

(i) To review the implementation of the Incentives Schemes.

(ii) To ensure effective and close supervision over implementation of the schemes.

(iii) To collect feed back information from the public and ensure remedial measures.

(iv) To invite entrepreneurs/connected non-official organisations to appear before the committee for stating the difficulties, if any faced by them.

(v) To refer issues involving policy decisions to the State Level Committee.

(vi) To refer to the State Level Committee matters which have been pending or which require clearance/approval of the State Govt.

(vii) To keep the State Level Committee apprised of the Implementation of the 1991 Incentives Scheme.

The committee will meet as and when required and at least once in every quarter.

10. State Level Committee : The state level committee is to be formed with the following purpose :

(a) To review the entire implementation of the New Industrial Policy and 1991 Incentives Scheme by obtaining feed back from the Divisional committees, Udyog Sahayaks as well as from non-official organisations, connected with industries such as Assam Entrepreneurs Association, Assam Manufactures Association etc.

(b) To direct various Government departments/institutions/agencies concerned to expedite required clearances, within stipulated time and to give such other directions as deemed fit with regard to the implementation of the incentives.

This committee will also meet as and when required and at least once in every quarter.

Other Policy Measures

Moreover, as per the new industrial policy of the Central Government, the Government of Assam has taken various steps for the adoption of delicensing system, to provide various facilities to the industrial units through the policy of liberalisation and to revive the state public sector industrial projects through disinvestment of its shares in the hands of private sector. Moreover, the maximum limits of investment of the small scale industrial units, ancillary industry and export-oriented small industry have been raised to Rs. 60 lakhs, Rs 75 lakhs and Rs. 75 lakhs respectively. Again, this investment limit of tiny industrial units has also risen from Rs. 2 lakhs to Rs. 5 lakhs.

Thus in order to accelerate the pace of industrial development in Assam, the successful implementation of this new industrial policy is very essential. The success of this new industrial policy depends upon the sincere effort of the Government, sincere co-operation of the Government officials and also on the successful participation of the local entrepreneurs of the state.

Therefore, it can be expected that with the implementation of various industrial projects in the public sector, joint sector, co-operative sector and private sector during the Eighth Plan, the prospect of industrialisation at a quicker pace will become bright. Again, with the development of infrastructural facilities in Assam and with the establishment of different industrial projects by the Central government, the prospect of industrialisation will become brighter in near future.

Industrial Policy of Assam, 1997

The Industrial Policy of Assam, 1991 has failed to make much headway in the industrial development of the State and the state has also failed to reap the benefit of economic liberalisation adopted throughout the country, under the new regime of economic reforms. Under this precarious situation, it has become imperative on the part of the State Government to redraft its new industrial policy considering its emerging problems and potentialities. In this regard, the need for adopting a new practical concept for growth and development oriented approach was also stressed by a number of industrial and economic experts of the State at the time of finalizing the draft policy by the State Government. Therefore, it has become imperative for the state to embark upon the high road of liberalisation, privatisation and globalization.

Accordingly, on 29th March, 1997 the State Government introduced its New Industrial Policy, 1997 with great promise. The AGP led alliance Government’s new industrial policy is aimed to provide an effective thrust for "expeditious promotion and growth of all industries with a view to creating a strong industrial base and employment opportunities in various directions."

Basic Thrust : The basic thrust of the Industrial Policy, 1997 is to create an environment for maximum, possible utilisation of locally available raw materials and human resources for industrialisation and to offer competitive advantage to all investors including the foreign ones in setting up industries in the State.

Identification of Priority or Key Areas :

The raw industrial policy has identified some priority or key areas which require more attention in the process of industrialisation. Accordingly, as many as 199 priority areas have been identified in this policy to set up industries in the State. These priority areas include- (a) development of local skills and entrepreneurial abilities ; (b) maximum employment generation for the local people ; (c) development of women entrepreneurs ; (d) development of food processing industry ; (e) growth of export-oriented units ; (f) promotion of rural non-farm sector ; (g) attaining balanced regional development within the State by giving special attention to the less developed areas and the hill districts ; (h) revival of sick industrial units ; (i) development as well as promotion of village and small scale service and business enterprise (SSSBEs) ; (j) establishment of medium and large scale industries in public, private, joint and assisted sectors to create an industrial base etc.

Infrastructural Development :

The new policy has identified the lack of infrastructure in the region as one of the main reasons for poor growth of industries in Assam. In the new Industrial policy, the State Government has proposed to give top priority to the development of infrastructural facilities in the State.

Land : Considering the shortage of developed land in the state for industrial purpose, the Assam Industrial Development Corporation (AIDC) Ltd. has been allotted Government land at a number of places for developing industrial areas. There is also a proposal to set up tree growth centres in the state within the next five years.

Power : Regarding the power position, the policy observed that the total available power in the state is around 315 MW which is less than peak demand of 375-400 MW, but the off-peak demand is around 270 MW only. Therefore, there is surplus power during the off-peak season. The policy observed that the Government with the help of ASEB and NEEPCO would take steps to increase the availability of power during the next five years by facilitating completion of power generation projects, under implementation in State. Such projects are Kathalguri gas based project, Amguri gas-based project, Karbi-Longpi Hydro Electric power project and lower Kopili Hydro-Electric power project. Once these projects are commissioned within the next few years, the state as well as north-eastern region will become a power surplus area. The Government in its package of incentives also proposed to provide subsidy for generating sets apart from subsidy on power tariff.

Surface Transport : The new Industrial Policy also include provision for the development of surface transport system of the state. To remove transport bottlenecks priority will be given to the development of roads leading to industrial areas. Focus will be given on conversion of meter gauge railway lines to broad gauge. The state Government has taken up with the centre for upgradation of existing broad gauge Railway line up to Guwahati from single track to double tracks.

In view of the high priority given by the Government to the export oriented units, the State Government is already pursuing with the Union Government the matter of declaring Guwahati Airport as an international airport at least from giving custom clearance facilities to the industrial units at Guwahati itself. The State Government will also take up the matter to develop the Brahmaputra river for the improvement of water transport facilities in the state.

Lack of skilled manpower is one of the most important factors for industrial backwardness of Assam. The Government will take steps to ensure development of skills among local people through various technical schemes.

Development of New Industries :

The new Industrial Policy proposes to encourage setting up of new industries in the area of fruit processing, vegetable processing, spice processing, aquaculture, horticulture based projects in the State. The policy also proposed to promote environment friendly industries and projects. In this regard the AIDC has also identified several viable projects for the coming years. For developing the electronic industry, the Government proposed to declare the Assam Electronic Development Corporation Ltd. (AEDC) as a nodal agency for overall development of this sector.

In a bid to tap the vast resources of oil and gas, the fourth oil refinery at Numaligarh had already been sanctioned and the policy observed, in this connection, that the State Government would take special care in order to ensure its implementation at the earliest.

The policy has also attempted to cover new areas like facilities for women entrepreneurs, emphasis on food processing industry, encouraging the export promotion industries through simplification of procedure and the delivery systems etc.

State Level Public Sectors Units (SLPSU) :

Considering the poor financial condition and mismanagement of State Level Public Sector Units (SLPSU), the new Industrial Policy, 1997 has observed that henceforth all state level PSUs would have to survive on their own. State public sector undertakings which were for a long time enjoying budgetary support from the State Government, will now have to change their strategies and discover new avenues of their survival. The State Government would help the PSUs in their revitalization strategies and urged the managements to find out ways to make profit. The State Government recently (in 1997) declared six public sector units in the state as sick and initiated efforts for revival of these sick PSUs by handling them over to joint sector.

The Government has incorporated various incentives in the industrial policy, apart from liasioning with banks and financial institutions to finalize packages for revival of potentially viable sick PSUs.

Small Scale Industries (SSI) :

Keeping in view the employment potentiality in the small scale sector, the new policy observed that the State Government would give top priority to setting up of industries in the small scale and tiny sector in which the State Government proposes to give additional incentives. In this connection, the Government has underlined the need to strengthen the District Industry Centres (DICs) in view of the vital roles played by these in the growth of small scale industrial units.

Assam is traditionally known for its rich handloom and handicraft products and the Government has promised several development schemes for promoting this sector. All possible steps would be taken for securing technical and financial assistance from the centre to develop handloom and handicrafts industries. Moreover, the Government also proposes to conduct a survey on various handicraft products and registration of handicraft units which will be undertaken by the Deputy Commissioners. The Government also proposes to encourage setting up of fruit processing, vegetable processing, spice processing, aquaculture, horticulture based projects in the state under this small scale and tiny industrial sector.

New Package of Incentives- "1997 Incentive Scheme" :

In tune with the Industrial Policy Resolution, 1997 the State Government has also formulated a package of incentives for the promotion of industrial units and revitalisation of sick industrial units in the state. The new package of incentives referred as "1997 Incentive Scheme" shall become operative from April 1, 1997 for five years. Thus the new policy carries a package of incentives which will be available for eligible units, especially in the small scale sectors, including sick units, units set by women, export oriented units etc. The following are the various incentives offered under the "1997 Incentive Scheme".

Power Subsidy : Power subsidy for industrial units up to a maximum of Rs. 30 lakh per year per unit is included in this incentive scheme. Industrial unit with connected load up to 1 MW will be allowed power subsidy of 50 percent subject to a ceiling of Rs. 5 lakh per industrial unit annually. In case of connected load ranging from above 1 MW to 2 MW, the subsidy will be 30 percent subject to a ceiling of Rs. 15 lakh per industrial units per year. Industrial Units with connected load above 5 MW, 20 percent subsidy will be granted subject to a maximum of Rs. 30 lakh per unit per year. This power subsidy will be available for a period of five years from the date of commercial production :

Interest Subsidy : Five percent interest subsidy shall be provided to the SSI units with an investment up to Rs. 60 lakhs on interest on working capital for the loan obtained from the banks and financial institutions. This benefit shall be available for a period of three years from the date of Commercial production and the maximum benefit shall be of Rs. 3 lakh per year.

Capital Investment Subsidy : The new policy also offered a special state capital investment subsidy at the rate of 30 percent of the capital investment on land, building, plant and machinery subject to ceiling of Rs. 10 lakh.

Subsidy on Generating set : The new policy has made provision for subsidy on generating set including non-conventional generating set which will be given at the rate of 50 percent of the cost of the generator subject to a ceiling of Rs. 10 lakh per industrial units.

Sales Tax Exemption : As per provision of the new policy, all new industries and existing industries going for expansion, diversification and modernisation will be granted sales exemption for sale of finished product and purchase of raw materials. For new SSIs, tiny industries and SSSBEs, exemption will be for 7 years to the maximum of 150 percent of fixed capital investment. Again for new medium and large units, the sales tax exemption will be for 7 years subject to a maximum of 100 percent of fixed capital investment. Moreover, in case of electronic industry, tax exemption benefit is extended up to 250 percent of the fixed capital investment for a period of seven years.

Other Subsidies : The new policy has also made provision for some other subsidies which include- (a) 20 percent subsidy for ASEB connection and installation of transformer for power supply to a maximum of Rs. 2 lakh ; (b) 50 percent subsidy on cost of pollution control and monitoring equipment to a maximum of Rs. 2 lakh ; (c) 5.0 percent subsidy on cost of quality control equipment subject to a ceiling of Rs. 1 lakh.

Industrial Support : The new policy has also made provision for institutional support. Accordingly, AIDC and ASIDC will participate in the equity contribution up to 20 percent of the issued capital on the company subject to a ceiling of Rs. 20 lakh to any viable project where the project cost does not exceed Rs. 5 crores. Preference will be given to companies floated by entrepreneurs of the state. Moreover, the AIDC will further provide 90 percent contribution towards the cost of feasibility reports, subject to a ceiling of Rs. 2 lakh in each case of medium and large scale industries, while 100 percent subsidy in case of small scale industries, subject to a ceiling of Rs. 50 thousand in each case.

Appraisal of the New Industrial Policy and the Steps to be Followed to keep the Benefit of Liberalization :

The State Government has again come out with another new Industrial Policy,1997 to embark upon the high road of liberalisation, privatisation and globalisation as the State has totally failed to reap any benefit from the present system of economic liberalisation and globalisation process adopted throughout the country. Although the Industrial Policy of Assam, 1991 was proclaimed by the previous Government with much fanfare but it has totally failed to implement as well as to reap any considerable benefit from the policy unlike the other industrially developed states of the country. Although, the industrialists of the State had maintained a high hope on this policy under the present regime of economic reform but all these remained in vain to dismantle the vicious circle of license and permit raj. The policy also failed to attract the required flow of investment from private investors, both Indian and foreign, due to unstable socio-political conditions arising out of defective socio-political set up, exploitation, extremist movement, corruption and bureaucratic obstacles.

The New Industrial Policy, 1997 of the Government of Assam, by no means can be considered as a fresh attempt to help out entrepreneurs. The policy makes some pious attempts and proclamations about the need to bridge the gaps and backlogs in the process of industrialization to achieve this end. The policy has also failed to make clear about how to go about industrialization of the state.

While all the previous industrial policies framed by the earlier state Governments failed to achieve the objective of industrialisation in the state, thus one fails to understand as to why the government of Assam required yet another industrial policy for the industrialisation of Assam and how far this new policy will become successful to attain its goal. The new industrial policy is a rehearsal of what had been formulated in the policies proclaimed earlier. Under the present situation, when the State Government is groaning under a tremendous fund crunch, its present attempt to assist the entrepreneurs in setting up industries is itself quite anachronistic. Entrepreneurs in Assam had already tasted the bitter experience to set up industrial projects attracted by the promises of incentives and subside incorporated in all earlier industrial policies. All their investments and schemes could not proceed satisfactorily due to the usual practice red tapism in the department concerned. Subsidies and incentives promised by the Government do not flow when they are required and the power scenario remained grim. Under such a situation, the entrepreneurs had to give up the project in the midway, sunken in deep debt. Naturally it is questioned, whether the Government is capable enough to keep its commitments to the entrepreneurs.

The schedule of industries drawn up by the new policy is a pointer to the fact that the Government is yet to emerge from the hackneyed concept of industries being saw mills, brick kilns, roller flour mills etc. The policy also failed to point out about how the Government would help the entrepreneurs by developing infrastructural facilities. Although the preamble to the policy stressed on how it had become imperative for the state to embark upon the high road of liberalization, privatisation and globalization, but it simply assures the prospective entrepreneurs that the State Government would prevail upon the Centre and different financial institutions to provide them the required financial back-up. The policy is quite silent on how it would help the export-oriented units. The policy did not mention about the steps to be followed by the departments concerned for lessening the paper work and the move to attend swiftly to the problems of clearance of the schemes and projects. Moreover, the Government should try to attract private capital, both domestic and foreign, considering the problem of its capital deficiency. Otherwise, the Government can do very little as an agency to help the industrialisation process. The officials and staff maintaining the ‘Udyog Sahayak Kendars’ should try to understand about what industry means and how urgent it is for them to attend to the entrepreneurs. The Government should train up its officials and staff accordingly. In order to attain a smooth passage to industrialisation, the need of the hour is to dismantle the license and permit raj completely.

The Government, both at the Centre and the State, should take into consideration the fact that liberalisation had made no difference to the North-east and, in fact, only widened the gap between the forward and backward states. The various corporations like AIDC and ASIDC should act as a catalyst in the economic development of the state, rather than merely establishing industries. A body should be instituted to review the implementation of the policy once in every three months to sort out any problems involved in it. Infrastructure development should be given topmost priority and an infrastructure development corporation should be formed and start functioning immediately. The industrial estates should be handed over to such corporation and the State Government should earmark land for future development and hand it over to the corporation. After developing land and providing all facilities like electricity, water etc. the corporation can sell the plots to the entrepreneurs.

Under the present socio-political condition of mistrust, instability, chaos and confusion, leading to huge capital flight from the state and sturdy inflow of capital resources any new policy will find it difficult to achieve its goal unless sufficient confidence building measures are taken by the Government as well as the people, in general, to gain the confidence of the investors. This will pave the way for smooth passage of large investment in the industrial sector to tap the huge industrial development potential of the state as well as to reap the benefit of liberalisation. Otherwise, the goal of attaining industrial development and the practical implementation of the policy will remain a distant dream for a industrially backward state like Assam.

Some Important Industries in Assam

Major industries of Assam include Tea industry, Petroleum industry, Plywood industry, Paper industry, Fertiliser industry, Cement industry, Coal industry, Leather industry, Shellac industry etc. The following analysis reveals the brief outline of some other industries of Assam.

Tea Industry of Assam

Tea industry, being the largest single industrial sector of the state, is playing a dominant role in the economy of Assam. It is the largest single industrial sector in the State which is contributing a bigger share in the state income of Assam. The importance of tea industry can be realised from the fact that Assam alone produces more than 50 percent of country’s total tea production. Further, Assam tea also contributes substantially to the national exchequer every year in the shape of foreign exchange earnings through its export.

It has a remarkable breakthrough when tea bushes were first discovered in Assam in 1823. It is a story of success and fulfillment heralding the age of new economic activities that brought Assam to the industrial map of the world. It has also made significant contribution to the economic regeneration of the state unfurling the door for an ever increasing export trade. Assam is now the second largest tea producing area in the world. Assam now produces about 20 percent of the world’s tea production and 53 percent of India’s total production.

In 1835, the East India Company established the first tea garden in Assam on experimental basis. Again in 1844, this garden was sold to Assam Company. Since then the number of tea garden started to increase gradually and it was spread over to a large part of Assam valley and also to a considerable part of Surma valley.

The total number of tea gardens in the State was 848 during 1991 which covered an area of 2.31 lakh hectares. The average number of labourers employed daily in these tea gardens was as high as 5.54 lakhs in 1991. Estimates of tea crop for the year 1991 reveal that during the year, Assam produced 396 million kilograms of tea as against 305 million kilograms produced during the year 1981.

In Assam, the total production of tea has maintained a gradual increasing trend since 1951. Total production of tea which was 150 million kgs. in 1951, gradually increased to 183 million kgs. in 1961 and then reached the level of 223.7 million kgs. in 1971. In 1981, the total production of tea in Assam reached the level of 305 million kgs. showing an increase of 37.6 percent in comparison to that of 1971.

2. Statistical Hand Book, Assam, 1995 and earlier issues.

The table no. 8.4 reveals that total number of tea gardens in Assam has increased from 751 in 1970 to 777 in 1980 and then 844 in 1985 and finally to 848 in 1991. Total number of tea factories which was 587 in 1970, gradually rose to 589 in 1975 and since then it started to decline to 575 in 1980, 563 in 1989 and then slightly rose to 568 in 1991. Total area under tea cultivation which was 180 thousand hectares in 1970, gradually increased to 200 thousand hectares in 1980 and then to 233 thousand hectares in 1991. Total production of tea in Assam has increased significantly from 212 million kgs. in 1970 to 300 million kgs. in 1980, which then further increased to 352 million kgs.? in 1985 and finally to 396 million kgs. in 1991. In respect of productivity, the average yield per hectare which was 1178 kgs. in 1970, gradually increased to 1499 kgs. in 1980 and then it rose to 1631 kgs. in 1985 and finally to 1700 kgs. in 1991.

The table further reveals that the average number of labour employed daily has also increased considerably from 394 thousand in 1970 to 449 thousand in 1980 and then the same figure rose to 484 thousand in 1985 and then to 554 thousand in 1991. Again the average ruling price of per kg. of tea in Guwahati Tea Auction Centre (GTAC) has also increased from Rs. 9.52 in 1975 to Rs. 22.87 in 1985 and then to Rs. 40.18 in 1991. These are all, no doubt, a good trend for the tea industry of Assam.

In 1995, Assam produced about 3999.0 million kgs. of tea, which was 53.0 percent of the country’s output of 754.0 million kgs. cut, tear and curl (CTC) tea contributed the maximum with 315.4 million kgs., orthodox tea provided 68.2 million kgs. and the other tea productions made up 4.2 million kgs. of the state’s total production. In this year, Assam’s share of orthodox tea exports was 55.4 percent of the country’s total sales abroad, while CTC shared 55.5 percent.

In 1995, there are 844 tea estates (gardens) covering an area of 2.31 lakh hectares of land. Daily number of labourer engaged directly in tea industry in Assam is about 7.0 lakh. Indirect employment has also been provided to large number of workers, engaged in ancillary industry and also in tea warehousing, marketing, transport etc. The tea industry is generating resources for industrial development in the state and is helping the country in maintaining ecological balance of the environment. The tea industry has helped in the growth of 45 satellite townships in and around the tea estates in Assam and is the catalyst for the growth of several ancillary industries. The tea industry has contributed to the growth of the Inland Container Depot (ICD) at Amingaon which today handles around 25 million kgs. of tea meant for direct exports. Assam tea contributes around Rs. 200 crores in terms of Assam Agricultural Income tax, land revenue, sales tax, green leaf cess etc. Moreover, the tea industry of Assam has been disbursing more than Rs. 1000 crore to the income stream in terms of salary, wages, bonuses, gratuity etc.

Recent Problems of Tea Industry in Assam :

However, all is not running well in respect of tea industry in the state. Tea industry of the state is now facing certain peculiar problems.

Age Old Gardens :

As the tea gardens in Assam are becoming age old, thus the productivity of these old gardens is declining. Data relating to area under tea according to different age group of bushes in Assam shows that in 1990 about 43 percent of the gardens were in the age group of over 50 years.

Looking at the future, the growth prospects of the tea industry of Assam valley appear to be limited. In the past decade, the tea gardens in Assam put out 27,000 hectares of new tea area and the production increased by 70 million kgs., showing an annual increase of 1.6 percent in area and 2.6 percent in production. In Assam valley most of the plantable areas within the registered tea area have been planted out and there may be only about another 3000 hectare of plantable land, still left, which will be fully used up within next two years. Under the present circumstances, the Assam Branch of Indian Tea Association (ABITA) will have to direct its energies to counter this stagnation and the approach will be two pronged one :

(a) To substantially push up the yields from old areas and low yield areas through replantation, rejuvenation and consolidation and (b) to initiate serious effort to bring more lands under tea. To implement the first point, the industry needs investible surpluses and the second point involves revesting denuded forests and waste land to the gardens by the State Government.

In a survey conducted by the Indian Tea Association (ITA) in 1987, it appeared that there were large tracts spread all over the tea growing areas,- lands that were taken under ceiling act, denuded forests and waste land unsuitable for agriculture. This land is lying, doing nothing, a national wealth just lying unused, unattended uncared for- a source that can be converted into a resource. Such vacant land may be allotted among the small tea growers for the production of green leaf and the ITA and ABITA must extend all technical expertise and managerial guidance and assistance to make them viable. This small growers scheme, formulated by ITA, some years ago, will solve unemployment problem as well as provide a green cover, preventing top soil erosion and consequent loss of fertility (as suggested by a NABARD study).

Scanty Rainfall :

Scanty rainfall has been creating a problem in the tea gardens of Assam in recent years. Out of 848 tea gardens in the State, only about a hundred tea gardens have their own irrigation system and out of this hundred, fifty gardens have partial irrigation facilities. Most of the tea gardens located in areas which have normally lesser rainfall as compared to other districts are without irrigation system. In districts like Sonitpur, Darrang, North Lakhimpur, Nagaon and Golaghat, only 30 percent of the gardens have their own irrigation system. Others have to depend on rains. Due to this scanty rainfall, the production of tea in Assam has declined from 403 million kgs. in 1993 to 30 million kgs. in 1994.

Rise in the bed of Brahmaputra :

Another problem faced by about 100 tea gardens of Assam is that they get inundated every year due to flooding of Brahmaputra arising out of rise in its bed. If Brahmaputra bed keeps on rising at the present rate of 9 to 12 inches every year then more and more gardens along the river will face this problem and suffer gradually.

General fall in the price of tea :

Another serious problem faced by the tea industry in Assam is the general fall in the price of medium and plain tea. For some time there were no buyers of such tea. This is mostly resulted from the break-up of the USSR leading to a loss of market of 120 million of tea for the country as a whole. Cacher tea suffered the most, as out of 104 tea gardens producing nearly 40 million kgs. of tea, most of it was medium and plain quality which got only Rs. 25 to Rs. 28 per kg. at the auction as compared to Rs. 40 being the cost of production in 1994. In 1973, the same tea got Rs. 45 to Rs. 48 per kg. in the GTAC. The 94th annual general meeting of the Surma valley branch of Indian Tea Association (SV-ITA) held on March 11, 1995 has focused this problem. The crisis in the Cachar tea industry is much more real than it is generally perceived in official circles. About 52 tea gardens are already on the sick list and some of these are, in fact, on the verge of closure. Financial chaos is looming large over most of the gardens. Such a situation was created due to the downward slide of price all over the country following over production accompanied by shrinking of market. In 1993, there was a target of exporting 200 million kgs. of tea whereas they could export only 160 million kgs. leaving a surplus of 40 million kgs. In addition to this, there is nearly 20 percent of unsold tea meant for domestic market, which are lying in the warehouses. Notwithstanding the other problems, it is the low price which is a matter of serious concern for the tea industry of Assam.

Increasing trend in the Cost of Production :

Another problem faced by the tea industry in Assam in recent years, is that the industry is facing an increasing trend in its cost of production. As per the study made by the RBI and NABARD, it is observed that the average cost of inputs as well as increase in the price of food grains leading to increase in the share of subsidy given to labourer by the tea estate management.

Excessive Rate of Taxation :

The rate of taxation imposed on the tea industry is excessive and discriminating. Tea industry is paying a higher rate than any other industry. When all other industries are paying at a rate of 51.75 percent but the rate of tax on the tea industry is 70.50 percent. Moreover, the imposition of time bound payment of advance agricultural income tax, levy and cess is also creating a serious financial problem for the weak tea gardens. Thus this high rate of taxes has been reducing the investible surplus of this industry.

Again, the Cachar tea gardens have traditionally been given the benefit of a differential rate of excise duty. The Cachar tea was previously subjected to excise duty of 33.3 percent of what used to be charged for the Assam valley tea on consideration of the former’s lower yield, lower price and higher cost besides its logistic disadvantage. But recently, the Government of Assam has been treating the tea estates of Cachar valley at par with those in Brahmaputra valley. Accordingly, the green leaf cess at 18 paisa per kg. is now required to be paid in advance throughout Assam. This high rate of cess has been creating a serious problem for tea gardens of Surma valley in Assam.

Another peculiar situation faced by the industry is that more than 200 tea companies have been showing perennial loss and avoiding agricultural income tax to the tune of about Rs. 40 crore. The State Finance Department is moving ahead with the proposal to cancel the lease of at least 200 "loss making" tea gardens of the State and hand over the land to willing small and medium planters. The State Government had already made up its mind not to renew the lease agreements with these companies after the expiry of the agreements in a couple of years from now. The tax authorities of the State Government found that out of the 653 tax assesses, altogether 208 were showing "suspect" perennial loss. It is being regretted that despite the State Government’s reduction of agricultural income tax from 65 percent to 45 percent, the tax compliance of these suspect companies did not improve.

For the majority of the tea companies, the 99- year lease agreement is coming to an end in the next couple of years. A new lease agreement will have to be incorporated before its expiry. Under such a situation, the state government’s proposal to cancel the lease of about 200 "loss making" tea gardens of the State may create confusion and apprehension in the mind of tea planters, which may dampen the spirit and incentive of the tea producers of the state. It is also true that the tea gardens should pay their necessary taxes and should not evade the taxes any more. Tea gardens, therefore, should bring transparency in their audited accounts and increase their tax compliance adequately. The State Government should also take care that the tea planters of Assam should not be unnecessarily harassed during the renewal of their land lease. Both the tea planters and the State Government should sit together to sort out differences amicably so as to remove all confusion and apprehension. Any deviation from such natural and logical course may retard the growth of the biggest industry of the State, which may invite a serious complication in the economy of the State.

Thus we have seen that bad weather conditions, poor sales at the auction houses, low sale price, low exports, below target increase in the domestic market, increasing cost of production, low yield of age old gardens and excessive rate of taxation are some of the serious problems faced by the tea industry of Assam in recent years and which seems to be out of their control.

Small Tea Growers in Assam and their Problems :

Another recent development in the history of tea plantations in Assam is the inclusion of small tea growers for production and supply of green leaf to the tea factories owned by bigger tea gardens. The Indian Tea Association (ITA), some years ago, formulated a small tea grower’s scheme for deserving entrepreneurs. Development of small tea gardens by small tea growers is very important in a state like Assam where unemployment among the youth is creating law and order related problem for the people of the State and more particularly in a state where tea industry is presently providing employment to at least one lakh people in Assam and still possess a huge employment potential.

As per the record of All Assam Small Tea Growers Association there are nearly 5064 small growers in Assam who are having membership with the association. Again 286 small growers of Assam are registered with the Tea Board and out of these only 200 are getting subsidy. In 1993, these small tea growers produced 492 lakh kgs. of green leaf. The quality of tea leaf produced by the small tea growers is much superior as compared to most of the bigger tea gardens in the state. This is mainly due to the fact that the small growers pluck their leaves after 6 to 7 days and the bigger tea gardens pluck after 7 to 8 days when the size of cloan increases affecting the quality of tea. The All Assam Small Tea Growers Association has chalked out a plan to create about 1 lakh small tea growers and thereby to employ at least 4 lakh educated youths and 12 lakh labourers by the end of 2006. Small tea growers has already established about 11,135 small gardens where about 2.46 lakh educated and unemployed youths have been engaged and about 1.0 lakh labourers have been directly employed. A good number of families have also been benefited by getting indirectly engaged in these gardens. In 1996, the small tea growers produced nearly 600 lakh kgs. green leaves.

Problems :

The small tea growers in Assam are having special problems of their own. Firstly, the biggest problem faced by these small tea growers is the shortage of land and non-allotment of land. Out of the total 2,50,800 bighas of land under tea plantation with the small tea growers, the actual amount of land allotted to them is 25,623 bighas, which is just 10 percent of the total area under plantation by small tea growers. Most of the land under plantation by small tea growers is either government land, surplus under Land Ceiling Act or VGR. Under such a situation the district administration is sometimes issuing eviction notices to small tea growers leading to a peculiar problem of insecurity among these growers. Although the State Government has recently appointed one-man commission under Addl. Dy. Secretary to go into the possibility of allotting degraded forest land for tea plantation. But the bigger tea gardens have also been staking their claims for the degraded forest land.

Secondly, small tea growers of Assam are facing acute financial problem as they failed to secure loan from commercial banks.

Thirdly, there is acute shortage of tea factories to process the green leaf produced by the small tea growers. Thus for want of such factories, they are forced to sell their green leaf to the capitalists who have no garden of their own or to bigger tea estates.

Fourthly, the small tea growers of Assam are not getting remunerative prices of their tea leafs as they are at the mercy of bigger tea estate owners or other factories. In 1993, there was huge increase in the price of tea but the benefit was never passed on to them.

Fifthly, the small tea growers are not getting proper technical guidance and training. The apex body Tea Research Association (TRA) does not give any technical know-how to their members for they cannot afford to become members of TRA. But this problem can be easily tackled jointly by ITA, ABITA, TAI and other tea associations in league with the State and Central Government. Establishment tea estates in the membership of ITA and ABITA must also extend all technical expertise, managerial guidance and assistance to the small tea growers in Assam.

Potential of Growing Tea in Non-traditional Areas of North-eastern Region :

Although Assam is the pioneer state in respect of development of tea industry in Assam, but there is a huge potential for growing tea in the non-traditional areas of North-Eastern region. In recent years, this immense potential of growing tea in non-traditional areas of North-Eastern states came to light following the initiatives taken in the states like Nagaland, Arunachal Pradesh and Meghalaya.

This standing committee on Commerce Ministry in its report submitted in April, 1995, emphasized the urgent need to expand tea cultivation to north-eastern states like Arunachal Pradesh, Mizoram, Nagaland and Manipur which have the "climate and soil conducive" for this purpose. The standing committee has also strongly recommended revisal of subsidy for replantation of tea to keep pace with the growing demand growth failing which it will "spell disaster" and exports might be the "first causality" as happened in the past.

According to the Standing Committee report, tea industry provides one million jobs. And an additional one million are indirectly employed in ancillary occupations. Therefore, to boost tea production, it is necessary to revise subsidy for replantation as most of the tea bushes are well over 50 years old and yields are no longer at their best.

Realising the potential, the Tea Board had announced a new tea unit financing scheme for these areas. For getting benefit of the new scheme, farmers would have to work out a technically feasible and commercially viable project report. Seventy five percent of the consultancy fees, subject to a ceiling of Rs. 2 lakh, would be borne by the Tea Board.

In the mean time, Agriculture Department of the Nagaland Government has brought nearly 60 hectares of new areas under tea plantation and distributed five lakh tea plants among the farmers free of cost.

In Arunachal Pradesh, tea plantation has also been taken up by the administration, forest corporation, Agriculture Department and local tribals in Arunachal Pradesh in a large scale. The State Government and banks are rendering assistance to interested farmers for this purpose. The tribals had taken up tea plantation on community and co-operation basis. In Changlang and Tirap districts of the state hill slopes, once famous for jhuming and shifting cultivation, were carpeted green with tea plants.

Recently, a privately owned tea company, the Siang Tea Company which took up large scale plantation at Oyan near Pasighat, was producing export quality tea and has also set up a mini tea processing unit at the plantation site. The Namshum Tea Company with a total grant area of 478 hectares in Changlang and a NABARD financed investment of Rs. 1.6 crores was set for a large output.

Tea plantation has also been taken up in Lohit, Siang and Dibang valley districts by various agencies and private individuals.

In Meghalaya, steps also have been taken to popularise tea plantation. Meanwhile, 500 hectares of land have been identified in Naya Bunglow, Rongran and Sonapahar area of Meghalaya as suitable for tea cultivation. Two nurseries had been set up at Rongran and Naya Bunglow with a grant in aid from the Tea Board. The financial grant provided for the purpose up to March 1993, was Rs. 33,66 lakhs. During the financial year 1993-94, a further sanction had been accorded for setting nurseries at Umsming and Rongran areas for raising plants at an estimated cost of Rs. 31.16. In these areas, plantation had been taken up by small farmers also.

The Tea Board has been encouraging entrepreneurs for undertaking activities of extension planting by providing long term loans and interest subsidy on bank loans since 1962. During the course of last three decades, about 88,000 hectares of land had been brought under extension planting of tea in various tea growing states.

Thus as the potential of growing tea in non-traditional areas of North-eastern region is quite rich thus it can be expected that with the continuation of such initiatives, the entire north-eastern region will be quite rich in the production of tea in near future.

Government Efforts for the Development of Tea Industry in Assam :

In order to improve the condition of tea industry in Assam, various steps have already been taken by the Government. In 1991, Assam Tea Corporation was established for the maintenance of sick tea gardens in Assam. In the mean time, this corporation has been able to bring some tea gardens within its control. In this respect, another important step was to open the Guwahati Tea Auction Centre on 20 th September, 1970.

In order to increase the demand for tea in the national and international market, the Government has set up "Tea Board". This Board is trying to increase the demand for Indian tea in England, Canada, America, Germany etc. through various type of publicity. On the other hand, "Indian Tea Board’ has been trying to increase the domestic demand for tea within the country and also advancing financial assistance to the tea gardens.

Moreover, for plantation, expansion and re-plantation works of the tea gardens, one Tea Finance Committee was formed. Again, the National Bank for Agricultural and Rural Development (NABARD) has also been set up by the Reserve Bank of India in July 1982, so as to supply adequate volume of credit to the agricultural and plantation sector. In the mean time, NABARD has extended a good volume of credit to the tea gardens of Assam.

Guwahati Tea Auction Centre : One of the historic event for the tea industry of Assam was the commissioning of the tea auction Centre at Guwahati on 25th September, 1970 at the initiative of the Government of Assam. The planters of Assam are deriving number of benefits from the Guwahati Auction Centre. Apart from making a saving in freight charges, the planters of Assam are also saving the payment of West Bengal entry tax. Chances of damage and pilferage of tea in transit are now less in the case of consignment to Guwahati. The buyers are getting the advantage of exemption from sales tax and facilities for quick inland transport.

The sale of tea at the Guwahati tea auction centre increased from 21,998 thousand kgs.in 1971-72 to 26,626 thousand kgs. 1974-75. Due to its encouraging performance, this auction centre has become an established market in the country where both the quantity of offerings and returns to producers are increasing year by year. It is heartening to note that Defence forces, Tea Trading Corporation of India and even foreign buyers like Iraq and U.K. etc. are participating in this centre. In the first part of eighties, the volume of sales through the Centre which received set back during the previous two years, reached a new height of 75.34 million kg. during 1982. The total sale during 1981 and 1980 stood at 64.97 million and 62.56 million kgs. respectively as against 73.3 million kgs. and 74.85 million kgs. respectively during 1979 and 1978. The average price fetch per kilogram of tea at the centre also displayed an upward trend during 1982 being Rs. 15.00 per kg. compared with Rs. 12.69 and Rs 12.83 per kg. in 1981, 1980 and 1979 respectively.

In recent years, the volume of sales through the centre increased considerably from 120.25 million kgs. in 1985 to 136.20 million kgs. in 1986. Again the volume of sales of tea has again increased to 141.51 million kgs. in 1991 and then rose considerably to 151.32 million kgs. in 1993. The average price fetch per kilogram of tea at the centre (GTAC) also displayed an upward trend from Rs. 22.87 per kg. in 1985 to Rs. 40.78 per kg.1991. But since 1992, the prices started to decline due to general fall in the demand for Indian tea in export market arising mostly from loss of captive market from USSR.

Accordingly, the average price of tea fetched at GTAC stood at Rs. 50.07 in 1993 and Rs. 43.46 in 1994.

Thus we have seen that the operations of Guwahati Tea Auction Centre (GTAC) continued without interruption throughout the period. Even during the years of Assam agitation, there was no closure in the activities of GTAC rather the rate of progress was much higher than in the comparable centres elsewhere in the country. At present, the Guwahati Tea Auction Centre is the largest CTC tea auction centre in the world.

During the extremist problem, there was considerable loss of confidence, especially among the buyers, both domestic and foreign. The darkest day came in November 8, 1990 when two buyers- Brooke Bond and Lipton-unilaterally taken decision to withdraw their staff without giving any notice to the State Government or GTAC. But with the combined efforts of the GTAC members, local tea traders, entrepreneurs and workers’ unions, the situation was controlled and the normalcy was returned by early 1991.

The GTAC has also faced another crisis when a few officers of Gujarat Government, allegedly in co-operation with some entrepreneurs made an attempt in 1993 to set up a new centre at Ahmedabad. But this move was averted with the opposition from various corners.

It is quite worth mentioning that the State Governments support for GTAC continued throughout the period. The steps taken by the Government to foster GTAC’s growth was the exemption from sales tax of all teas sold in GTAC in the initial years. This has encouraged the producers to send their tea output to the centre throughout the period. The prudence shown by the State Government has paid good dividend by helping the GTAC to grow its strength year after year. Since 1987, the State Government has levied a sales tax, which is bringing in revenue of Rs. 12  to Rs. 15 crores per year to the state exchequer.

Since its inception, the GTAC has contributed immensely towards generation of employment opportunities as its members provided nearly 3000 full-time jobs besides part time and occasional ones and has also contributed towards the activities related to the development of transport, banking, housing, hotel and construction. Local educated youths have also gained knowledge and skills in different relevant aspects of tea trade.

With the development of GTAC, the infrastructural facilities have also been developed. The transport infrastructure for tea has substantially improved. Besides transportation by barges, through the riverine route, by railway wagons and also by trucks to various destination of northern and western India, the recently developed Inland Container Depot (ICD) at Amingaon has increased its activities satisfactorily during the past few years. The ICD is almost exclusively handling tea where the tea is mechanically loaded to containers in palletized form. The containers are licensed by the Tea Board and sealed by customs so that these cannot be opened anywhere else till they reach their ultimate destinations all over the world. Total number of containers sent through ICD, Amingaon has increased from 861 in 1986 to 1674 in 1989 and then to 1718 in 1993. In 1994, it was anticipated that about 2100 containers would be sent out from the ICD.

The recent spurt of liberalization has encouraged tea producers to sell more teas directly and outside the auction system. However, it is observed that a substantial quantity of Assam tea, particularly of the orthodox varieties, is still being sold in the Calcutta auctions. In an effort to attract such orthodox teas to GTAC, sales tax on such teas was withdrawn and a workshop was held on April 11, 1992, which was largely attended by all the senior representatives of the different segments of the tea trade and industry. However, the promises of representatives to send more orthodox teas to GTAC has not yet materialized

.

Thus the development of GTAC has helped the process of concentrating a part of the tea trade in Guwahati and accordingly accruing and passing a portion of benefits of the tea industry, however small, to the people of Assam. The GTAC is also having a bright prospect for further growth in its activities in near future if the socio-political situations in the State allow the things to happen and the Centre (GTAC) gets co-operation from all concerned. Thus it is necessary that all concerned should remain alive and vigilant so that the opportunity is not missed any further.

Petroleum Industry of Assam

As Assam is having sufficient deposit of Petroleum crude four oil refineries have already been established in Assam. These four refineries are, Digboi Refinery, Noonmati Refinery, Numaligarh Refinery and Bongaigaon Refinery. Total production of refinery products has increased from 1390 thousand metric tonnes in 1979 to 1566 thousand metric tonnes in 1981 and then to 2531 thousand metric tonnes in 1991.

Digboi Refinery

Digboi refinery was originally commissioned in 1901, when the petrol driven vehicles were yet to enter the Indian transport scenario. Therefore, the refinery produced only Kerosene, Wax oil, fuel oil and greases. It then had a annual capacity of 28000 metric tonnes. The refinery was rebuilt in 1923, when its oil field production and refining capacity was increased and it emerged as a cost-efficient commercially viable unit. Addition of two distillation towers in 1932, by the Foster Wheeler Company of U.K., gave the Digboi refinery, the distinction of being the first modern refinery in Asia. Two more distillation units were installed in 1940, further increasing the capacity. Thus till 1950, Digboi was the only refinery in India.

At present, Digboi refinery is one of the six oil refineries operated by the Indian Oil Corporation (IOC). Digboi refinery is still in production even after 94 years of its installation. In this refinery, items produced from crude oil include- motor spirit (23.2%), Diesel oil (17.4%), Kerosene (16.9%), Furnace fuel (16.8%), Wax (7.9%), Lubricant (3.8%), Bitumen (2.2%), Coke (1.7%), Gas (2.4%), Others (4.4%) and unutilised part (3.2%). At present the refining capacity of Digboi refinery is 0.50 million tonnes only.

Despite the fact that Digboi oil refinery, Asia’s first and perhaps even the world’s oldest continuously operating refinery, is producing in excess of its capacity every year, the need to modernize this age old refinery has been long felt.

On October 14, 1981, this Digboi refinery and the marketing assets of the erstwhile Assam Oil Company came under the wing of Indian Oil Corporation Ltd. Since then a number of projects have been undertaken. Four refinery linked projects at an investment of Rs. 11.04 crores have already been completed by June, 1990.

After that the modernisation project of the Digboi Refinery of the IOC was approved in June, 1989 at an original cost of 143.74 crores, which is expected to be commissioned by July, 1996. Work for the project was affected due to infrastructural deficiencies and local disturbances. The projects which are under implementation against Digboi Refinery Modernisation Project include- Digboi refinery modernisation project, Catalytic reforming unit and wax hydro finishing unit. The revised cost of this modernisation project is estimated at Rs. 478.80 crores. With the completion of this modernisation project, the production capacity of this age old refinery would increase and it would emerge as an cost efficient commercially viable unit.

Noonmati Refinery

Establishment of another new refinery became necessary after the discovery of crude oil in the Naharkatiya area. But there was a great deal of controversy about the establishment of this refinery in Assam. At last, it was decided to establish this refinery with a production capacity of 0.75 million tonnes at Noonmati area of Guwahati. To meet this purpose one agreement was signed between the India Government and the Rumanian Government. Rumania Government sanctioned Rs. 52.38 crores long term loan at the interest rate of 2.5 percent. Besides, Rumania Government supplied machineries and thus the refinery was established with the help of their skilled personnel. In 1961, establishment work of Noonmati Refinery was completed. This refinery is also under the control of Indian Oil Corporation (IOC) Ltd.

Since then this refinery is producing various types of petroleum products such as motor spirit, HSD, lubricant, Kerosene, wax etc.and the total refining capacity of this refinery is 0.85 million tonnes.

The Noonmati Refinery (Guwahati) is expected to soon go for a massive expansion programme as a hydro-treatment plant has been approved by the Indian Oil Corporation (IOC) for the refinery. The plant will be set up at a cost Rs. 391 crore and the proposal will soon be approved by the Union Petroleum Ministry. The refinery is also now planning to increase its refining capacity to 1.5 MMTPA from the present 0.85 MMTPA. The other proposals include the hydro treatment plant and a Rs. 81 crore ISOSIV plant for production of lead-free petrol in the refinery. The other expansion proposals of this refinery include a Rs. 32 crore delayed coking unit (DCV), a crude distillation unit (CDU) and a paraffin wax unit (PWU) at a cost Rs. 500 crore. The total cost of all these expansion programmes is estimated to around Rs. 1200 crore.

Bongaigaon Refinery and Petro-chemicals Limited (BRPL)

With the increase in the production of crude in Assam Oil fields and also with the increase in the demand for petroleum products in the North-Eastern region, the demand for the establishment of third refinery in Assam was mooted. Considering the requirement position, the Petroleum Ministry finally came to a decision to set up the third refinery in Assam in the public sector. Accordingly, the Bongaigaon Refinery and Petro-chemicals Limited (BRPL) was formed as a public sector limited company. On 19th January, 1972, the foundation stone of Bongaigaon Refinery and Petrochemicals Limited (BRPL) was laid by Late Indira Gandhi, the then Prime Minister.

BRPL, a government of India undertaking , under the administrative control of the Ministry of Petroleum and Natural Gas was registered on February 20, 1974 with its headquarter at Dhaligaon under Bongaigaon District. Originally, total cost of construction of this refinery was estimated at Rs. 81.10 crores with Rs. 24.37 crores worth of foreign exchange component. But ultimately this multi-product company was commissioned at a cost of Rs. 450 crores.

The refinery units which includes- Crude Distillation Unit (CDU), Kerosene Treating Unit (KTU), Delayed Coker Unit (DCU) and Coke Calcination Unit (CCU) were commissioned one by one in phased manner by 1979. Initially, total production capacity of this refinery was 1.35 million tonnes.

The petrochemicals units which include xylene, deimethyl terephthalate (DMT) and polyester staple fibre (PSF) plants were commissioned by 1988 with xylene plant commissioned in 1984 and the DMT unit in 1985.

Products Spectrum of BRPL: The main refinery products of BRPL today include- SR Naptha Motor spirit (Petrol), MR Naptha, Aviation Turbo Fuel (ATF), HSD, LDO, Calcined Petroleum Coke (CPC), Kerosene (SKO), RPC (Net), Reformer Naptha, BRPSOL-100.

The petrochemical products produced by BRPL include- Para-xylene, Ortho-xylene, Cee-nine Solvent, DMT, Polyester Staple Fibre (PSF) and PSF Waste. Among these, the most prestigious product is the PSF under the trade name "Bonpoly". The production capacity of PSF is 30,000 MT and that of DMT is 45,000 MT.

Production Position of BRPL : Total production of various refinery products and petrochemicals of BRPL have been increasing at a satisfactory rate. In 1992-93, total production of some of the petrochemicals was as follows:

1. Para-xylene - 26,074 MT

2. DMT - 40,625 MT

3. PSF - 10,397 MT

4. Calcined Petroleum Coke - 28,372 MT

5. Crude Throughput - 1.16 million tonnes

Again in 1996-97, the production position of BRPL has improved further. The production report of BRPL shows the following figures of refinery products and Petrochemicals in 1996-97, which had shown an upward swing on all fronts.

The above reveals that the total crude (processing) throughout in BRPL refinery has increased from 1.216 million tonnes in 1995-96 to 1.542 million tonnes in 1996-97 which was 26 .8 percent higher than that of previous year. The total production of various refinery products in 1996-97 include- S.R. Naptha 121224 MT, Motor Spirit -41255 MT, Naptha -20623 MT, BRPSOL-5410 MT, Reformer Naptha-69760 MT, ATF-71767 MT, SKO-140866 MT, HSD-558138 mT, LDO-19806 MT, RPC-63126 MT, CPC-22112 MT and LPG-14553 MT.

Again the total production of various petro-chemical products produced by BRPL during 1996-97 was as follows-Para-xylene-27003 MT, Ortho-xylene-2061 MT, Cee-Nine-10330 MT, DMT, 38089 MT, PSF-21871 MT and PSF waste-1210 MT. Among the various petrochemicals produced by BRPL the production of Cee-Nine and PSF has increased by 21.6 percent and 3.81 percent respectively, whereas the production of other petro-chemicals have either remained constant or declined to some extent.

Gross Sales : The gross sales turnover of BRPL gradually increased from Rs. 534 crores in 1992-93 to Rs. 624 crores in 1993-94 and then to Rs. 725 crores in 1994-95. Again the net profit of the company had also increased from Rs. 29.03 in 1992-93 to Rs. 37.92 crores in 1993-94 and then to Rs. 60.12 crores in 1994-95.

Marketing of Products : Refinery products of BRPL are marketed properly and the petrochemicals produced by the Company are also getting its market gradually. The most prestigious petrochemical produced by BRPL, i.e., the polyester staple fibre (PSF : "Bonpoly" ) has not only achieved operational stability but has also been able to generate quality products which are well accepted in the market throughout the country. Spinning mills of Assam particularly, Assam Polyester Co-operative Mills (APOL) at Rangia depends entirely on BRPL for its requirement of fibre. The other three spinning mills in Tilu, Noapara and Jagiroad are also the main buyers of PSF from BRPL. Again the Prag Bosimi Synthetics Ltd. which is recently set up in Assam in the joint sector is also utilising PSF produced by BRPL for the manufacture of PFY/POY. These mills of Assam consume only 9 percent of PSF and the remaining 91 percent of PSF has been marketed in Bombay and Western part of the country.

Exports : With the increase in the production of polyester staple fibre (PSF), BRPL started regular export of PSF from the 1993-94. The volume of export of BRPL fibre has increased from 901 tonnes in 1993-94 to 2906 tonnes in 1994-95. In the year 1993-94, the total PSF export was worth US$ 1 million. In 1994-95 with the increase in the volume of export of PSF to countries like Belgium, Bangladesh, France, Nepal and Iran, total value of export would be above $3 billion (US). Meanwhile, efforts have been made to start exporting to South-east Asian countries like Indonesia, Philippines and Vietnam. The products exported by BRPL includes regular fibre for apparel use and specialty fibre, i.e., fibre fill PSF, which is used for making pillows, mattresses, quilt and for stuffing purposes in upholstery.

Product Application Centre (PAC) : A Product Application Centre has been commissioned which are providing application research on PSF (bonpoly) in the fields of spinning, weaving and wet processing. PAC would help in achieving the highest quality norms and assurance for "bonpoly" fibre and also diversify the uses of petrochemical products produced by BRPL.

Installation of New Projects : Over the last three years since 1992, BRPL has invested Rs. 205 crores in developing certain new projects. Accordingly, a glycosis plant for recycling of wastes generated during the production of PSF was commissioned in 1993 ; additional crude oil and POL product tankages have been built and facilities for rail and road dispatch of different products were commissioned in 1993-94 ; a new product ‘Cee Seven Solvent’ was developed by modifying the aromatics plant in 1994 ; facilities for storage and dispatch of bulk LPG were constructed in 1994 and a digital control systems were installed for captive power plant operations, improving the reliability of power supply and resulting in optimum use of fuel.

BRPL Expansion Project : BRPL proposed a refinery expansion project to raise its production capacity from 1.35 MMTPA to 2.35 MMTPA involving the capital outlay of Rs. 223 crores, including foreign exchange component of Rs. 32 crores, which was subsequently approved by the Cabinet Committee on Economic Affairs (CCEA) and Public Investment Board (PIB). The project was sanctioned by the Government of India on December 31,1991.

The refinery expansion project consists of two unit- (i) crude distillation unit (CDU) and (ii) delayed coker unit (DCU). The project also includes LPG recovery facility and debottlenecking of reformer in the existing aromatics plant.

The BRPL has been executing these expansion schemes since January 1, 1992. The work of the refinery expansion project has been completed by May, 1995 and this will now double the refining capacity from 1.35 million tonnes per annum to 2.7 million tonnes per annum. Another major project, i.e., LPG recovery project has already been completed.

Significantly, while the original cost of this expansion project was Rs. 223 crores, but the same is almost completed within Rs. 190 crores, resulting in a saving of Rs. 30 crores. In the mean time, the production has also been started.

In addition, BRPL’s xylene production capacity would also be increased from 29, 00 TPA to 35,000 TPA at a cost of Rs. 5 crores.

In the mean time LPG plant with 22,000 million tonne per annum capacity has already started commercial production at this complex. Besides, a crude distillation unit (CDU) and a delayed Coker Unit were commissioned in 1995-96. This has increased the crude processing capacity from 1.35 MPTA to 2.35 MTPA and the gross fixed asset of the company from Rs. 480 crore to Rs. 659 crore. Other expansion programmes of BRPL include PSF and DMT expansion plant, Methanol plant, Benjin plant, and the Aromatic plant.

In the mean time, although the refining capacity of BRPL has been expanded to 2.35 MTPA but the actual crude throughout in 1996-97 in its refinery unit was only 1.54 MTPA, leading to under-utilisation of its refining capacity to the extent of 0.81 MTPA which was about 34.5 percent of the total refining capacity of the BRPL. If immediate steps are not taken to utilise its untilised expanded refining capacity, then it will create a serious impact on the financial health of the NRPL. Thus steps must be taken to increase the crude throughout in the refinery as per its expanded refining capacity.

Moreover, another impending problem of BRPL is that with the commissioning of the Numaligarh refinery, the BRPL will cease to receive crude produced in the state and will have to depend on imported crude. Of the 5.08 million tonnes per annum (MTPA) or crude oil produced by OIL and ONGCL in the State, 3 MTPA would be required for Numuligarh refinery and the remaining 2.0 MTPA would have to be distributed between Digboi and Guwahati refineries, whose respective capacities are at present 1.6 MTPA and 1.0 MTPA. This would compel the BRPL to import crude to keep the refinery functioning. But as the imported crude has different components, the BRPL refinery, designed as per indigenous crude component, do not possess that much of flexibility to adopt imported crude immediately. In that case, some necessary changes are to be made in the refinery structure.

Besides, the financial condition of BRPL is also greatly strained in recent years. One of the major reasons is the low refinery margin of Rs. 308.41 per tonne paid to the BRPL barely covers the operation expenses and thus it needs to be revised without any delay. Another factor responsible for this financial strain is the downfall in the profitability of the petrochemicals division resulting from the increase in the price of naphtha, fall in the prices of para-xylene and DMT in naphtha, fall in the prior of para-xylene and DMT in both domestic and international markets and the reduction of import duties of DMT PSF. Thus considering the situation immediate steps must be taken to restore financial discipline in BRPL.

Perspective Plan of BRPL: The public sector Bongaigaon Refinery and Petrochemicals Limited has also chalked out a perspective plan to consolidate its growth through various expansion and diversification programmes which after completion will increase the annual sales turnover of the company to Rs. 2000 crores.

Accordingly, the refinery expansion scheme is almost completed. Meanwhile, the BRPL has also received approval for expansion of its DMT plant capacity from 41,000 TPA to about 60,000 TPA and PSF plant capacity from 30,000 TPA to 36,000 TPA at a cost of Rs. 90 crores. Another project to recover methanol and costly catalysts from waste stream of the DMT plant is now in an advanced stage of completion. This would help in reducing the cost of raw materials and minimise discharge of particles to the atmosphere, thus improving the air quality. Another step to reduce environmental pollution is being taken with the commissioning of a tertiary treatment plant within a year. After the commissioning of this plant, there would be no liquid effluent disposal as the treated water would be reused. All these recently completed and on-going projects would result in an increase of the sales turnover of the company to more than Rs. 1000 crores.

This perspective plan finalised in 1994, involved growth in the petro-chemicals field by taking advantage of additional quantities of aromatic-rich naphtha that would be available with the expansion of the refinery as well as setting up of the Numaligarh refinery.

Failure of BRPL to Develop Down-stream Industries in Assam and its Future Prospect :

BRPL was established with a high hope of developing various downstream industries based on the petrochemicals and refinery products produced by it. Accordingly, the people of Assam expected that a chain of downstream industries would come up so as to utilise the various petrochemicals and refinery products produced by BRPL. But unfortunately, people’s expectations remained a distant dream, as the state has completely failed to develop these downstream industries. The factors which are mostly responsible for such failure to develop down-stream industries in Assam are as follows :

(a) Inappropriate product mix of the BRPL is highly responsible for such failure to develop downstream industries in the state. Present product mix of the BRPL would never permit the development of small scale down-stream industrial units within the state. To start an industrial unit with such product mix requires a huge investment, which is very much difficult in a state like Assam.

(b) State sector participation in the application of such product mix for the development of down-stream industries has been totally missing.

(c) Capital Intensive : Development of down-stream industries with the present product-mix of BRPL will be a capital-intensive one. Such type of capital-intensive investment project is unlikely to develop in a state like Assam.

(d) Co-operative sector has also failed to develop down-stream industries in Assam, excepting APOL project established at Rangia.

(e) Lastly, the lack of involvement of local entrepreneurs is also highly responsible for such failure to develop down-stream industries based on the products produced by BRPL.

Prospect : But the amount of polyester staple fibre (PSF) produced by BRPL has a high prospect of developing textile industry within the state. The only textile project that has been successfully developed in Assam is the APOL textile project established at Rangia. But the amount of PSF produced by BRPL (21871 MT in 1996-97) could be utilised to develop and run 25 numbers of spinning mill within the state. One such spinning mill could have 25 thousand looms and can employ about 1 to 1.5 lakh people both directly and indirectly. In such spinning mill, blending of polyester yarn with cotton yarn is quite necessary. Moreover, with the development of spinning mill, a good number of weaving, dying, printing etc. can also be developed within the State. All these projects, if implemented, would create ample employment opportunities to millions of people within the state. Thus instead of establishing any more new refinery, the state should try to develop a good number of spinning mill and other associated projects, both in small and medium scale, so as to develop a broad-based textile industry within the state, on which the people of the state has their inclination from its origin. If this textile industry can be developed in Assam then only it can serve the real purpose of establishing a capital intensive project like BRPL and thereby the benefits of establishing BRPL can percolate to the local people at the grass root level. This will also create an ample scope for income and employment generation within the state. But in order to materialise these projects, the private sector participation is highly essential and also the only alternative, which demands a conducive investment climate within the state.

Numaligarh Refinery :

The Government of India has finally decided to set up the fourth refinery in Assam at Numaligarh under the Golaghat district of Assam. This new company, Numaligarh Refinery Limited (NRL) was formed in April 22, 1993 and the construction work of this mega project has already been started. This refinery is being set up in the joint sector. Total refining capacity of this refinery (NRL) would be around 2 million tonnes.

This refinery is promoted by Bharat Petro Chemicals Ltd. (BPCL), Indo-Burma Petroleum (IBP) and Government of Assam with equity participation of 32 percent, 19 percent and 10 percent respectively. The remaining 39 percent of the equity will be offered to public and other financial institutions. The required loan for this project is to be obtained from the Central Government through Oil Industry Development Bank (OIDB).

This refinery is being set up in the assisted sector in pursuance of the commitment in the Assam Accord of 1985 with major equity participation of the IBP and Assam Government. After much hue and cry and dilly-dallying of seven years, the State Government has finally agreed to accept 10 percent equity participation while the IBP got 51 percent leaving the rest to the primary market.

The original cost estimation of this refinery was Rs. 1830 crores including the foreign exchange component of Rs. 323.50 crores. This Rs. 2000 crores joint venture NRL, an of shoot of Assam Accord was completed in 1998. Though the cost of the project was estimated at Rs. 2000 crores but taking the other link projects and cost escalation into account, the ultimate cost of the entire project was higher by another Rs. 1000 crores.

The acquisition of land for the project being completed, the State Government  formally handed over 509.7 acres of land for the project in April, 1993. The soil investigation work, awarded to Regional Research Laboratory (RRL), Jorhat.  Initially the detailed feasibility report of the project was prepared by Engineers India Limited (EIL) and the approval for the site was accorded by the Ministry of Environment in 1991.

EIL has been appointed as prime consultants and the process of design, basic engineering and detailed engineering for the indigenous technology based plants had almost been finalised.

The volume of crude oil for the Numaligarh refinery would be supplied from the nearby oil fields of Oil India Limited (OIL) and the Oil and Natural Gas Commission (ONGC). It is expected that the refinery would be completed by the end of 1998.

The high tech. refinery is designed to process 3 million metric tonnes per annum of Assam crude oil. It will have various processing units viz., Crude Distillation Unit (CDU), Vacuum Distillation Unit (VDU), Delayed Coker Unit (DCU), Hydro Cracker Unit (HCU), Hydrogen Unit (H2 U), Coke Calcinations Unit (CCU), Sulphur Recovery Block (SRB), Catalytic Cracking Unit (CCU) and a Captive Power Plant (CPP). The refinery will meet the objective of maximizing middle distillates like kerosene and diesel. Besides this, the refinery will produce LPG, naphtha, high speed diesel, aviation turbine fuel (ATF), Kerosene and Calcined Coke.

The NRL has already initiated steps to enter the capital market from which it expects to realize Rs. 707 crore. Of the funds already realized, part has come from equity contributions and part from an OIDB loan of Rs. 438 crore.

The total project cost of NRL is now revised at Rs. 2,722 crore, of which Rs. 225 crore is for setting up a marketing terminal adjacent to the refinery. The entire cost of the project will be realized through debt (Rs. 1,815 crore) and equity (Rs. 907 crore) at a ratio of 2:1. The Centre has allocated Rs. 100 crore in the revised budget estimate and committed to provide adequate funds during the new two years to ensure completion of Numaligarh Refinery project as scheduled.

It may be mentioned that the refinery will annually process three million tonnes of Assam crude. The crude will be tapped off at Badalipara from the pipeline which supplies to Bongaigaon from the oil fields at Lakwa and Duliajan. OIL is providing 60 percent of the crude and the ONGC the remaining 40 percent. Moreover, the refinery can absorb around 700 people through direct employment and around 5,000 people through indirect employment. At present, the project spans a total area of 1,000 acres, including 250 crores of the marketing terminal plots.

Demand-supply Gap of Petroleum Industry in Assam and its Impending Danger:

The Petroleum industry of Assam is at present facing a serious shortage in the supply of petroleum crude due to the prevailing demand supply gap. At present, the petroleum crude crisis is reflected from the fact that although the refining capacity of BRPL has already been expanded from 1.35 MTPA to 2.35 MTPA but the actual amount of crude through input in 1996-97 in this refinery was only 1.54 MTPA , leading to under-utilisation of its refining capacity to the extent of 0.81 MTPA, which was about 34.5 percent of total refining capacity of the BRPL such under-utilisation of the expanded refinery capacity has been creating a serious impact on the financial health of BRPL.

With the Commissioning of the Numaligarh Refinery scheduled on December 1998, the demand-supply gap of the petroleum industry would be worsening further, if no immediate steps are taken to avert the crisis.

Statistics reveal that crude oil production in the North-east, both by Oil India Limited (OIL) and Oil and Natural Gas Commission Ltd. (ONGCL), stood at 5.08 million tonnes in 1995-96. The production is again not likely to increase until exploration efforts are intensified, which is again unlikely considering the ground situation of the country.

The combined capacities of the refineries at Digboi, Guwahati (both belonging to Indian Oil Corporation), Bongaigaon(BRPL) and Numaligarh(NRL), after completion of their on going schemes, will be around 7.5 million tonnes.

The present crisis in the supply of crude arises due to the fact that the OIL and ONGCL have failed to increase the production of petroleum crude in the entire North-eastern region. Although the Petroleum Ministry has projected the total crude production in the North-east to be around 7.0 million tonnes at the end of Eight Plan and accordingly planned for the expansion programme of BRPL refinery and commissioning of Numaligarh but due to the failure of ONGCL to increase crude production both in Assam and Nagaland, such projection could not materialise. Now the ONGCL is planning to tap the oil reserves available of the North Bank of Brahmaputra, mostly in the Lakhimpur district as the oil reserves in Arunachal Pradesh could not be tapped due to its peculiar geographical problem and infrastructural bottlenecks.

In order to avert the crisis of petroleum industry of Assam, the Ministry of Petroleum proposed a Rs. 130 crore project to supply imported crude to the crude-starved refineries in Assam. Moreover, the Oil Co-ordination Committee and Engineers India Ltd (EIL) have been asked to work out a strategy to examine the various alternatives to supply the refineries with imported crude via Haldia port.

As per the Ministry’s plan, Assam will stop crude supply to Barauni the moment Haldia-Barauni pipeline is commissioned. In this connection, the IOC has already started bringing in crude, though in small quantities in wagons from Haldia to Barauni.

Both the Oil Co-ordination Committee and the Engineer’s India Limited have jointly submitted a proposal to the Petroleum Ministry with three options. (a) to bring in imported crude from Haldia port in wagons ; (b) to use barges to carry imported crude via Bangladesh (option is already in existence as Numaligarh refinery is using barges to transport equipment to Assam) and (c) utilize the BRPL’s existing Naharkatiya-Guwahati-Barauni pipeline to pump back imported crude brought from IOC’s 4.2 million-tonne Haldia-Barauni pipeline.

It is understood that the ministry is in favour of the third option, considering the fact that the Haldia-Barauni pipeline capacity can be increased to six million tonnes with the help of boosters. Moreover, the BRPL has also proposed to the Petroleum Ministry to increase the Haldia-Barauni pipeline capacity to 7.5 million tonnes per annum at an additional cost of Rs. 400 crore, so as to meet the future scarcity of crude for achieving full capacity utilisation. The Ministry is not in favour of transportation of crude by rail, since it is not feasible on a long term basis, considering the existing inadequate railway network. Under the present situation, it would be better to use the existing pipeline between Barauni-Bangaigaon-Naharkatiya pipeline which is economically and environmentally safe and more importantly on the consideration of the utilisation of the existing costly pipeline.

Assam Petrochemical Complex, Namrup :

In order to utilise the petroleum waste available from refineries in Assam, the Assam Petrochemical Complex was established at Namrup with a total investment of Rs. 5 crores. This complex was established with the help of a Japanese Company. This complex was based on the natural gas available from Lakwa and Moran Oil fields at Sibsagar District.

Based on natural gas as main feed stock, the company started its commercial production of methanol and formaldehyde in 1976 from its two plants of 21 mt. per day and 37 mt. per day capacity respectively. The methanol unit of the company had the distinction of being the country’s second producer of methanol, pioneering production of the chemicals from natural gas in India.

The company entered the market through tough competition coupled with location disadvantages. It also suffered major interruption in power and natural gas supply during the peak period of Assam agitation, resulting in under utilization of plant capacity.

However, the company survived the competition, gained advantages and marched ahead and within 14 years operation the company expanded its manufacturing capacity of methanol and formalin from 7000 TPA to 40,000 TPA and 12,000 TPA to 16,500 TPA respectively. Besides, successfully commissioning capacity by another 100 TPD was being implemented.

APL is making sustained profit since 1990-91 on the average of Rs. 5.00 crore per year. The Oil India Ltd. (OIL) which was formed in 1959 and was subsequently made a public sector company in 1981 by amalgamating Indian Oil with Assam Oil Company , has now shifted its headquarters from Delhi to Duliajan in Assam. This OIL is providing necessary support to the petroleum industry of Assam. Besides, the Oil and Natural Gas Commission (ONGC) was established in 1959 in order to run the exploration activities for finding oil in India. The ONGC is having its office at Nazira in Sibsagar district and is playing an important role in conducting exploration activities in the region along with other parts of the country.

Assam Gas Cracker Project :

There was a long standing demand from the people of Assam to establish a gas cracker project in Assam so as to utilise a huge quantity of unutilised natural gas, being flared up since  long back. Accordingly, after a long exercise, it was finally decided that the Assam Gas Craker Project will be set up as a joint sector project by the Government with Reliance Industries Ltd., Bombay. With that purpose, a memorandum of understanding (MOU) was signed by the Government of Assam and Reliance Industries Ltd. on October 25, 1994 and a company named "Reliance Assam Petrochemicals Ltd." has been formed.

The idea for setting up such a project for utilization of natural gas available in Assam was mooted  far back as in 1982 and the Assam Industrial Development Corporation (AIDC) submitted an application to the Government of India for obtaining the letter of intent in December 1984. Accordingly, the Government of India issued a letter of intent in February 1991.

On 24th November 1995, the then prime Minister, Mr. P.V. Narasimha Rao laid the foundation of the prestigious Assam Gas Cracker Project at Tengakhat, about 22 kms. from Dibrugarh. This gas cracker project, the biggest of its kind in this part of the country would be completed at a cost of Rs. 4,000 crore and the project would provide employment to a huge number of educated unemployed youths besides helping in the growth of numerous ancillary industries in the state. This ambitions gas cracker project, when completed, would directly provide employment to about 2,000 persons and indirectly to more than 1 lakh persons.

The main objective of Assam Gas Cracker Complex is the conversion of natural gas into value-added petrochemical product, promote industrialisation in backward area, import substitution and generation of employment.

Utilising associated natural gas, which is now flared and wasted, this project will convert the petrochemical fractions of the gas into valuable polymers which are substitutes for costlier items such as wood, metal and glass. It will save foreign exchange because polymers are now deficit products and are imported.

What is more significant is the fact that this project will act as a catalysts for the future industrial development of Assam, and the entire North-east. Besides, the tremendous technology impact and fillip to trade with the neighbouring countries it will boost up the investment climate in the state and give moral support to the entrepreneurs to put up new ventures specially in the small scale and down-stream sectors where large-scale employment opportunities can be expected to be created in the near future.

There is enough reason to believe that this natural gas project will go a long way in making Assam a competitive industrial force for years to come. For our, it is highly employment-oriented project with potential for large scale development of downstream industries in the years to come, which include chemicals, packaging, implements, paints, foam, rubber etc. It is also a highly attractive investment proposition, and in the time to come, will invite a lot of financial support. Secondly, this project is a step in keeping with declared national policy of speedy industrialisation of North-eastern region.

The Assam Gas Cracker Project will be converting valuable fraction of natural gas flared into valuable petrochemicals. It will also meet the deficit of petrochemicals in the country and save foreign exchange. But, most of all, it is a project based on readily available local resources  that can use local manpower.

The feedstock of the project is the associated gas available from the oil fields of Upper Assam to the extent of 7 million SCM per day. The annual capacity product pattern of this project is :- Ethylene-3 lakh tonnes, Propylene-51,000 tonnes, Polythylenes-3 lakh tonnes, Oxo-Alchohols -65,00 tonnes. The completion schedules of this project are 3 years from zero date.

The down stream units of this gas cracker project include mainly polymer processing units in the small and medium scale sectors in the areas like-Packaging, Household, Industrial, Agricultural, Building construction, Wires and Cables etc.

But the implementation of this project is delayed due to problem of shortage of required quantity of natural gas available from oil fields in Upper Assam. It is now revealed that the amount of gas to be supplied by OIL and GAIL would facilitate the production of no more than 2.3 lakh tonne per annum (TPA) of ethylene for the project whose capacity, as per MOU should be three lakh TPA. This shortage of natural gas has thus created a problem in the implementation of the project. Alternative proposals are also mooted which are expected to be finalised soon. The Central Government has already granted a cost subsidy of Rs. 377 crore to this project in view of the regional constraints to be faced by the project. In the mean time, the Reliance has proposed to raise the capacity of 4.5 lakh TPA of ethylene (based on composite feedstock) and sought the Petroleum Ministry’s Commitment on allotment of surplus naphtha, a costly alternative fuel. The Government of India has very recently given final clearance for setting up the ambitions Assam Gas Cracker Project at Tengakhat in Dibrugarh district by M/s. Reliance Industries Ltd., which is expected to contribute significantly to the industrial and economic development of the state.

Thus we have seen that the petroleum industry is the biggest industry of Assam. This industry is doing a lot for the improvement of both national economy as well as the economy of the State. With the establishment of four refineries and petrochemical complex it is now expected that this industry will earn a special position in the industrial development of the country as well as of the state.

Plywood Industry of Assam

Plywood industry is one of the forest-based industry. For manufacturing plywood, several piles of veneers are combined with glue in order to prevent shrinkage. System of plying increases the strength and thickness of the ply board. Commercial plywood and tea chest are main products of plywood industry. Plywood is mostly used in the manufacture of tea chest, boxes, furniture, panels, boards, flush doors, bodies of vehicles and railway compartment etc. With the increase in the demand for plywood, the plywood industry of Assam is gradually expanded in recent years.

In 1984, there were 52 plywood factories in Assam of which 13 belongs to large and medium scale. Moreover, about 40 factories were located in the districts of Dibrugarh, Jorhat and Sibsagar. Total production of plywood in the state gradually increased from 31 million sq. metre in 1982 to 43 million sq. metres in 1986 and then gradually declined to 42.7 million sq. metres in 1994. At present there are about 48 plywood factories in Assam, which has generated employment opportunities to nearly 5,600 persons directly and nearly to 1.0 lakh persons indirectly.

Initially Assam had plenty of woods suitable for the production of plywood. But unplanned cutting of trees has resulted huge deforestation in the state resulting in ecological imbalance. The State Government has, therefore, imposed severe restrictions on unplanned cutting of trees, which has threatened the prospect of plywood industry due to shortage of raw material. The plywood manufactures, therefore, has been forced to import a large part of their raw material from Malaysia by ship. In order to solve this scarcity of raw material, the plywood industry should go for captive plantation of soft wood in the state.

The manufacture of plywood which originated in Assam as early as in 1917, has been transformed into a major industry with the gradual growth and development of private enterprise, particularly after independence with the assistance and encouragement from the Government and the people of the State. The plywood industry is now the second largest industry in the private sector in Assam after tea industry. This plywood industry of Assam approximately meets 60 percent of the country’s total need for plywood. At present the annual turnover of this industry is Rs. 200 crores. This industry has got immense employment potential for the people of Assam. Thus more plywood factories should be established on the basis of suitable timber available in the forest of Assam.

But unfortunately, the plywood industry of Assam is now facing an imminent closure following the interim injunction issued by the Supreme Court of India on December 12, 1996, banning movement of all forest goods in the north-eastern region.

The industry, which is the second biggest in the state, after tea, has altogether 48 mills scattered in the upper Assam districts and many of them closed down following paucity of raw materials.

Notably, the state produces 60 percent of the total requirement of plywood of the entire country and most of the leading brands of plywood market have their factories located in Tinsukia district. Plywood is basically made of holong and mekai timber which is solely available in the reserve forest of Upper Assam, neighbouring Nagaland as well as Arunachal Pradesh. The plywood industry consumed only 4 percent of the total consumption of timbers in the country. Though working on 55 percent of the rated capacity, this plywood industry of Assam meets 60 percent of the country’s requirements. Given the adequate supply of raw materials, it has the potential to meet the entire requirement. The Rs. 200 crore annual turn-over industries are credited with producing the finest variety of plywood in the country.

But recently, Supreme Court’s interim order banned felling of trees in Changlang and Tirap district of Arunachal Pradesh beside closing down of all plywood mills situated within 100 km. of the Arunachal Pradesh border. This process literally hammered the final nail in the coffin of the plywood industry which was already facing the shortage of good quality timber. The Rs. 200 crore annual turnover of plywood industry of Assam, whose functioning has come to a grinding halt since December 12, 1996, following the verdict of Supreme Court is going to incur a huge loss of several crore of rupees due to stocks of inventories becoming useless for the mills.

Accepting the reality and the necessity of the ban, the wood workers have urged authorities to allow controlled felling as well as import of timber from South-east Asia for the survival of this large industry. Thus considering the grave crisis faced by this industry, immediate steps must be taken on alternative lines, so as to save this industry from its imminent closure. Moreover, on the long term basis, the State Forest Department and the Plywood Manufactures should also take up plantation of those trees required for the production of plywood.

If we can properly develop this plywood industry on scientific and long term basis with easy flow of raw materials produced within the State in collaboration with the State Government, this industry will no doubt contribute immensely towards the economic development of Assam.

Paper Mill of Assam

On the basis of the plenty amount of forest products like bamboo, soft wood etc. Assam has a good potentiality for establishing a good number of paper and paper pulp mill. The forests of Assam are supplying raw materials to different paper, paper pulp mills within and outside the state. During the Fourth Plan Period Ashok Paper Mill Ltd. was established at Jogighopa with a total investment of Rs. 15 crores. Total production capacity of this mill was 90 tonnes of paper and 120 tonnes of paper pulp. But due to various irregularities, this mill had to face huge loss and ultimately it was closed. Considering the huge potentiality for the growth of paper industry in Assam, another two paper mills has come up in the public sector. One of this Mill is established at Jagiroad of Nagaon District under the patronage of Hindustan Paper Corporation Ltd. This Jagiroad Paper Mill has started its Commercial production. Another paper mill is established at Panchagram in the Cachar District of Assam. This has the production capacity of 150 tonnes of paper per annum which will be ultimately doubled within a short time. This Cachar paper mill has started its production. Both of these two mills are controlled by Hindustan Paper Corporation. Besides Bengal Paper Mill Private Ltd. is also trying to set up another paper mill at the North Cachar Hill District. In 1981, total production of paper in Assam was 14 thousand metric tonnes. But since then the total production of paper in Assam started to decline particularly after the closure of Ashok Paper Mill at Jogighopa and it reached to only 0.5 thousand metric tonne in 1983. Moreover, the two paper mill run by HPC in Assam is also struggling for survival.

Although the Jagiroad Paper Mill of HPC was set up with a capacity of 300 tonnes per day, but due to various problems, the mill was producing only 230 tonne per day. During the past few years, the mill had a capacity of utilization of just 55 percent but presently this had been improved to 70 percent. Accordingly total production of paper in this Jagiroad Paper Mill has also increased from 57,544 MT in 1991-92 to 72,000 MT in 1994-95. This paper mill is still running under loss. It is expected that once the mill could reach the mandatory 80 percent production mark, it would start making profit. Recently, the Government of Assam has signed a memorandum of understanding (MOU) with Sanghi Group of Industries, Hyderabad for the revival of sick Ashok Paper Mill at Jogighopa. In the mean time the renovation work of the mill has also been started.

Renovation of Ashok Paper Mill :

After 13 years, Sanghi Textile Limited, a Hyderabad based private business house, came forward to take over the mill by signing a MOU on a lease contract for 25 years. On April 1, 1995 the Sanghi Textile Limited (STL) shouldered the responsibility of bringing the mills back on the rails. Ultimately, with the untiring efforts of STL team, the mill became operational after a prolong gap of 13 years. After remaining idle for a period of 13 years, the machines became useless and needed major renovation and replacement. The three boilers are modified and are brought back to operational level.

After the overhauling of the major parts, the production of paper mill had been restarted from November 1, 1996 to a tune of 50 to 60 metric Tonnes (MT) of paper per day. The STL management has planned to increase the production phase by phase and the final target is 110-120 MT of paper per day and 30 MT of pulp-sheet per day.

Although the expansion programmes was progressing smoothly, but suddenly the Sanghi Textiles Ltd has declared ‘Lock out’ in its Ashok Paper Mill at Joggighopa with effect from 6 A.M. of May 2, 1997 following the strike resorted by the workmen resulting stoppage of operator of the entire unit. This is really a setback for the APM, when the paper mill was revived after a stalemate of 13 years. Thus immediate steps must be taken by all concerned to reopen the mill as soon as possible.

Fertiliser Industry of Assam

For the proper utilisation of Natural Gas at Naharkatiya Gas, Utilisation Committee of Government of India permitted to establish one fertiliser plant at Namrup on the basis of natural gas available at Naharkatiya oil field of Assam just after that Namrup Fertiliser Plant was established in Assam. This is a public sector plant under the control of Hindustan Fertiliser Corporation Limited (HFCL). The commercial production of this plant started in March, 1965. In the initial stage the plant was expected to produce 50,000 tonnes of Urea and 50,000 tonnes of Ammonium sulphate. In 1970 this plant produced 27.5 thousand metric ton of Urea and 60.5 thousand metric ton of Ammonium sulphate. Later, to increase the production of fertiliser Plant Assam Gas Company set up another pipeline from Moran Gas grid to Namrup in order to supply necessary amount of gas to this fertiliser plant. Due to this, the production capacity of Ammonium sulphate by this Namrup Fertiliser Plant was increased by nearly three times: At present the total production capacity of this fertiliser plant is 16.7 million metric tonnes of Urea and 304 million metric tonnes of Ammonium sulphate. But the total production of fertiliser in Assam has gradually declined from 31.6 thousand metric tonnes in 1992 to 12.9 thousand metric tonnes in 1994.

The giant gas based Hindustan Fertilizer Corporation Limited (HFCL), Namrup Unit, once the pride of Assam, is on the verge of total collapse with its last working unit, Namrup III, virtually gasping for every cubic metre of natural gas to its self functioning. The Namrup III, set up with a cost of Rs. 285.55 crore, and which began commercial production on October 1, 1987 is today running at a minimum load of 60 to 70 percent due to a severe natural gas crisis, which has been on the rise since June 1987. The operation of the other two units Namrup I and II had to be suspended in 1986 and 1993 respectively for the same reasons.

The Namrup plant was established on the basis of an assurance by Oil India Limited (OIL) to supply required amount of gas to the extent of 1.76 million metric standard cubic metres (MMSCMD) per day from its Naharkatiya and Moran field. But much to the surprise of all concerned, OIL started to reduce the pressure and reached the level of 0.05 MMSCMD during 1992-93. This has resulted in shutdown of the production of urea and ammonium sulphate in Namrup I, built at a cost of Rs. 24.26 crore. Shortly after, the second unit had to shut down after the total gas shortage rose to 0.70 MMSCMD which was the required pressure for this unit.

The gas supply agency OIL and GAIL has also lowered its pressure from the assured amount of 0.45 MMSCMD to 0.39 MMSCMD in August 1994, resulting in shutdown of Namrup II which could not be restarted after a prolonged suspension of operation.

But as the demand supply gap of gas remained wide, the high powered  Task Force intervened in 1995 to sort out the crisis. But all these remain in vain. In January 1996, total amount of gas supplied by OIL and GAIL remained at 1.25 MMSCMD which was of no help for any of the three units as the requirement of plant I and II alone was 1.35 MMSCMD at full load. It is observed that unless the required amount of 2.21 MMSCMD of gas is met, the three plants of Namrup will fail to survive.

It is really a very sad situation where on the one hand, a huge number of gas is being flared up by the ONGCL and OIL at their oil-fields and on the other the gas-based fertiliser unit of Namrup is facing an imminent closure due to scarcity of gas supply. Under such a situation, proposals are mooted from different corners to set up a National Council for Oil Development headed by the Union Petroleum Minister and comprising Ministerial and company representatives from all the oil-producing states. However it remains to be seen whether the proposals would to accede to by the centre as it would mean giving up its proprietary rights over the oil and gas. The same can be said of the demand that the State Government should have proper representation on the boards of OIL and ONGCL as well as the plan to introduce a law by which the State Government would have adequate control and say over its natural resources.

Enough harm has already been done to HFCL plant at Namrup by OIL and ONGCL by cutting down repeatedly the supply of gas, causing in shut-down of its first two units and the third one is gasping for every cubic metre of gas.

Under such a situation, formation of such a council would result in transparency over the availability of gas and would also result in rational utilisation of oil and gas and maximum capacity utilisation of all existing gas and oil based industrial units lying within the State’s territory.

Jute Industry of Assam

Assam is one of the famous state of India in respect of Jute production. Every year a good quantity of raw jute is produced in the Nagaon, Goalpara, Barpeta and Darrang Districts of Assam. Previously as there was no jute mill in Assam the whole amount of raw jute produced in Assam were exported to Calcutta. As there was sufficient demand for various jute products viz., gunny bag, rope etc. in Assam, Co-operative Jute Mill was established at Silghat of Nagaon district. In 1970 this mill started its commercial production. In 1971-72 this jute mill produced 729 tonnes of jute products. After that total production of this jute mill was increased to 4299 tonnes in 1979 and then to 5951 tonnes in 1981. Total production of jute products has further increased to 6 thousand tonnes in 1982 and then it declined to 5.0 thousand tonnes in 1994. At present Assam is regularly exporting about one million tonne of raw jute per annum to Calcutta.

In the mean time the Government of Assam has laid foundation stone for two jute Mills, one at Mangaldoi and another at Barpeta area. The jute mill of Mangaldoi area will be established at Dalgaon under the co-operative sector. In December, 1994, the AIDC has set up another Jute mill in Assam.

It is really a matter of pity that Assam in spite of being the second largest jute producing state in India has not been able to draw sustenance from development and diversification of jute products. About 70 percent of total jute produced in Assam is purchased for processing outside the state. Unfortunately, the State’s efforts for starting and operating jute mills have not been a happy experience, in spite of having a good potential for the same.

At a time when Assam has been making endeavours for promoting industrial development and investment, jute holds a promise which can be translated into a reality provided private entrepreneurship  developed by various entrepreneur assistance schemes introduced by National Centre for Jute Diversification (NCJD).

Sugar Mill of Assam

Among the various districts of Assam a good amount sugar cane farming is done at Kamrup and Sibsagar district. At present there is only one sugar mill at Barua Bamungaon of Golaghat district. The commercial production of this sugar mill started in 1958. This mill has the capacity to press 320 quintals of sugar cane daily. In 1959-60, the total production of sugar by this mill was 48,000 maunds. The major problem of this mill is that it has to collect sugarcane from far flung areas. However, sugar cane cultivation is gradually being extended at good rate in the Golaghat District. Total authorised capital of the Assam Co-operative sugar Mill Limited of Barua Bamungaon is Rs. 2 crore and the working capital of this mill is Rs. 40 lakhs. Total share of the Government of Assam is to the extent of Rs. 27 lakhs. This mill has generated employment opportunities to nearly 1000 persons.

Considering the bright prospect for the growth of sugar industry, the foundation stone of another sugar mill was established in 1971 at Ratabari in Cachar district of Assam. This sugar mill is having the capacity to press 1250 tonnes of sugarcane per day. This mill had started its commercial production and soon after became sick and had to be closed down in its initial stage. In 1986, another co-operative sugar mill was started at Kamrup in Nagaon district. During the Fifth Five Year Plan, the Government of Assam had decided to establish another 6 sugar mills in Assam under the public sector. With that intention it was proposed to set up a separate corporation to meet this purpose. But the work could not proceed much in this regard. In 1982, total production of sugar in Assam was 12 thousand metric tonnes and the total number of sugar mills in Assam was 3. After that, total production of sugar in Assam declined to 6 thousand metric tonnes in 1989 and then in 1991 it declined further to 1.5 thousand metric tonnes. In the mean time, the Central Government sent a Expert Committee to study the problems of these two sick sugar mills of Assam and the committee has suggested certain measures for the revival of these sick sugar mills.

Match Industry of Assam

In 1925. one Swedish industrialist established one match factory at Dhubri of Assam. Initially the match factory was known as Assam Match Company. The name of the company is now changed to "WIMCO". about 7 percent of the total match produced in India is being produced by this company. At present, the company has been modernised. In the Cachar district of Assam, another match factory is established. In 1982, total production of match was 6 million gross boxes. In 1994, total production of match has declined gradually to 4.5 million Boxes. In the forests of Assam a good quantity of raw materials is available for the production of matches. At Bijni of Bongaigaon district one match splint factory was established for the production of match sticks. Further, it is expected that more match factory will be developed in Assam very soon.

Cement Industry of Assam

Assam Cement Company was established with the intention to establish and develop cement industry in Assam. The State Government contributed a good amount towards the share capital of this company. The Assam Cement Company established its first cement factory at Cherrapunjee. This is the first cement project in the North-East India. This factory has total production capacity of 68,000 tonnes of cement per annum. Now this factory is lying within the state of Meghalaya.

Cement corporation of India has established another cement factory at Bokajan of Karbi Anglong district. Total production of cement of the Bokajan cement factory was 110 thousand metric tonnes in 1978 and then the production increased to 196 thousand metric tonnes in 1981.

Total production of cement in Assam which was 129 thousand metric tonnes (MT) in 1980, suddenly increased to 197 thousand MT in 1981 and then it started to decline to 169 thousand MT in 1985 and to 156 thousand MT in 1988. With the inclusion of few mini cement plants, total production of cement in Assam gradually started to increase and reached the level of 178.8 thousand MT in 1991 and then to 275 thousand MT in 1994.

Considering the huge reserve of limestone available in the Karbi Anglong and North Cachar Hill districts of Assam some more cement production units have been set up in Assam in recent years. Besides Bokajan cement factory of CCI, the other mini and micro cement production units of Assam include- Vinay Cements Ltd. (Umrangshu), NECL (Umrangshu), Prag Shiv Cements (Sonapur). Moreover, two VSK Cement plants of 7500 TPA capacity were set up at Guwahati and Lanka (Nagaon).

Development Efforts : Considering the huge potential for the development of cement industry in Assam along with its growing demand, the Government agencies are trying to set more mini cement plant in the state. A few cement plants and paper grade lime plants have already been proposed on the basis of raw materials to be made available by the Assam Mineral Development Corporation Ltd.

The Regional Research Laboratory (RRL), Jorhat has developed Vertical Shaft Kiln (VSK) technology for production of ordinary portland cement, which has been commercially accepted in our country. RRL, Jorhat has developed the VSK technology for different plant capacities ranging from 6000 TPA to 30,000 TPA. The cement plants based on this VSK technology are low capital intensive having a short gestation period resulting in quick return on investment. Two such VSK cement plants have already been set up in Assam at Guwahati and Lanka. Again the RRL, Jorhat has entered into an agreement for a turnkey consultancy assignment worth Rs. 50 lakhs with Karbi Anglong Chemicals Limited (KACL) for a 30,000 TPA VSK Cement plant at Karbi Anglong in Assam.

Accordingly, the Karbi Anglong Chemicals Ltd. is going to establish a mini cement plant in the village Amlokhi in Diphu. The project is of a 100 TPD cement plant based on VSK technology of RRL., Jorhat. The Assam Hills Small Industries Development Corporation Ltd. is also the holder of equities of the project on direct fund participation. Means of finance has been arranged from IDBI, promoter shares, Assam Government subsidy and bank borrowing for working capital. The total cost of the project comes around Rs. 8.67 crores.

Moreover, a large cement plant of one million tonne per annum capacity is also proposed by the AIDC Ltd. in joint sector with private entrepreneurs, at N.C. Hills in Assam and the work of which has already started.

Production of Cement in the North Eastern Region

The North-Eastern region is having a rich potential for the development of cement industry. Side by side, the demand for cement is also increasing at a fast rate in the entire north-eastern region. The major cement production industrial units in Assam includes-Bokajan Cement Factory under CCI, MCCL at Cherrapunji (Meghalaya), Vinay Cements Ltd. and NECL at Umrangshu of N.C. Hills district of Assam, Virgo Cements Ltd. at Garo Hills, Prag Shiv Cements at Sonapur and VSK Cement Plants at Guwahati and Lanka.

In spite of the fact that 10-odd cement industrial units are on production in the entire north-eastern region at present and 3 more are to begin commercial production shortly, there is a standing shortfall of 3.70 lakh tonnes of cement in the north-eastern states as up to 1993. In 1994 the gap between the demand and supply ratio went far more. Total demand for cement in the entire north eastern region is projected at 10 lakh MT and all the cement producing units could contribute hardly 3 lakh tonnes. The remaining 7 lakh MT is met by the cement manufacturing units from outside the north-east.

Under the present demand supply scenario of cement in the north-eastern region, is now-a-days facing frequent scarcity in the supply of cement due to non-availability of cement from other parts of the country. Thus considering the huge demand-supply gap and sound development potential for cement projects, the North-Eastern states must take adequate steps to set up more medium mini and micro cement producing units within the region.

Coal Industry in Assam

Coal is one of the major mineral resources of Assam. Coal was first discovered in Assam in 1925. A good quantity of coal is available at Makum, Margherita, Ledo, Nazira, Lanka Daman, Jaipur and Namdam area of Assam. The Assam coal has a good demand for railway, water transport, tea gardens, cement plants and for domestic uses. Thermal electricity can also be generated with the help of these coal. Total production of coal has increased from 5.75 lakh tonnes in 1980 to 9.82 tonnes in 1991 and then to 12.92 lakh tonnes in 1994. The coal fields of Assam are under the control of Coal India Ltd. The sulphur content of Assam coal is quite high.

Shellac Industry of Assam

Shellac Industry of Assam was established at Chaparmukh, Nagaon district. A good amount of shellac would be produced in Assam and the major portion of this shellac would be utilised at the shellac industry of Chaparmukh. In future, this industry has a very good prospect. There is a good demand for shellac products in the foreign countries like America, Great Britain etc. With the help of these shellac, gramophone record, French polish, Lekars, electric insulator etc. are being produced in Assam.

Leather Industry of Assam

A good amount of raw leather is available in Assam. Thus a few tannery factory could be established in Assam. On the basis of these tannery, Assam could develop a good number of shoe making factory. Although there are some small tanneries in Assam but there is no factory for producing shoes. Assam is regularly exporting all these leather to other states of India. There is a small unit of tannery processing industry in existence at Jorhat of Assam. But its activity is centred round processing of raw materials only which it supply outside the state. At present there are 2 leather and leather products factories in Assam.

Recently, the East India Tannery Co-operative Society Limited at Badarbhita near Barpeta road township of Assam has undertaken a project of a multi-million worth of tannery, the first of its kind in entire NE region. Total investment of this project would be about Rs. 153 lakh. The tannery society of Barpeta road will not only process the raw material but also convert them into finished products. In the mean time, 10 bighas of land has already been acquired and the construction work is going on in full swing. Out of the total investment of Rs. 153 lakh, 60 percent will be met by Assam Financial Corporation, Rs. 62 lakh by the Apex Bank and Rs. 32 lakh will be given by the State Government and the remaining Rs. 20 lakh will come from ownership shares.

Moreover, there is a proposal to set up a tannery at N.C. Hills in Assam. These units will supplement the growth of a viable leather industry in Assam like packing and utility consumer materials.

Other Factory Establishments

Besides these major industries developed in Assam, a good number of medium and small scale industrial units are also operating within the state in scattered manner. These includes- two medium sized railway workshops at Bongaigaon and Dibrugarh, and engineering workshop at Tinsukia, aluminum ware factories at Bongaigaon and Karimganj, Assam Carbon Limited, India Carbon Limited, Spun Silk Mills, Cotton Spinning Mills, Assam Syntex Limited, Tihu, The Prag Bosimi Synthetics Ltd., Fruit Processing Plants, Hard Board Factory, Jax board factory, Glass factory, Vegetable (Vanaspati) factory of STATFED at Amingaon, Assam Asbestos at Bonda, Assam Ispat at Amingaon, Sawing Mills, Flour Mills, Motor repairing and engineering workshops etc.

Assam Steel Plant (SAIL) : The Authority of India Limited (SAIL) has finally decided to set up a steel plant in Assam. The name of plant is finalised as "Assam Steel Plant". The first phase of this plant will cost Rs. 44 crore which will manufacture 40,000 tonnes of galvanised plain sheets as well as galvanised corrugated sheets. The foundation of this project has already been laid on 23rd March 1997, at Dagaon in Kamrup district. This plant will go a long way in filling the demand-gap for galvanised corrugated sheets in the north-eastern region.

Although the project was initially stated to cost around Rs. 200 crore, that will become a reality only after the first phase started production. The initial plant capacity of 40,000 tonnes per annum of galvanised sheets would go up to 1,00,000 TPA in due course. The plant will not only contribute to the economic and infrastructural development of the seven states but also open up new avenues for employment. The plant is cited to have direct man-power requirement of 231persons besides having the potential to generate indirect employment for 1,000 other persons.

At present, there are only two galvanising units operating in the North-eastern region which together have a total capacity of 40,000 tonnes with a projected availability of only 32,000 tonnes. Fulfilling the need for a third plant, SAIL is setting up its Assam STEEL Plant at Dagaon in Kamrup district.

Industrial Estates : Moreover, the Industries Department of Assam has also developed 17 industrial estates in different parts of the state for the development of small scale industries. In 1993-94, total number of sheds constructed in these estates was 279, out of which 255 sheds were allotted and again out of this 164 sheds were functioning. In the mean time, 4 new industrial estates are also being constructed by the Govt.

Growth Centres : Again for the promotion and development of small scale (SSI) and tiny industrial units the State Industries Department has so far opened 7 Growth Centres in the state, the location of which being at Barpeta, Goalpara, Duliajan, Kalapahar, Bonda, Lilabari and Sariharjan. In 1993-94, total number of sheds constructed and allotted in these centres stood at 52 and 46 respectively, However, of the 42 number of sheds occupied till 1993-94, only 31 sheds were actually functioning.

Thus with the development of existing industries along with the development of infrastructural facilities in the state, it can expected that Assam will be able to develop a powerful industrial sector, provided a sound socio-political atmosphere prevails in the state.

Over the last couple of years, a good number of large and medium sector industries have been set up in the state and a few more are in the offing. Some such projects under various stages of implementation include : Industrial Papers (Assam) Ltd. at Ding, Polyester Filament Yarn project at Sipajhar, Textile Processing House at Nalbari, Cement Project at Amlokhi near Diphu, Tannery project near Barpeta Road and Galvanised Plain and corrugated sheet project at Changsari. Moreover, the fourth oil refinery at Numaligarh and the massive Gas-cum-Naphtha Cracker project in the state, when materialised, are likely to usher in a new era of industrial development in Assam in near future.

Prospect of Diversification of Industries in Assam

Industrial development in Assam is largely confined to tea, jute, and oil. While other states have a more diversified industrial structures, Assam’s industrial sector is still dominated by "miscellaneous food products"  the most important of the group being tea factories which alone account for more than 50 percent of the net output from manufacturing industries of the state. But the state possesses various natural resources which can be utilised for the diversification of industries in Assam. Yet the state could not achieve a diversified industrial development in the following areas :

(a) Forest-Based industry- This includes paper and pulp industry, plywood industry, match industry, tanning and finished leather goods industry, hard board industry, furniture and construction etc.

(b) Petro-chemicals based industry- This includes polyester textile industry, plastic, pesticides, photo film industry, resins, PVC compounds, detergents etc.

(c) Mineral-based industries- This group covers Coal processing plant, potteries and Cement industry etc.

(d) Agro-base-industry- This includes growth of sugar, jute, medicines and chemical industry and expansion of tea based industry.

(e) Textile industry- This includes expansion of Eri, Muga, silk industry and establishment of polyester fibre from B.R.P.L.

(f) Small scale industry-This can cover a wide area covering handloom, bell-metal, match, hand made paper, soap, candle, straw, fruit processing, leather goods, chemicals, garments, bread, biscuits, pencils, ropes, steel trunk, exercise books, surgical bandage, plug pins, plug socket, tyres and tubes, cement pipes, garment, spices, carpentry, jewellery etc.

The development of above mentioned industries naturally demands active interest from the Central sector, active initiative from the State sector and active participation of the private sector.

The State Government is also patronising establishment of various industries in the private sector. Besides, the State Government is also being increasingly involved in undertaking many industrial ventures of its own. As a result of these efforts, a few important resource and demand industries have come up in the State in the recent past and a few are in the offing. The process of industrial development in the State is expected to get further fillip in near future with the completion of a few diversified range of industries being set up under public and Co-operative sectors.

Since the last few years, a steady growth is observed in the number of registered factories. Total number of registered factories in the State which was 1604 in 1971 increased to 2670 in 1991. Tea factories account for about one-fourth of the total registered factories in the State. At present, only 8 factories are there in the state which employs 1000 or more workers. The product-wise classification of the factories can throw some light about the present status of diversification of industries in the State. There are Tea factories numbering 570 which account for the highest number of registered factories in the State followed by saw mills and plywood factories (461), rice/flour/oil mills (419). Among the large and medium industries, there are ten oil and oil products industry, 7 Cement and Cement product factory, 1 Fertilizer factory, 24 Cotton and Cotton products industry, 3 sugar mills, 4 Jute mills, 2 Bicycle factory, 2 Oxygen units, 3 Paper mills, 3 Steel and Steel products unit, 1 Rods & Wire Unit, 22 Wood products factories and 10 wheat products factories. Total number of large and medium size factories in Assam, as on 31st March, 1994, was 116.

The Regional Laboratory at Jorhat one of the chain national laboratories has started functioning in 1994. The charter of laboratory includes development of technology for effective utilisation of immense natural resources of the north-eastern region and to undertake long as well as short range problems which would help in the economic development and industrialisation of the region. This Laboratory with its R&D activities, has identified a number of projects along with processes, which could be developed for effective utilization of various raw materials available in this region. The identified projects are mentioned below :

(a) Chemical Industries :

(I) Phyto Chemicals : Medicinal and economic Plants which include plants like Bassil, Citronella, Eucalyptus Citriodora, Japanese unit, Lemon grass, paper mint-essence oil-mostly needed in perfumery pharmaceuticals and cosmetic industries.

(ii) Agro-chemicals-Which includes pesticides, furfural and organic chemical.

(iii) Inorganic and Mineral based chemical projects- Which include project like-Mini Cement plant with the capacity of 35 to 100 tonnes per day, oil-well cement additives (required for drilling operation in oil exploration), cement-like product from paddy husk ash. Molecule sieves from paddy husk, silica gel, silica sol and potassium silicate, water filter candles, petro-chemicals from petroleum waste.

(b) Utilisation of cellulose raw materials and Recycling of waste products : This includes the projects for production of matrix poard, Low cost roofing sheet, paper Board and paper like carbon-less copy paper.

(c) Utilisation of coal in the N.E. Region : this includes production of Carbon Blacks. Fluidized Bed combustion for power generation.

Thus the Regional Research Laboratory, Jorhat has identified a long list of projects along with the preparation of project design and process. On the basis of these designs and processes, a good number of a small and medium scale industry could be developed in Assam. Already some of these projects have been selected in the private sector for its development on the basis of raw materials available in Assam. If all these projects could be developed in Assam within the shortest possible time, a wide range industrial diversification in Assam would be possible soon.

Development efforts :

With the intention to accelerate the process of industrial development and diversification of the State. The State Government announced a package of incentives so as to attract investments, promote the establishment of new industries and to facilitate the expansion and diversification of existing industries in Assam. The package of incentives offered consists of mainly :

(i) Contribution towards preparation of feasibility reports.

(ii) Subsidy on industrial housing.

(iii) Concessional power tariff for new industries and for existing units undertaking expansion and diversification.

(iv) Sales tax exemption on purchase of raw materials and sale of finished goods for the first five years of Commercial production.

(v) Capital investment subsidy on the line of central investment subsidy scheme in the non declared backward district.

(vi) Allotment of developed lands in industrial areas etc. This package incentives comes into effect since Oct.’ 1982 and those were further included in the Industrial Policy (1991) of Assam.

The State Government of Assam has set up a host of organisations for carrying out the task of industrial development Corporation, The Assam Small Industrial Development Corporation. The Assam Hills Small Industries Development Corporation, The Assam Industrial Promotion and Infrastructure Corporation. The Assam State Textile Corporation (AIDC) has set up three industrial projects under the public sector in the State viz ; the Assam Conductors and Tubes Ltd. and the Chemical units of Associated Industries(Assam) Ltd. have also been revived and taken over by the Corporation. Other projects undertaken by AIDC and which are either commissioned or under implementation are : a 17,280 spindle capacity polyester blended yarn spinning mill Nathkuchi (Tihu), a 100 TPD Methanol plant (Expansion project of APL) with foreign know-how, a cigarette factory in Joint sector, a 7,200 TPA phthalic Anhydride plant based on raw materials from BRPL with foreign know-how and 200 TPD Mini Cement Plant at Umrangshu (N.C. Hills district). The Assam State Textile Corporation Ltd. is designed for setting up spinning Mills and other textile industries in the State. The corporation was engaged for setting up spinning mill of 15,552 spindle capacity at Noapara in the district of Bongaigaon and the project is now transferred to a private sector company.

The Assam Small Industries Development Corporation (ASIDC) is also actively engaged in building up small scale industrial base in the State and has opened a number of small scale units under its own management. Besides, the Corporation is also rendering services for the promotion of various schemes such as seed money assistance scheme. Scheduled caste/tribe development scheme, marketing assistance scheme, raw materials scheme, stipendiary training programme etc.

Besides, after announcement of new industrial policy by the Central Government in July 1991, Assam Government introduced various schemes in order to accelerate the industrial development in the State through the development of local-resource-based industries. Besides providing incentives to new entrepreneurs for attracting them to establish new industrial units, the State Government has also undertaken various measures to develop infrastructural facilities in the state.

Initially for the implementation of various schemes, Assam Government made provision of Rs. 250 lakh in 1992-93. Again the Eighth Five Year Plan has made provision for Rs. 1,200 lakh for the industrial development in Assam.

Under the new industrial policy, 1991, various schemes undertaken by the State Government includes : equity participation in the industrial projects of the Government assisted sector, sales tax exemption, advancing industrial subsidy, providing factory sheds to small industrial units, development of human resources, revival of sick industries, subsidy on electricity bill, investment of Government capital and reduction in the rate of State Finance tax.

In 1990-91, in total 2746 small scale industrial units were set up which have generated additional employment potential for 11,000 persons. On the other hand, in this year 2,201 hand trade and cottage industries were set up. Moreover, considering the increasing demand for readymade factory sheds and infrastructural facilities, the Government of Assam set up 4 Industrial Estates, i.e., one each at Digboi and Dimoh and the other two at Guwahati.

Due to giving increasing priority on large and medium scale industrial units in the Eighth Plan, in the mean time about 114 such industrial units were set up in the private and co-operative sector.

Moreover, responsibility to create market of 15 items produced by local small industrial units of Assam has been given to Assam Small Industrial Development Corporation (ASIDC). The Assam Industrial Development Corporation (AIDC) has been playing an important role to set up large and medium scale industrial projects in Assam and it set up a cement project at Umrangshu on the basis of limestone reserve of North Cachar hills at the cost of Rs. 2.40 crores. Moreover, by utilising 1.5 lakh tonnes of cement grade limestone and paper grade lime, some mini cement industrial units will also be set up.

In the mean time, the Central Government has taken a decision to set up a Gas-cum-Naphtha Cracker project in Assam. The estimated amount of expenditure of this project is fixed at Rs. 2,118.30 crores and it will generate employment directly to the extent of 2000 persons. AIDC with the help of private sector company (Reliance Group) will set up this project.

In order to set up large and medium scale industrial unit, AIDC is playing an important role through subsidised term loan and equity participation scheme. In the mean time, the Corporation (AIDC) has set up successfully the Prag-Bosimi Synthetics Limited in the joint sector near Guwahati at the total investment of Rs. 330 crores. On the basis of raw materials available from BRPL, this plant having the production capacity of 25,000 TPA has started producing Polyester Filament Yarn (PFY) and Partially Oriented Yarn (POY), which will give a boost to the vast weaving population of Assam.

In the mean time, it has become imperative for the State to embark upon the high road of liberalisation, privatisation and globalisation. Accordingly, on 29th March, 1997 the State Government introduced its New Industrial Policy, 1997 with a great promise for adopting a smooth path for rapid industrialisation in the State. The new industrial policy provides an effective thrust for "expeditious promotion and growth of all industries with a view to creating a strong industrial base and employment opportunities in various directions".

Small scale and Village Industries of Assam

Importance

In a backward State like Assam, Small scale industries have a big role to play. There is ample scope for the development of small industries on the basis of factor endowments available in the state. This development of small industries will not mobilise local resources but will also increase income and generate employment opportunities. Cottage and small industries have great importance in a agrarian economy like Assam. Rural agricultural families of the state are getting subsidiary occupation from these village industries. As these industries require minimum capital and ordinary tools and implements, thus rural families can run these industries.

At the end of December, 1995 Assam had a total of 18,637 registered small scale industrial units (i.e. units registered with the Directorate of Industries, Assam) with an employment of approximately 84 thousand persons. These included industries engaged in manufacturing various products such as tea machinery, commercial and tea chest plywood, building materials, chemicals, textile, transport equipment, food manufacturing, printing, publishing etc.

The village and cottage industries include handloom weaving, rope-making brass and bell-metal, cane and bamboo work, gold and silver work etc. these industries provide subsidiary employment to good number of people in the rural areas. Some of these industries are organised and managed by artisans and Craftsman.

With the growth and development of these Cottage and village industries, many poor families have been able to raise their income and improve their standard of living. This subsidiary occupation also promotes the habits of thrift and investment among the poor families in the rural areas of the state. Cottage industries of Assam are producing different types of artistic goods, e.g., muga and silk products which have wide market throughout the country.

In Assam, there is ample scope for the expansion of small and village industries. These industries would be able to produce different types of consumer goods to meet the demand for both the rural urban people of the state.

Growth of small industries

With the development of infrastructural facilities in the State, there is a gradual growth of small industries both in its number and sizes. In 1951, there were only 94 registered factories in Assam. The number of factories again increased to 146 in 1958. Total number of workers employed in these factories of Assam was also increased from 4,908 in 1951 to 5,320 in 1958.

A survey of small industries in the unorganised industrial sector of the state, undertaken by the Directorate of Economics and statistics, Assam, revealed that the number of small industrial units in the urban areas of the state stood at 91 in 1971-72. These small industrial units provided employment of 6,286 persons. These industrial units were in the production group of cotton textiles, Silk, Bakery, Wooden furniture, Letter Press, Biri, Saw milling, Soap, welding, Bell metal, Motor vehicle repairing. Among these industries, textile manufacturing industry had the largest number of units (365 units) followed by manufacture of transport equipments (104 units).

A Census of small scale industries, conducted in 1973-74, shows that there were only 1984 registered units in Assam in 1975-76 and the largest number were accounted for by metal products followed by units engaged in manufacture of timber product.

At the end of March, 1978, total number of small industries registered with the Directorate of industries of the State Government stood at 7562 units. These include industries engaged in manufacturing various products like tea machinery, commercial and tea chest, Plywood, building materials, chemicals etc. Again, at the end of December, 1994, Assam had a total of 17,048 registered small scale industrial units with an employment of approximately 84 thousand persons. A total of 1751 units were registered with the Directorate of Industries, Assam during 1994 as against 2310 units registered during 1993. This shows the trend in the growth of small industries in Assam. Classification of these small industries shows that in 1984 there were 2350 Agro-base industrial units, 1290 Forest-base industrial units, 2633 Engineering base industrial units, 1275 chemical base industrial units, 1326 Textile based industrial units and 8079 miscellaneous based industrial units in the State. After that, at the end of December, 1995, the total number of registered small scale industrial units increased to 18,637.

With a view to promoting and developing a chain of small industries in the State, the programme of establishment of Industrial Estates has been taken up by the State Government. These Estates will provide infrastructural estate have been set up. These are located at Guwahati, Nalbari, New-Bongaigaon, Dhekiajuli, Nagaon, Jorhat, Sibsagar, Tinsukia and Badarpur, Lahowal, Bihupuria, Gauripur, Bokajan, Digboi, Dimow and two more at Guwahati. These industrial estates have provided a total of 269 sheds for setting up small scale units, out of which 255 sheds were in occupation till March, 1994. However, only 164 factory sheds were actually functioning on that date.

Further, a number of growth centres have also been identified which aim at reduction or elimination of time lag between the date of completion of the factory shed and coming up of an industrial unit through provision of infrastructural facilities like road, power etc. Up to March 1994, the State had seven such Centres, one each at Kalapahar (Guwahati), Barpeta, Goalpara, Duliajan, Bonda, Lilabari and Sariharjan under the management of State’s Industry Department. A total of 52 sheds were provided by these centres up to that date, of which 42 sheds were in occupation.

Besides, in February 1985,the Government of Assam had decided to develop one industrial area in every district headquarters in the Seventh Plan Period. This has no doubt, created a congenial atmosphere for the successful growth of small industries in the State.

During the Seventh Plan, about 8,000 small industrial units were set up in Assam.

After that, in August, 1991 the Central Government introduced a special New Small Sector Industrial Policy. On the basis of this policy, the Government of Assam formulated and announced its own industrial policy, 1991. In this policy, special measures were undertaken to set up various types of Khadi and village industries, small, tiny and ancillary industries.

As the State Industrial Policy, 1991 has failed to initiate the process of industrialisation in the State under the regime of economic reforms, thus the new AGP Government has introduced its New Industrial Policy, 1997 to embark upon the high road of liberalisation, privatisation and globalization with a great promise for adopting a smooth path for rapid industrialisation in the state.

Industrial Growth Centres :

In the mean time, the union Ministry of Industry has approved three industrial growth Centres in Assam in February 1997, for the first time and the first of which will be set up in the Sonitpur district. A total outlay of Rs. 30 crore has been sanctioned for the entire Sonitpur project to be developed and completed during the Ninth Five Already 1500 bighas of land have been handed over for this industrial growth centre. The proposed industrial growth centre would greatly benefit and brighten the prospect of industrialisation of this most backward region in the north bank of Brahmaputra. The centre will act as the agency to facilitate provision of all kinds of requirement for setting up various small and medium industries in the complex. Assistance will be given for preparation of investment and proposals, banking and financial support, infrastructure facilities like electricity, telecommunication, transport etc. and also for the development of technical and managerial skills. The centre is also expected to serve as a catalytic agent for the promotion of industries and business ventures outside the Balipara complex to feed the units in the centre and also in marketing their products.

Moreover, in order to advance financial assistance to small scale industries of Assam, the Assam Small Industries Development Bank of India (SIDBI) sanctioned loan to the extent of Rs. 75 crores in 1991-92 and 1992-93, out of which Rs. 65 crore has been disbursed. This bank has prepared a long term plan to assist the cottage and small industries of Assam in different manner.

Rural Industries Programme of SIDBI :

The Small Industries Development Bank of India (SIDBI) inaugurated the Regional Development Centre (RDC) Guwahati on March 16, 1996 for the development of small scale industries in the state.

A comprehension Rural Industries Programme (RIP) is currently being implemented in Assam by the SIDBI, together with ten other states in the country, which have been identified on the basis of the largest concentration of rural population below the poverty line. The programme aims at commercial exploitation of local resources in order to set up rural industries with the involvement of local institutions for effective co-ordination and implementation. Fund support is given to NGO’s for on lending to the rural poor as well as for generating employment for women under Mahila Vikash Nidhi. Besides, support is also given for conducting Entrepreneurship Development Programme (EDP) in rural areas. SIDBI has so far provided funds amounting to Rs. 258.28 lakh to 33 NGOs in the country which would help about 12000 rural people in their income generating activities.

Growth of Khadi and Village Industries

Khadi and Village Industries are playing a very important role in the economy of Assam. Different types of Khadi and Village industries are operating in the various parts of the State. As per information made available by the Khadi and Village Industries Board, Assam, a total of 660 bee keeping centres, 488 oil extraction centres, 2125 pottery centres, 177 hand pounding (rice processing) centres, 1476 gur and khandsari centres, 59 khadi (cotton & silk) production centres, 26 soap making centres, 15 cottage match and agarbatti factories, 180 footwear unit, 17 hand paper unit, 765 cane and bamboo centres and 44 gobar gas plants were in operation in the State during 1994-95. These Khadi and Village Industries provided employment to nearly 93 thousand persons. Following are the values of production by a few of these centres during 1994-95 : Bee keeping centres- Rs. 123.35 lakhs, oil extraction centres- Rs. 468.75 lakhs, pottery centres- Rs. 173.50 lakhs, gur and khandsari centres-Rs. 330.00 lakhs, Khadi production centers-Rs.122.81 lakhs and soap making centres Rs. 49.14 lakhs.

Total value of the production of Khadi and village industrial units under the Assam Khadi and Village Industries, Board has increased from Rs. 15.67 crores in 1989-90 to Rs. 20.98 crores in 1994-95. Total number of employment generated by these industrial units was 0.94 lakhs in 1994-95.

In the field of khadi and village industries, various schemes are under implementation in the State. For the development of handicrafts in the State "Common facility centre" have been initiated for red glazed pottery at Barpeta, brass-casting at Hajo, brass-bell metal at Sarthebari and dying of yarn at Soalkuchi. The Assam Khadi and Village Industries Board are running 20 training-cum-production centres in the State. Further, for the marketing of khadi and village industries goods, the board has been running 34 Khadi Bhandars in different commercial areas of the State.

The Khadi and Village Industries Commission (KVIC) have recently decided to set up a raw material bank in the north-eastern zone for storing cotton, eri muga etc. The raw material bank forms a part of the development strategy drawn up for the north-eastern zone to give a boost to KVIC activities in the NE region.

The KVIC has also proposes to set up a central "Vastragar" as well as central godown for village industries for extension on marketing assistance to tiny units.

The other measures undertaken for strengthening KVIC in the NE zone included introduction of special funding patterns for infrastructural facilities and managerial support, enlargement of organisational base for rapid implementation of activities by enlisting new institutions and setting up of mother units to feed small and weaker units by extending all input supports to viable institutions in the NE zone, out of which 38 are in Assam, one each in Meghalaya and 15 Mizoram, two in Arunachal Pradesh, four each in Nagaland and Tripura and in Manipur.

Handloom Sericulture and Weaving

Handloom, sericulture and weaving play an important role in the rural economy of Assam. The State is particularly famous for her variety of handloom products such as eri, muga and silk fabrics. It is worthy to mention here that almost every household in the rural areas of the State are connected with the weaving industry. Being a production and employment oriented industry, it can reshape the rural economy to a great extent. The State Government is taking this opportunity through the establishment of a number of eri-seed grainages, eri-concentration centres, sericulture farms. Tassar farms, muga farms, huge food plantation centres and mulberry silk farms etc. in different parts of the State.

The Sericulture Training Institute and the sericulture research station at titabar are the two institutions which are imparting training and undertaking research works on sericulture in the State. The Training Institute has continued to impart training to trainees not only from Assam but also the neighbouring states of the Region.

The handloom industry of Assam is well known for its quality and originality. It is estimated that there are more than 7 lakhs of handloom in the State which provides part time and full time employment to nearly 8 lakhs of people. It is also worth mentioning here that almost every household in the rural areas of the state are connected with the weaving industry. But only a small proportion of State’s 7 lakhs looms (estimated in 1974-76) are operated on commercial lines. A good number of these looms are operated mostly for self-utilisation.

The use of modern technology in the textile industry of Assam is far from being satisfactory. In order to revitalise the handloom sector, various schemes have been introduced which includes providing avenues for the production of quality fabrics, modernisation of looms, motivation of weavers for taking up the industry on commercial lines, extension of training facilities to artisans etc. During 1994-95 there were 263 Weaving Demonstration Circles under the supervision of the Directorate of Sericulture and Weaving, Assam, which covered a total of 7819 villages of the State. A total of 2.81 lakh part-time weavers and 26171 whole-time weavers were engaged through these circles during 1994-95, and the Directorate also distributed 7254 handlooms in different areas of the State.

Assam’s Handloom and Textile Industry which support nearly 20 lakh people both directly and indirectly is now facing a tough challenge. Massive irregularities, continued negligence and lack of foresightedness due to which this important industry which has still remained unorganized despite engaging nearly 10 percent of the total population of state, at least partially, have forced the industry towards its premature death. It may be mentioned that against a target of producing 155.50 million metric tonnes (MT) of clothes, the Handloom and Textile Industry could produce only 133.44 million MT of cloth in 1993-94 and Department has also failed miserably to supply adequate power looms ; and there are only 1372 power looms all over the state. Due to shortage of electricity, many industries like handloom and textile industry in Assam are now facing premature closure.

The department for last several years failed to supply the required quantity of yarn to the weavers the department requires 165.25 lakh kg. of cotton, 90,000 kg. of silk, 1.80 lakh kg. of Wool, 42,000 kg. of muga, 95,000 kg. of eri and15,000 kg. of other varieties of yarn every year. The industry is incurring losses due to failure to supply required quantity of yarn to the weavers in time.

In respect of sericulture, there are 389 institutions engaged by the Department of Sericulture for the development of eri, muga, mulberry and tasar, but it also a common fact that the silk industry of Assam has not progressed as expected. Assam, with about 2.70 lakh persons engaged in sericultural activities offers good scope for development and is also the major muga and eri silk production state in the country and enjoys monopoly in the production of muga silk. The Central Silk Board (CSB) has already ten institutions for the development of mulberry non-mulberry silk in Assam. The prominent among them are Regional Muga Research Station, Boko, Regional Sericulture Research Station, Titabar and a Muga Seed Development Project, Guwahati.

In the mean time, the state had developed some basic infrastructure for the production of different types of silk, i.e., muga, mulberry etc. In 1995-96, for the development of eri, the state has about 26 eri seed grainages, 91 eri concentration centres and 22 eri spinning units. For the production of muga, the State has 23 muga forms, 61 village grazing reserves and 15 muga reeling units and also for mulberry, the State has 12 mulberry farms, 102 collective mulberry gardens, five mulberry gardens and 27 reeling units. There are also 5 tasar centres in Assam. In the case of Sericulture, the State had 8,127 sericulture villages under the supervision of the Directorate of Sericulture & Weaving in 1994-95. These villages engaged nearly 1.28 lakh families in eri-culture. 28 thousand families in mugaculture and about 39 thousand families in pat-culture. In 1994-95, the production of silk yarn from the sericulture villages was of the order of 75,477 kg. of muga, 23,500 kg. of pat. Besides, the Directorate also maintains a number of sericulture farms, eriseed grainages, basic muga seed farms, eri-concentrations centres, reeling units etc. In 1988-89, total production of Raw Silk and silk yarn in Assam were 12.67 lakh kgs.

In order to activate the sericulture industry, the state Government had at the instance of Central Silk Board requested Agricultural Finance Corporation Ltd. to formulate the integrated sericulture development project for Assam, covering mulberry, muga and eri 1986. Though the report was submitted in 1987 but it could not be implemented due to administrative and other constraints. In view of the progress and developments that had taken place in sericulture industry during the liberalization era, a need was felt to update the report. The AFC prepared a fresh project report in 1994 and submitted the same in 1995. But the implementation process has not yet been started.

The project aims at increasing the production of eri, muga and mulberry over a period of 10 years from the present level of 75,416 tonnes to 2,75,777 tonnes and in terms of value, the value will increase by five fold i.e., from Rs. 23 crore to Rs. 108 crore. The total investment called for is Rs. 177 crore and the total employment generation will be 75,000 man years. The project, if implemented, will also improve the socio-economic condition of the people from the present yearly income level of Rs. 1,225 to Rs. 5,750 per family adopting sericulture and will also change the present practice of kitchen garden sericulture to commercial sericulture.

Thus considering the high potential and suitable environment for the development of sericulture industry, it is expected that concrete steps be taken by the concerned agencies to develop the sericulture industry in such a manner so that it can attain the commercial viability at its earliest.

Bell Metal Industry

Among the Cottage Industries of Assam the position of bell metal industry is next to handloom industry. Sarthebari of Barpeta district is the main Centre of this hereditary cottage industry. This is household industry where workers are mainly unpaid family members. The industry produces various types of utensils made of brass and bell metal and other decorative pieces with the help of simple traditional tools and equipments. But the industry has not been modernised due to want of finance and lack of technical know-how. This industry is facing competition from large scale bell metal, aluminum and stainless steel industries. There is no definite system for supplying raw materials to these industries at a reasonable price and also to supply cheap bank credit. Thus due to all these difficulties faced by this industry the very existence of this industry is at stake.

For the development of this bell metal industry one "Common facility service Centre" has been established at Sarthebari. This centre provides some modernised common facilities to these bell-metal artisans. Besides, the Khadi & Village Industries Board is also helping in marketing its product through their Khadi Bhandars established at various commercial areas of the state.

Besides, the Small Industries Development Bank of India (SIDBI) has decided to boost the bell metal industry at Hajo. The Bank has plans to help improve the design, production and marketing of the bell metal products in big way. For this purpose artisans will be brought from Moradabad. The entire cost will be borne by the SIDBI. In 1993-94, this modernisation works has already been started.

North East Handloom and Handicrafts Development Corporation (NEHHDC)

The North East Handloom and Handicrafts Development Corporation (NEHHDC) have been playing an important role in the promotion and growth of handloom and handicrafts industry of Assam and other North-eastern states. This corporation was established in 1977. This corporation offers the facility of -(a) supply of raw materials, (b) advancing working capital and (c) marketing arrangements to handloom and handicrafts industrial units of this region. With the patronage of this corporation, the handloom products of Assam and North-eastern states has been sent to Brussels, Tokyo, New York, Berlin etc. for exhibition. Moreover the handloom products of Assam is also having a good market in the countries like England, Italy, France, Switzerland, Singapore, Saudi Arabia etc. Like the handloom industry, the handicrafts industry of Assam as well as of other north-eastern states is also a potential industry. The Assam Government Marketing Corporation and North Eastern Handloom and Handicraft Development Corporation have taken the responsibility for the modernisation and market diversification of the products of handicrafts industry like bamboo and cane works, wooden works, doll making, ivory works etc.

Problems of Cottage and Small Industries of Assam

Although the heritage of small and cottage industries in Assam is very rich but these industries are handicapped with innumerable difficulties . Some of these important difficulties and problems faced by cottage and small industries are enumerated below :

Firstly, ignorance, illiteracy and conservative attitudes of the people connected with these industries are standing in the way of modernisation and expansion of cottage and small industries in Assam. Due to ignorance these industries are using outdated tools and old methods of production and thus could not keep pace with other sectors of the economy. They fail to adopt newer and scientific methods of production and thus produce old designed traditional goods. This is no doubt a big problem for this industry.

Secondly, dearth of capital is the next problem of the cottage and small scale industries in the state. Rural artisans and craftsmen are very poor and thus they depend on village money lenders to meet their financial needs. As the village money lenders charge high rates of interests  the cost of production of these industries is raised. Necessary funds are not made available to the rural artisans and craftsmen from the commercial banks and other financial institutions like Assam Financial Corporation. Thus for the want of finance, these industries cannot modernise their production process.

Thirdly, scarcity of raw materials is next major problem faced by cottage and small scale industries in the State. As they are facing the difficulty of getting regular supply of raw materials at a reasonable price, this creates a problem for smooth functioning of these industries. This retards the growth and expansion of these industries.

Fourthly, absence of proper training facilities to the artisans is the next hurdle which these industries are facing. Thus in the absence of proper training, the artisans are still following outdated methods and produce goods of old design and styles.

Fifthly, lack of proper marketing facility stands in the way of expansion of these small and cottage industries. Due to this absence of proper marketing arrangements these industries sometimes go for distress sell of their products to the private dealers at a poor price.

Lastly, the cottage and small industries of the state are facing increasing competition from the large scale organised industries. Due to this high cost structure poor quality and design, they cannot stand in the competition with the organised industries and thus their very existence has been threatened.

Remedial Measures to solve the problems of Cottage and Small Industries.

The cottage and small industries of the state have been playing an important role in building the state’s economy. Even with the growth of large and medium industries these small industries are still maintaining their importance, providing a good volume of income and employment in the rural areas. As these industries are suffering from may loopholes, to plug these loopholes following remedial measures are important :

Firstly, efforts are made for modernisation and expansion of these industries. Workers engaged in these industries should be acquainted with modern scientific technique and methods of production. Steps  must be taken to provide improved tools and implement it  at fair prices.

Secondly, commercial banks and other financial institutions should come forward with various schemes of short term and long term credit for the cottage and small industries in the state. Moreover, credit should be made available at cheaper rates, these will help in other expansion and diversification of these industries in the state.

Thirdly, proper agencies and scheme should be developed for supplying raw materials to small and cottage industries at convenient time and rates.

Fourthly, necessary efforts should be made to train workers of these industries. Thus arrangements are to be made for setting up training institutes at different places of the state for the said purpose.

Fifthly, proper marketing arrangements should be developed in different parts of the state for the smooth sale of the product of these industries. This arrangement will save the workers and artisans from the clutches of middleman.

Sixthly, more "common facility service centre" should be developed in the state in and around these small and cottage industries from where these industries would get all the necessary common services in times of their need.

Lastly, Industry Department of the state should chalk out plan for the modernisation and expansion of these small and cottage industries and involve all these industries into such plan.

Government’s effort

The State Government of Assam has introduced different measures to sort out difficulties of the small and cottage industries of the state during these 44 years of planning. Steps have been taken with some specific measures to revive and develop these industries during the plan period.

The state Government has introduced a long-term scheme of advancing loans at cheaper rates to these industries. Besides, Assam Financial Corporation, Co-operative Apex Bank and the nationalised Commercial banks are also offering long-term credit to these small and cottage industries.

Further, the Government has taken steps to offer basic infrastructural facilities for the smooth growth of small industries in the state. With this purpose, 17 industrial estates have been built up at different parts of the state to extend basic facilities. The Government has also taken the initiative to supply improved quality of adequate raw materials at fair prices to these industries. Besides, some "common facility service centre" have been established in some selected places where there is a concentration of small and cottage industries. These centres are offering some common facilities to these industries. Some Growth centres have also been developed by the State Government for the speedy development and growth of small industries in the state. Moreover, some training centres have also been created by the Government throughout the state to impart necessary skill and know-how to the artisans, craftsmen and workers. The State Government has also set up emporiums and Khadi Bhandars in various towns to provide a good market for the product produced by these small and cottage industries.

Further, the state Government has set up a host of organisations for the development of small and cottage industries in the state. These includes : The Assam Small Industrial Development Corporation, The Assam Hills Small Industries Development Corporation, Assam State Textile Corporation and Khadi and Village Industries Board.

The Assam Small Industries Development Corporation (ASIDC) is actively working for building small scale industrial base in the state. The Corporation has also opened a number of small scale units under its own management. The Corporation has also been engaged in the promotion of various scheme, marketing assistance scheme, scheduled caste/tribe development scheme, marketing assistance scheme, raw materials assistance scheme, stipendiary training programme etc.

During the Seventh Plan about 8000 small industrial units were established. In 1990, about 2,030 new SSI units were set up. In 1990-91 all total 2746 new SSI units were established which have generated employment of more than 11,000 persons. In 1992 about 2835 new SSI units were established in Assam. On the other hand, in 1990-91, about 2201 cottage and handicrafts industries were established. Moreover, considering the growing demand for factory sheds and other infrastructural facilities, the State Government has started to develop 4 more industrial estates-one each at Digboi and Dimoh and two more at Guwahati. Taking these new 4 industrial estates, the total number of industrial estates in Assam would be now 17. Moreover, in order to create demand for the sale of 15 commodities produced by local small scale industrial units, the State Government has assigned the responsibility to Assam Small Industries Development Corporation (ASIDC).

Further, the State Government announced a package of incentives to attract investments, promote establishment of new industries and to facilitate the expansion and diversification of existing industries in the state. These incentives include, contribution towards preparation of feasibility reports, subsidy on industrial housing, concessional power tariff, sales tax exemption on the purchases and sales of the company, capital investment subsidy and allotment of developed land in industrial areas.

In the mean time, on August, 1991, the Government of India announced one new Small Sector Industrial Policy, 1991 separately for the development of small industries. On the basis of this policy, the Government of Assam has announced its Industrial Policy, 1991. This policy has undertaken certain special measures to provide incentive to set up various types of khadi and village industries, small, tiny and ancillary industries for the balanced regional development of the state.

During the Eighth Plan, the State Government has introduced 14 schemes in order to provide incentive to local entrepreneurs to set up industries and for accelerating the pace of industrialisation of the state. As per Government estimate, about 2610 industrial units in the handicrafts sector has been established which have generated employment to 7,492 persons. During this period, scheduled caste and scheduled tribe entrepreneurs have set up 504 and 567 small industrial units respectively. Through another industrial scheme, 3480 educated unemployed youths have received certain benefits. Moreover, the State Industries Department has selected 12 entrepreneurs to produce paper grade lime for supplying it to Hindustan Paper corporation. Again this department has also selected 10 entrepreneurs to set up mini and micro cement plants in Assam on the basis of local available resources. Therefore, due to all these efforts, total number of registered small scale industrial units has increased to 20,552 in January, 1994. As per this new industrial policy the State Government has taken certain steps to set up new industrial units in the rural areas. Thus the future of this small scale industry sector depends upon the successful implementation of these measures.

Thus all these reveals that an industrial climate is being gradually created in the State and thus the state will be able to develop a solid base of small scale and cottage industries in the years to come.

Future Prospect of Small Scale Industries in Assam in view of the Current Economic Reforms

Assam is endowed with huge volume of different types of natural resources like mineral forest resources, water resources etc. However, the state is yet to experience industrial development on a scale achieved by many states in the state of the country. The current economic reforms introduced in India in the form of industrial policy reforms, fiscal policy reforms, monetary policy reforms, foreign investment policy reforms, foreign trade reforms etc. with the sole objective to bring a new element of dynamism in the process of economic growth of the country. Economic reforms have broadly widened this scope of industrialisation in the country.

Assam being a industrially backward state, having a huge potential for industrial development, can be able to make much headway in the path of industrialisation under the current process of economic reforms. In this respect, small scale industries have a special role to play in the industrial development of the state. The new Small Sector Industrial Policy, 1991 introduced by the Central Government has made ample provision to boost the growth of small scale industries. Moreover, keeping in conformity with the Industrial policy of the Centre, the State Government had also formulated its Industrial Policy, 1991where it made ample provision to ensure balanced regional development through rapid promotion of a host of Khadi and village industry, cottage industry, tiny, small and ancillary industries throughout the state on the basis of the techno economic potential surveys. But unfortunately, the Industrial Policy, 1991 could not create much impact on the development of industrial sector of the state. Thus in order to embark upon the high road of liberalisation, privatisation and globalisation, the State Government introduced its New Industrial Policy, 1997 with a great promise for adopting a smooth path for rapid industrialisation in the state. Thus under the new industrial policies introduced by both the central and the State Government, the future prospect of small scale industries in Assam is quite bright.

Secondly, under the fiscal policy reforms, the Central Government has made provision for either tax holiday or tax concession to the newly developed industries in a backward state like Assam. Such tax reliefs have brightened the scope for the promotion and development of small scale industries in an industrially backward state like Assam.

Thirdly, the Central Government in its 1995-96 Budget has made provision for setting up the North Eastern Development Finance Corporation Ltd. (NEDFi) and accordingly, on 23rd February, 1996, the NEDFi was set up with this main object to provide finance and other facilities for the promotion, expansion and modernisation of industrial and infrastructural project in the North eastern region. NEDFi has also made special provision for financial support, data bank etc. for the small scale industries of the state, which has already brightened the prospect of the development of small scale industries in Assam. The NEDFi will concentrate on downstream petrochemical units, plantations, sericulture cane and bamboo projects.

Thus in view of the current economic reforms, it is observed that the prospect of small scale industries in Assam is quite bright. But the ultimate success of economic reforms in promoting small scale industries in the State depends finally on the improvement of law and other situation of the state which will simply create suitable environment conducive for industrial development of the state. Moreover, in order to promote different types of small industries based on local resources, local entrepreneurs should come forward and participate actively in the industrialisation process of the state.

Considering the current situation prevailing in the state, it can be finally observed that although the current economic reforms has already created a favourable impact on the industrialisation process of some of the industrially developed states but it could not create any considerable impact on the process of industrializing in Assam. But considering the rich resource base, it can be observed that the prospect of industries, especially of small scale industries, is quite bright, provided an investment-friendly climate is created in the State.

Agro-industries of Assam

Introduction

Agro-industries include all those industries which could be developed on the basis of agricultural produce. Assam being an agricultural state, possesses wide scope for the development of agro-based industries in its various parts. These include tea, Jute, Sugar, fruit processing, medicines, chemicals sericulture and weaving, paper boards, hard boards, insecticides, building materials, coffee, rubber etc. The Agro-industrial potentialities of some crops have already been exploited in the State and these include tea, Jute, Sugarcane, fruits. The other potentialities  still largely remain untapped. If all these potentialities could be developed, the economy of the state would be much benefited out of it.

Role

Agro-industries of Assam are playing a very important role in the economy of the State. Tea industry is the biggest agro-industry of the State. The economy is dominated by this tea industry, influencing both the income and employment of the State. Following are the important roles of this agro based industries in the State :

1. Utilisation of huge volume of agro-based raw materials and agro-waste is possible with the growth of agro-industries in the State. Assam is possessing huge volume of agro-based raw materials and agro-waste which  still largely remain unutilised. Utilisation of these resources could supplement income of the agriculturists in the State.

2. Development of agro-industries would increase the job opportunities for huge number of population in the State. Agro-industries, mostly being a labour-intensive industry can engage a good number of workers both male and female. Tea industry of Assam alone provides employment to more than 5 lakhs of persons daily. If other agro-based industries materialise fully, the problem of unemployment could be easily solved in the State.

3. Agro-based industries of the State are contributing a good portion of State income. As these industries can provide employment to huge number of workers thus a huge section of rural people derives their income from these industries. Thus it is a source of livelihood to a good number of people and their level of living has been improving with the gradual growth of these agro-industries in the State.

4. With the growth of various agro-industries in the State many agricultural produce and agricultural waste are gradually getting market easily. If all these industries could not be developed in various parts of the State, a good market for agricultural raw materials and agricultural waste would be created. This would, no doubt boost the State’s economy.

5. Agro-based large and medium industries have an important role in the development of cottage and small industries of the State. A good number of cottage industries would also be revitalised with the growth of these agro-industries.

6. This will help good in the creation of industrial climate in the State. The expansion of tea industry in Assam has led to the growth of many small industries viz., industries producing tea machineries and implements, tea chests and plywood industry etc.

Problem of agro-based industries

Although there is a huge potential for the growth of agro based industries in the State but problems faced by these industries are always going against its expansion and growth. The main problems of these industries are enumerated below :

1. Inadequate investible resources : Agro-based industries in the State are facing the problem of getting investible fund from external sources. They cannot collect sufficient fund for their modernisation. They are not getting sufficient bank credit for meeting their purposes. Further, in spite of huge development potential, many agro-based industries could not be developed due to lack investible resources.

2.Lack of transport and communication facility : Inadequate transport and communication facility in the State is the next major hurdle for these agro-industries in the State. This creates problem for their collection of raw materials and in the sale of their products. Further, the transportation cost in this state is also quite high in comparison to other states which always goes against the growth and expansion of both and old agro-industries in the State.

3. Problems of marketing : Inadequate marketing arrangements are the next drawback which these agro-industries are facing. Excepting tea industry, other agro-industries in the state are facing acute problem of marketing of their products. There are no proper marketing arrangements for this product of agro-industries and transport and communication gap is also adding to this problem. In the absence of marketing facilities these industries are sometimes bound to go for distress sale. This creates disincentive for its expansion and growth.

4. Lack of technology : Agro-based industries in the state are also suffering from lack of technical know-how. Proper technology has not been developed which always goes against the modernisation of these industries in the state. These agro-industries are still following old technique of production and thus producing old style products. This creates difficulty in the marketing of their products.

5. Lack of initiative and enterprise : Agro-based industries in the states could not achieve sufficient rate of growth and expansion due to the lack of initiative and enterprise from the part of local entrepreneurs in the state. In spite of possessing a huge development potential for the growth of agro-industries, the state could not achieve sufficient development in the field of agro-based industries. Proper utilisation of these huge agro-industrial potential require active initiative and enterprise from the local entrepreneurs.

Agro-industrial potentialities

Assam is blessed with vast agro-industrial potentialities. Some of these agro-industrial potentialities have already been exploited. These include tea, jute, sugarcane, pineapple, orange and some other fruits. But other potentialities are still largely remaining unutilised. The richest agro-industrial potentialities which can be developed in the state are mentioned below.

Citronella, an aromatic crop, recently has emerged as an important crop with much industrial potentiality. Similar to this, rubber and coffee are two other crops which have shown potentiality of large scale cultivation in the state. Another important group of crops which is yet to be explored but having a high potential is the spice crops. These include ginger, black-pepper, turmeric, large cardamom and cinnamon.

There are plants like yams, tapioca, sweet potato and maize which are widely grown in this state. These plants are important sources of carbohydrate and starch and thus can be utilised for producing starch power and ingredient of livestock feed. Soya bean also grows extremely well in some hilly parts of Assam along with other North-Eastern States. Oil and nutritious Soya protein food can be produced from soybeans. Besides, soybeans can also be used as an ingredient of livestock feed as it possess high protein contain.

Ramie is another underutilized plant. It has a great prospect of being grown in Assam which could be utilised as a source of blendable fibre for the polyester complex proposed to be established there. Besides there are huge variety of orchids growing wild in the various parts of the state which have sufficient potentiality in the export market.

Utilisation of agro-waste is another area on which good number agro-industries could be developed in the state. The Regional Research Laboratory (RRL) established at Jorhat has prepared many schemes for the development of agro-based industries of different types. The laboratory has already prepared the technique and designs necessary for these projects. These include;

(a) Photochemical : The laboratory has developed know-how for the cultivation of various medicinal essential oil bearing and other economic plants like Baseil, citronella, Eucalyptus, citriodora, Japanese mint, lemon grass, pepper mint etc. The Laboratory has already designed a suitable distillation plant for these above projects.

(b) Agro-chemicals : The laboratory has also developed technology and necessary design for producing agro-chemicals like pesticides (phosphamidon, quinophas), furfural (industrial chemical) and organic chemicals on a commercial basis by utilising agro-waste of the state. Rice straw, paddy husk, jute stick and baggage have been used for the production of furfural.

(c) Building materials and others: The laboratory has developed a process for making masonry cement using paddy husk ash on commercial basis. Molecular sieves have also been produced by the laboratory from paddy husk. Similarly, jute stick, biogases, paddy straw and decaffeinated tea waste have been utilised for making paper boards and building materials. The laboratory has already prepared manufacturing details along with information for machineries etc. for setting up small as well as medium size paper board mills from fibrous raw materials and agro-industrial waste.

Besides those Agro-chemicals identified by the R.R.L (Jorhat) Assam has the potentiality of producing certain other agro-chemicals. Ethanol and its derivative can be produced from sugarcane and tapioca.

Citric Acid is the chemical which can be produced in good quantity from a large number of citrus species available in Assam along with other North-Eastern states. Some of these species contain very high percentage of citric acid. Production of enzymes is the next prospective area which needs exploitation. These include pramalin from pineapple waste and papain from papaya. Engenol a suitable ingredient for preparation of perfumery chemicals can also be produced in the state from Tezpatta (cinnamomum taranta) which is available in large quantity both in Assam and Meghalaya.

Further, for producing biomass as a source of energy as well as for making paper boards weeds like water hyacinth has been successfully utilised.

Another established agro-industry of Assam is sericulture. Assam has the potentiality of raising of all the four varieties of silk worm, namely, eri muga, mulberry and oak tsar. Thus the development potential of these sericulture industry is very good.

Assam is also well known for its huge forest resources. Proper utilisation and management of these forest resources like bamboos, canes, soft wood etc. will be able to develop a good number of land based enterprises which in turn will generate sufficient employment opportunities.

Steps needed

Considering all the potentialities and problems of these agro based industries some steps need to be taken for converting the endowments into assets. These steps includes developing - (a) a package of feasible technology, (b) a package of service to the people involved in growing in and utilising the technology for developing suitable enterprises and (c) a package of public to create the needed environment of growth. Steps are also needed to solve the problems of transportation, communication and marketing. Sufficient incentives in the form of subsidies, duties, tax exemptions etc. have to be offered for providing initial impetus. Steps are also to be taken for avoiding internal competition within the region for the market.

It is also necessary to gear up research and development (R&D) efforts in this area. More  investments are required in this field. It is important to consider the use lf land and water resources (agro materials) in a scientific way after paying due consideration to ecology, energy consumption, economies and employment generation.

Considering the inherent problems of the State, sufficient stress must be laid for the development of various types of land and water resources potential. If these agro-industries can be developed properly, these will help the State in increasing production, generating gainful employment and also in the increase of income of rural people of the State.

Industrial Finance in Assam

Institutional finance is an important part of industrial finance everywhere. Sufficient flow of institutional finance is extremely essential for the successful development of industries in an area. Institutional finance is also playing a vital role in the process of industrial development in various states of the country. But the flow of institutional finance in Assam is still at a very low ebb in comparison to its flow in other states of the country. Thus one of the basic reasons for industrial backwardness of the State is the inadequate availability of required finance.

Commercial banking sector is advancing a big portion of institutional finance for the industrial development of each State. In Assam, total outstanding credit of scheduled commercial banks to the industry sector of the State, at the end of December, 1979, stood at Rs. 75.4 crores only of which Rs. 18.3 crore were meant for small scale industry sector. The share of this industry sector out of total outstanding blank credit was nearly 40 percent. This share of State compares very unfavorably with Rs. 2442 crores (58 percent) of Maharashtra, Rs. 1334 crores (70 percent) of West Bengal, Rs. 815 crores (66 percent) of gujarat, Rs.979 crores (57 percent) of Tamil Nadu, Rs. 295 crores (55 percent) of Haryana, Rs. 638 crores (47 percent) of Uttar Pradesh and Rs. 9863 crores (48 percent) for all India. At the end of December, 1980 total outstanding credit of scheduled commercial banks to the state increased to Rs. 104.7 crores which includes Rs. 21.3 crores for the small scale industry sector. Thus, the industry sector shared nearly 46 percent of the total outstanding bank credit in the State.

So far as the role of scheduled commercial banks in the State’s industrial sector is concerned, it is revealed from RBI publication, "Basic Statistical Returns, Bank Credit, Quick Estimates, June 1986" that the share of the industry sector in the total outstanding bank credit in the state stood at 40.4 percent at the end of June, 1986 as against a comparatively higher share of 47.2 percent at the end of December 1982 was 45.8 percent. Of the total outstanding credit, as at the end of June, 1986, the small scale industrial sector accounted for nearly 12 percent of the total.

Industrial Credit and Investment corporation of India Ltd. (ICICI) opened a development office at Guwahati in February 1982 with the intention to serve the needs of north eastern region. The ICICI has so far assisted 18 industrial projects of which 14 projects are established in Assam. While looking at the figures of financial assistance sanctioned and disbursed by various all India financial institutions it is found that Assam compares very unfavourably with many other states in the country. For example, the average per capita assistance sanctioned by these all-India institutions up to the end of March 1982 amounted to only Rs. 61.9 lakhs in Assam compared with Rs. 213.9 lakhs in Gujarat, Rs. 458.0 lakhs in Maharashtra, Rs. 292.6 lakhs in Tamil Nadu, Rs. 287.1 lakhs in Karnataka and Rs. 270.5 lakhs in Punjab.

In respect of performance of Industrial Finance Corporation of India (I.F.C.I.) during the plan periods, it is found that during the First Plan I.F.C.I. sanctioned financial assistance increased to Rs. 165.29 lakhs during the Second Plan and to Rs. 363.00 lakhs during the Third Plan in Assam. During the Annual Plans assistance was Rs. 78.50 lakhs only. During the Fourth Plan the net financial assistance from I.F.C.I. to Assam came down Rs. 203.00 lakhs and then to Rs. 249.00 lakhs in the Fifth Plan. Thus the aggregate assistance from I.F.C.I. to Assam till the Fifth Plan was Rs. 1103.79 lakhs.

The track record of this financial institution (IFCI), like that of any other operating from this region is a dismal one. During the period from 1948 to 1995, the IFCI had sanctioned only Rs. 125.44 crore to some industrial projects in Assam which is as low as 0.5 percent of its sanctions vis-à-vis the rest of India. Moreover, the North-eastern regional office of the IFCI is recently on the verge of closure following a directive from its higher authorities to transfer all its files to the Calcutta regional office as a part of restructuring of the IFCI.

It would be better to look into the position of Assam vis-à-vis some other states of country in respect of amounts sanctioned and disbursed by various all India financial institutions (covering IDBI, IFCI, ICICI, LIC, UTI, GIC, IRCI, SFCs and SIDCs) up to the end of March 1982 as well as during 1981-82 from the following table:

In 1981-82 total amount of industrial loan sanctioned by these financial institutions to Assam was Rs. 11.99 crores against which Rs. 7.42 crores was only disbursed. Out of cumulative amount of loan sanctioned to the extent of Rs. 123.11 crores by these institutions to Assam up to the end of March 1982, the total cumulative disbursement was only Rs. 108.75 crores, which was 88.3 percent of the total amount sanctioned.

Further, this cumulative amount of loan sanctioned to Assam up to the end of March 1982 was only 1.08 percent to that of all-India as against 20.9 percent of Maharashtra, 9.7 percent of Tamil Nadu, 8.04 percent of West Bengal and 4.03 percent of Rajasthan. Thus Assam’s figure compared very badly, to that of above mentioned state in this respect. This reflects the prospect of industrial development in Assam.

Moreover, the "Report on Development Banking in India, 1989-90" published by the Industrial Development Bank of India, reveals interesting statistics on state-wise volume of assistance sanctioned and disbursed by the term lending institutions. According to this Report, the volume of per capita cumulative assistance sanctioned and disbursed by term lending institutions (comprising IDBI, IFCI, ICICI, LTC, NTC, TIC, IRBI, SFCs, SIDC) stood at Rs. 191.40 only in Assam as at the end of March, 1990, while it is as high as Rs. 1950.21 in Gujarat, Rs. 1632.53 in Maharashtra, Rs. 1206.88 in Punjab, Rs. 1108.16 in Haryana and Rs. 797 at all India level. However, over the recent few years, the volume of assistance sanctioned and disbursed by the term lending institutions in the State is recording a steady upward trend as it increased from Rs. 24.75 crores and Rs. 48.16 crores respectively in 1985-86 to Rs. 21.82 crores and Rs. 64.04 crores respectively in 1989-90. As a result, the total cumulative assistance sanctioned and disbursed to the State stood at Rs. 622.62 crores and Rs. 380.89 crores respectively as at the end of March, 1990. Thus it is revealed that the state continued to enjoy a very meager share (less than even 1 percent) of the total volume of assistance sanctioned and disbursed for the country as whole.

North Eastern Development Finance Corporation Ltd. (NEDFi)

The entire North-eastern region comprising seven sister states is endowed with rich natural resources like oil, gas, limestone, other minerals, forests resources and water resources. In spite of that the Region is yet experience industrial development on a scale achieved by many states in rest of the country. The reasons for such backwardness consist of infrastructure bottlenecks, inadequate finances low level of local entrepreneurship and complex local systems. The local entrepreneurs, although very small in number, are not familiar with complex banking procedures and thereby failed to take full advantage of the presence of various financial institutions and banks. Considering the situation, it has become imperative to set up an institution with special knowledge of the Region and dedicated exclusively to its requirements.

Accordingly, Union Finance Minister, in his Budget speech for the year 1995-96, announced the setting up of a separate development bank for the Region. Keeping in conformity with such announcement, the North-Eastern Development Finance Corporation (NEDFi) Ltd. was incorporated on August 9, 1995. After receiving a certificate to commence business operation from September 1995, the North-Eastern Development Finance Corporation Ltd. (NEDFi) was inaugurated on 23rd February, 1996 with headquarters at Guwahati with the objective of providing focused attention to the industrial and infrastructural development of the Region. The Board of Directors of NEDFi is also constituted by inducting eminent persons from the North-Eastern Region and also from outside the Region, having widening experience in industry, economics, finance and management.

Role of NEDFi :

The main object of NEDFi is to provide finance and other facilities for promotion, expansion and modernization of industrial and infrastructure projects in the region. Eventually, the NEDFi will provide a wide range of facilities and services, tailor made to meet various requirements of industrial units, including discounting or re-discounting of bills, guarantees, subscription to and/or underwriting of shares and securities, issuing letters of credit and providing consultancy, information and research facilities NEDFi will also help first generation entrepreneurs during implementation and early operation stages of their projects by providing hand holding services so as to mitigate the problems arising out of inexperience. The corporation will prepare and from time to time, update profiles of projects that have been identified as having good scope for success in the progress of the region and would be able to solve the problems of small investors to a large extent.

NEDFi’s mission is to be dynamic responsive organisation for assisting the development of the Region by identifying and financing commercially viable industrial and infrastructure projects so that it leads to fixed capital formation without causing any significant environmental degradation and through this maximise the wealth of the Region and the well-being of its people. Thus NEDFi got underway with the promise to the people to make a distinct improvement in the industrial and infrastructure development scenario of the region within the shortest possible time. In short, NEDFi is considered as the development bank of the North-East, for the North-East.

Resources :

NEDFi has been incorporated with authorised share capital of Rs. 500 crore and IDBI, SIDBI, IFCI, UII, LIC, GIC, and its subsidiaries and SBI have agreed to contribute Rs. 100 crore towards etc initial capital. This would enable NEDFi to raise further resources by way of borrowings through issue of fixed deposits, bonds, Government loans, grants etc. To meet its requirement NEFDi will also raise further equity as required for its operations in due course. NEDFi can draw upon the wealth of experience financial strength of its promoter institutions to raise resources to meet its requirements. The Government of India with its commitment for development of the Region will provide all support and is sure to extend necessary concessions to NEDFi to enable it to achieve its objectives.

Scope for Industrial Development :

In spite of having vast natural resources the North-Eastern Region is quite dependent on supplies from other parts of the country even for food items such as cereals, fish, eggs etc ; besides other requirements. Goods coming in from other parts of the country and those going out of the Region have to bear additional transport cost; this state of affairs offers considerable scope for producing the goods within the Region so as to meet the local demand. The Region can also process its available resources and serve the markets outside of region. NEDFi has made detailed study on the scope of industrial development in the Region and has identified a fairly wide spectrum of industries having potential in the region.

Target Activities and Functions :

The following are the important target activities and functions of NEDFi :

Firstly, NEDFi will assist all industrial concerns in the North Eastern Region promoted by limited companies or co-cooperative societies, for setting up new units or expansion and modernisation of existing enterprises. NEDFi will provide assistance in the form of term loans, direct subscription/underwriting of equity and/or debt instruments, provide financial guarantees and participate in deferred payment guarantees. It will provide term loans to eligible industrial concerns to start with and will also selectively extend direct subscription/underwriting facilities, both independently and in co-ordination with other institutions. As NEDFi may provide finance in consortium with other institutions and banks, their norms may generally be followed while assessing viability of the projects to be assisted. One of the main objects pursued by NEDFi is encouraging and promoting private capital both internal and external. The corporation will not dilute its norms of project viability comprising break-even point, debt repayment, servicing capacities for determining their eligibility for financial assistance.

Secondly, NEDFi will independently finance small scale industries ordinarily with a minimum loan component of Rs. 25 lakh and assemble a consortium of commercial banks and other financial institutions for projects with loan component for exceeding Rs. 25 lakh ; the minimum term loan from NEDFi will, however, be Rs. 25 lakh. NEDFi will consider smaller and medium scale projects costing up to Rs. 2 crore independently and may join a consortium with other institutions and banks for assisting larger ones. NEDFi would provide underwriting/direct subscription to share capital to the maximum extent of 25 percent of the share capital of the industrial concern with a maximum limit or Rs. 1 crore.

Thirdly, the NEDFi considers providing the entire working capital requirement of small scale industrial (SSI) units promoted by any first generation, entrepreneur till the point of time the project is expected to reach optimum level of operations. The corporation may explore a consortium arrangement with other institutions or banks for such working capital term loans.

The NEDFi will concentrate on downstream petrochemical units, plantations, sericulture, cane and bamboo projects.

Fourthly, the NEDFi will build up and maintain a data bank of the natural, human, and technological resources, market opportunities incentives available in this region for helping industries in identifying new technologies, markets, trends in economy and other relevant information. It will also compile profiles of projects with sound research for the benefit of entrepreneurs. It will soon be a think tank for the region and for this an elaborate information system and technology plan is being operationalised to support the setting up and operation of the data bank.

Fifthly, the business plan of the NEDFi has already been prepared by Tata consultancy Services (TCS), which has identified 62 projects which would be feasible industrial projects in all the seven North-eastern states. Out of these projects identified by TCS, 31 industrial projects are identified for Assam followed by 21 in Meghalaya, 19 each in Nagaland and Arunachal Pradesh, 15 each in Manipur and Tripura and 9 projects in Mizoram.

The identified projects, included fruit and vegetable processing, rubber processing, handloom and handicraft, meat and milk processing, lime stone, petrochemicals, urea fertilizer plant, minipower plant, wood based plant, bamboo mat board and silk processing. The 62 projects have been located and updated to prepare brief pre-investment studies which could be used by the eligible entrepreneurs to put together a few bankable proposals with the help of independent industrial and technical consultancy organisation.

Two major agreements that were arrived at the first anniversary of NEDFi include-firstly, a pact for joint financing in the small scale industries sector with Small Industries Development Bank of India (SIDBI) and secondly, a promise by the State Bank of India (SBI) to provide working capital to NEDFi assisted projects.

The Corporation (NEDFi) has approved assistance aggregating Rs. 12.18 crore to two projects both engaged in oil exploration and production sectors of the region. It disbursed its first assistance of Rs. 20 lakh towards form allotment of shares to premier Cryogenics Ltd. a Guwahati based firms for a project on liquid nitrogen, in July 1996. The second project which is being financed is for the working of oil well under ONGC, OIL by SVUI Projects Ltd. The NEDFi was helping the company with a loan of Rs. 12 crore.

The NEDFi, after the completion of the one year of its incorporation had received 30 inquiries for projects involving total investment of Rs. 46 crore with an employment potential for 1,500 persons and covering wide areas of industrial activity which include sectors like tea, food processing, textiles, cement, hosiery, hotels and nursing homes. These projects are mainly from Assam, Meghalaya, Manipur and Tripura.

It may be mentioned that the NEDFi has been registered as a Category I merchant banking institution by the Securities and Exchange Board of India (SEBI) and will provide project advisory service and take part in merchant banking, including lead management. It has also taken up compilation of a data bank for all the seven states of the region to help local as well as outside entrepreneurs to take investment decisions.

Thus it is expected that NEDFi with the support from Government of India and the state Governments of the Region will work actively towards catalyzing industrial development of the Region. This would facilitate the progress of the North-Eastern Region towards its rightful place on the industrial map of the country.

State Level Public Sector Units (SLPSUs) Assam- Large Scale Sickness Causes and Remedies

Like the other states of India, the government of Assam has already established a good number of State Level Public Sector Units Enterprises (ALPSUs) and also invested a considerable amount of resources on it, with a high hope of getting a rational rate of return. But unfortunately, things are not moving in right direction. There are at present 51 State PSUs in Assam. But the state of affairs of these PSUs are not at all encouraging. At the end of 1996-97, 48 PSUs of the State had taken monetary assistance worth about Rs. 2,500 crore over the past years and their accumulated losses stood at a total of about Rs. 1500 crore. Barring 3 units, all PSUs in the State were incurring losses continuously over the past years and had become dependent on budgetary support from the state government. This is no doubt an unhealthy practice adopted by these PSUs. In order to face the situation, the State Government had to cut plan budgets for various departments which was affecting the development activities seriously.

The accumulated loss has eroded the capital base of SLPSUs completely and negative rates of return on capital and paid-up capital have been 12 and 30 percent respectively. The turn-over of the SLPSEs has been poor and it is in the range of 20 percent of the capital investment while in terms of paid-up capital, it is only about 50 percent thereby implying that a very significant portion of the investment have gone into fixed costs. The growth of turnover has been of the order of only 10 percent against the growth in investment of the order of 20 percent per year.

The dividends have been declared by only three of the state public sector units (PSUs), namely the Assam Mineral Development Corporation, Assam State Warehousing Corporation and Assam Financial Corporation. The contribution to the State exchequer by 24 SLPSUs as on March 31, 1992 has been a meager Rs. 11 crore. About 30 of the SLPEs retain positive net worth of Rs. 170 crore, but the remaining SLPEs brought down the net negative net worth to about Rs. (-) 270 crore. This would have been in the order of Rs (-), 110 crore had the capital structure of the ASEB been not changed by conversion of loan of Rs. 800 crore to equity in 1991-92.

Among the State PSUs, the ASEB is responsible for the highest amount of loss. The ASEB alone accounts for 66 percent of the total accumulated loss of Rs. 1500 crore incurred by SLPSUs. The growth in the employment in the employment in the SLPSEs during the period from 1987-8 to 1991-92 has been of the order of five percent except in 1991-92. The turnover per employee has remained almost constant at around Rs. 0.7 lakh per employee per year. The total employment in the SLPEs have increased from 56,200 in 1987-88 to 64,490 in 1991-92.

The following are the 30 losing SLPSEs : Assam Electronics Development Corporation Ltd. (AMTRON), ASEB, ASTC, Statfed, Assam Syntex Ltd., Assam State Textile Corporation Ltd., Assam Polytex Ltd., Cochar Sugar Mills Ltd., Fiertichem Ltd., Assam Plantation Development Corporation Ltd., Assam Co-operative Spinning Mills Ltd., Assam Small Industries Development Corporation Ltd., Assam Fisheries Development Corporation Ltd., Assam State Housing Board, Assam State Minor Irrigation Development corporation Ltd., Assam State Fertilizer and Chemicals Ltd, Assam Seeds corporation Ltd., Assam Conductors and Tubes Corporation Ltd., Assam Tourism Development Corporation Ltd., Assam Khadi & Village Industries Board, Assam State Development Corporation for Scheduled Castes, Assam State Development Corporation for OBC Ltd., Assam Hills Small Industries Development Corporation Ltd., Assam Polyester Co-operative Society Ltd., Assam Film (Fin.Dev.) Corporations Ltd., Assam State Weaving and Manufacturing Co., Ltd., Assam Co-operative Sugar Mills Ltd. and Nagaon Co-operative Sugar Mills Ltd. However, a few of the above SLPSEs have already been handed over to the private sector. The report of the Comptroller and Auditor General of India (CAG) for the year 1996 reveals that out of 38 government companies in Assam, 28 suffered losses during the past two years or more. The 38 companies included 10 subsidiaries and four statutory corporations as on March 31, 1996. The companies had total investment of Rs. 477.47 crore (equity Rs. 248.27 crore, long term loan Rs. 46.15 crore) at the end of March 1996. As per the latest finalized accounts of these companies, 28 companies had incurred accumulated losses of Rs. 124.27 crore and the remaining five companies earned accumulated profits of Rs. 1.11 crore. Three companies have not yet started commercial function and two companies have not finalized accounts since inception. Almost all the 38 private sector undertaking of the state have been unable to finalize their annual accounts for a period over 14 years due to non-appointment of a statutory auditor by the Comptroller and Auditor General of India since 1981-82, resulting in non-accumulation of profit and dividend incurred by PSUs of the State.

It may be noted that SLPSEs were created  to export the natural resources of the state, to produce goods and services and to implement development programmes for the weaker sections of the society and were expected to yield reasonable rate of return on investment. However, the rate of return has been negative over the years and therefore, creation of new SLPSEs was restricted.

Causes of Large Scale Sickness of State PSUs

The public enterprises in Assam are suffering from major problems which are mostly responsible for their large scale sickness. The following are some of the important causes of such large scale sickness of state PSUs :

1. Loss incurring enterprises are suffering from endowment constraints as the selection of sites of SLPSEs were done on political considerations rather than rational considerations.

2. Under-utilisation of production capacities of SLPSUs are quite common.

3. Absence of rational pricing is also responsible for large scale sickness of state PSUs.

4. The state PSUs are suffering from technological gap as these enterprises could not adopt up-to-date technologies.

5. Mismanagement and unimaginative functioning of State PSUs in the past years.

6. Much government interference in the day to day activities of state PSUs reduced their degree of autonomy of the managements in respect employment pricing, purchase etc.

7. Heavy social costs of SLPSEs is also responsible for their large scale sickness.

8. State PSUs are suffering from operational and managerial inadequacies.

9. Evil competition from the private sector units and sabotaging of State PSUs are also responsible for their large scale sickness.

10. Marketing constraint of state PSUs is a big problem for which they could not collect good market for their commodities, resulting huge losses.

11. State PSUs are suffering from surplus manpower, which is creating drainage of resources unnecessarily, followed by sickness.

12. Workers engaged in the State PSUs are lacking sincerity and devotion to their job leading to wastage of productive capacities. Moreover, external factors like trade unionism, union rivalries and labour troubles are also responsible for disruption in smooth functioning of State PSUs.

13. Non-updating of accounts and non-holding of annual general meeting or Board meetings for years together are the two deterrent practices resorted to by most of the State PSUs, which are also largely responsible for their growing sickness.

14. Inefficiency in management and poor corporate plan have been also largely responsible for growing sickness of SLPSEs.

15. Finally, management of the PSUs have been politicized over the years to sub serve the interest of the ruling party and they have been made to employ too many people to make them unviable as economic entities.

The status report on the state PSUs prepared by the exports observed that "the inefficiency in management has led to the poor planning ......... In spite of repeated advice most of the SLPSEs have failed to draw up a corporate plan to justify their continuance in existence."

Remedial Measures to be followed for the Revival of SLPSUs

The following measures are worth-mentioning for bringing a dynamic change in the horizon of state level public sector units in Assam :

(i) optimum utilisation of capacities of all the state PSUs in Assam ;

(ii) technological upgradation of these revivable enterprises to make it more competitive and viable ;

(iii) diversification of product mix ;

(iv) adoption of rational pricing policy for the improvement of economic performance of these undertakings ;

(v) Withdrawing subsidization policy at least from unproductive channels:

(iv) removing evil competition between the public and private sector units by integrating enterprises of both the sector.

(vii) making the management more accountable to the public as well as to the government ;

(viii) relieving the State PSUs from unnecessary government interference in their normal activities ;

(ix) Diversifying both internal and external markets for the products produced by the enterprises through standardization of quantity, advertisement and popularization of the product through different agencies;

(x) worker’s voluntary Co-operation and participation for its improvement ;

(xi) gradual privatisation of some SLPSUs, through open mind, where such privatisation is permissible and where crowding out effect takes place ;

(xii) undertaking a time bound programme for the revival of those loss incurring enterprises and also to raise their degree of viability by raising their efficiency and productivity ;

(xiii) State PSUs must not think of keeping themselves running only with governmental support any longer, but should devise means of their own to ensure how they could survive as self-sustained ;

(xiv) attaining sound financial and managerial capabilities to make them stand on their own feet ;

(xv) State PSUs should proceed with limited objectives instead of diversification of business till they become self sustained ;

(xvi) State PSUs should submit review reports regularly to the Government and to take up corporate plans for internal resource generation ;

(xvii) and finally State PSUs should make serious efforts for their revitalization through effective management, innovative ideas, checking of wastages, sincerity and dedication.

New Industrial Policy (1997) Guidelines for State level PSUs and Government Efforts

Considering the poor financial condition and mismanagement of State Level Public Sector Units (SLPSUs), the new Industrial Policy, 1997 has observed that henceforth all state level PSUs would have to survive on their own. State public sector undertakings which were for a long time enjoying budgetary support from the State Government, will now have to change their strategies and discover new avenues for their survival. The State Government would help the PSUs in their revitalization strategies and urge the managements to find out ways to make profit. The State Government recently (in 1997) declared six public sector units in the state as sick and initiated efforts for revival of these sick PSUs by handing them over to the joint sector or to private sector.

The State Government has incorporated various incentives in the industrial policy, apart from liaisoning with banks and financial institutions to finalise package for revival of potentially viable sick PSUs.

The advisory Committee appointed by the State Government had also recommended privatization of loss making PSUs excepting two profit making units viz., Assam Petrochemicals Ltd. and Assam Gas Company Ltd. The Committee also suggested that those units which cannot be revived should be sold as scrap and its proceeds be paid to labour and debts. In the second category, in which the State PSUs can be revived, it should be made into co-operatives by workers and management.

The State Government, after deciding to transfer six of its loss-making PSUs to the joint sector, has finally advertised in top business dailies of the country for private participation. Among the six loss-making units, three are textile units, two are fertilizer units and four paper unit. These six PSUs are- Assam Syntex Ltd. Nathkuchi ; Assam State Weaving and Manufacturing company Ltd. Katmari ; Assam Spun Silk Mills Ltd. Jagiraod ; Assam State Fertilizer and Chemicals Ltd, Chandrapur, Fertichem Ltd. Bonda and Industrial Paper (Assam) Limited, Dhing.

The policy of privatizing sick PSUs may also be considered as cropper because the objectives for which these PSUs had been set up are either no longer an economic feasibility or the new, private managements are unable to bail them out for obvious reasons. The entire fault, in this connection, lies with the inability of the Government and our policy makers to see development as being much beyond just the immediate need to employ more and more people without any regard to whether employees would be able to generate enough resources to meet their own expenses. Such a far-sighted policy adopted by the earlier Governments is mostly responsible for such uncomfortable situation.

As the State Government has decided to withdraw budgetary support to State PSUs from the year 1998, thus the Government should prepare necessary guidelines for all state PSUs regarding how they could manage their affairs and thereby survive on their own. The State PSUs should also get them ready to face the challenges and prepare a well worked out plant of action to change their strategies for generating resources for their own, without diverting the objectives for which they had been set up. In this connection it can be suggested that while determining the strategies, the rationality approach should prevail upon the plan of actions to be adopted by the State PSUs.

Low Rate of Industrialisation or Industrial Backwardness

Although the pace of industrialisation in Assam had started during the British period, with the growth of tea and oil industry, but the State could not attain much progress in its industrialisation path even after completing more than four decades of economic planning.

Causes of Low Rate of Industrialisation or Industrial Backwardness

Assam is lagging behind other states in regard to industrial development. This is due to absence of large investments in industry during preceding plans and Assam’s geographical isolation. The volume of private investment in Assam is very low due to heavy risk involved in the investment. These risks are both natural risks, arising through natural calamities and political risks as the State itself is a border State. Thus the factory industries in the State are growing at a very slow rate. Following are the main reasons behind this low rate of industrialisation in Assam :

1. Lack of adequate capital formation : The state is experiencing a very poor rate of capital formation. The volume and rate of savings in Assam are very poor. As the level of per capita income in Assam is very poor, the saving potential is low. Possibly, there are large accruals of additional income in the rural sector. But there are inherent difficulties of mobilizing these incremental rural incomes. Thus this lack of capital formation is a very important hurdle on the path of industrialisation of the State.

2. Shyness of capital : Shyness of capital is the another reason behind this slow rate of industrialisation in the State. Investors whether from within or from outside the State are not willing to invest their capital in Assam. Further, geographical isolation and high cost of production of the State inhibit private investment from other regions.

3. Inadequate economic and basic infrastructural facilities: The economic and basic infrastructural facilities which includes power, transport and communication facilities etc. are not yet sufficiently developed in the state. Without a sound infrastructural base, the State cannot develop various industries on the basis of its natural endowments.

4. Dearth of technical personnel: There is dearth of technical personnel in Assam. In the absence of a good number of technical personnel, the state has always been depending on other states of the country. Further, the industrial activities in the State are suffering due to this dearth of technical personnel creating a huge delay in the commissioning of the project.

5. Lack of entrepreneurial motivation: There is lack of entrepreneurial motivation on the part of local people of the State. Local initiative and enterprise are lagging behind the requirement necessary for the successful industrialisation in the State. This a very important hurdle in the path of industrialisation in the State. Without active entrepreneurial motivation on the part of local people the industrial development of the State would be incomplete.

6. Lack of credit facilities : Credit facilities in the State are not easy. The problem is more complicated particularly for the small and medium scale industries of the State Banks and other financial institutions in the State are not offering helping hands towards the establishment of small and medium scale industrial projects by offering credit on easy terms. In fine, lack of industrial credit is one of the very important problem of industrialisation in Assam.

7. High cost structure : Cost structure in the State is very high in comparison the other states of India. High cost structure always reduces the profit outlook of the industries. This is mainly due to the existence of higher price level in the State in comparison to other States. This is also aggravated by higher unit cost of transport which acts as a further disincentive to external private investment in the State. Besides, this high cost structure in the State has been raising the cost of all industrial projects in the State which works as a dampener towards the establishment of new industries.

8. Investment risks : Due to heavy risks involved in the investment arising through natural calamities and political risks as the state itself is a border state, the volume of private investment in Assam is very low. Assam is unfortunately one those few states which are every now and then visited by natural calamities such as floods and draughts. Particularly flood has raised the problem of insecurity for the new industrial projects in the State.

9. Disturbed law and order situation : Due to various socio-political reasons, the law and order situation in the State is not always smooth rather it is often disturbed. Thus the industrial development of the State has been suffering due to lack of suitable law and order situation. Besides, the State Government had to spend a heavy amount on police administration for the maintenance of law and order. This unduly heavy expenditure on law and order maintenance has put severe strain on the already slender finances of the State Government and has, to that extent, hampered the Government’s ability to finance various schemes for industrial development.

10. Lack of Markets : Proper market has not yet developed in the State for the marketing of produced by the industries in Assam. Excepting the Guwahati Tea Auction Centre, the marketing arrangements for other industrial sectors are totally lacking. This creates a problem for the industries to sell their products. Thus both these large and medium industries had to depend on the markets outside the State resulting higher unit cost of transport and higher administrative cost.

11. Lack of efficient administrative machinery : The lack of efficient administrative machinery is always going against the industrial development of the State. A sound industrial development always requires an efficient administrative system, the state’s industrial sector is bound to suffer.

12. Low level of central sector investment : The central sector investment on industrial development of the State was all along poor. During the planned period only a few medium and large scale industrial units have been developed under the central sector in spite of having huge development potentialities in the State. Moreover, these investments were mainly centralised around the oil sector only neglecting the other potentialities of the State.

Major Constraints in the Growth of Large Scale Industries in Assam and its Prospect under Economic Reforms

Assam has already established two sets of large scale industries, i.e., tea and petroleum industry from the first stage of its development in spite of having serious constraints. The state is quite rich considering its endowment position having rich potential for the development of some large scale industries. The state is having the prospect of developing some large scale industries in the areas of petro-chemicals and its down stream industries, polyester spinning and textile industry, jute products, cement, food processing etc.

In spite of having rich potential, the state is facing some major constraints in the growth of large scale industries. The following are some of these major constraints :

1. Poor capital formation : Poor rate of capital formation in Assam is considered as one of the major constraints in the growth of large scale industries in the state.

2. Infrastructural backwardness : The state is too much backward in respect of basic infrastructural facilities which include power, transport and communication etc. In the absence of adequate power supply and suitable transport and communication system (viz., improved rail, road and telecommunication network) the development of large scale industries neither desirable nor possible.

3. Shyness of Capital : Another important constraint in the path of developing large scale industries in Assam is the shyness of capital. Investors both from within and from outside are not willing to invest their capital in Assam. The problem has gained its momentum in recent years with the rise of insurgency problem in the state, leading to huge amount of capital flight, money transfers and increased amount remittances from Assam. Moreover, the investment flow from outside the state has also been obstructed seriously by the problems of growing insurgency, geographical isolation and higher unit cost of production.

4. Dearth of skilled and efficient person : There is dearth of skilled, efficient and technical person in Assam which is also considered as an important constraints in the growth of large scale industries.

5. Lack of Industrial Credit : The State is not having adequate credit infrastructure. In the absence adequate credit arrangements, the State cannot expect to develop large scale industries easily.

6. Poor Capital Market set up : The capital market set up in Assam is also very poor. The newly established Guwahati Stock Exchange is yet to play a major role in developing the capital market set up. Therefore, developing large scale industries in the absence of sound capital market would be a difficult proposition.

7. High Cost Structure : High cost structure prevailing in the state not only increases the project cost but also aggravates the problem which also acts as further disincentive to external private investment flow in the State, dampening the spirit of developing large scale industries.

8. Lack of Markets : One major hurdle in the path of developing large scale industries is the lack of proper marketing arrangement for different industrial products excepting Guwahati Tea Auction Centre. Being located in the remote corner of the country, the large industries of the state will always have to bear additional cost of transport for marketing their products in the absence of adequate marketing arrangements.

9. Investment Risks : Another constraints in the growth of large scale industries is the investment risks arising out of natural calamities like flood and political risks as the state itself is a border state. Moreover, growing insurgency has also raised some kind of insecurity in the minds of external investors. Such insecure environment is also a great hurdle in the path of industrialisation in the state.

10. Disturbed Law and Order Conditions : Growth of large scale industries in Assam is also being constrained due to disturbed law and order conditions arising out various socio-political reasons.

11. Lack of Entrepreneurial Motivation : Another important constraint in the growth of large scale industries in the state is the lack of entrepreneurial motivation of the local people of the state, resulting in lack of initiative and enterprise for the development of such industries.

Bright Prospect of the Development of Large Scale Industries under Economic Reforms :

In spite of various constraints the prospect of the development of some large scale industries in Assam is brightened under the ongoing process of economic reforms. The economic reforms introduced in India has paved the way for smooth sailing of some prospective large scale industries in Assam. Economic reforms in the form of industrial policy reforms, foreign investment policy reforms, tax reforms, trade policy reforms etc. have widened the scope of developing large scale industries in Assam in certain specific areas like-Petrochemicals, Natural gas, Power generation, textile, food processing etc. Assam Gas Cracker Project, Tengakhat, to be promoted by Reliance Industries Ltd. is an offshoot of economic reforms introduced in Assam. Assam is also having a wide scope for the development of power generation projects for which some foreign investors have shown their interest. The establishment of North Eastern Development Finance Corporation Ltd. (NEDFi) is an encouraging step in this direction. Thus it is expected that a good number of large scale and medium scale industrial projects may be developed in Assam in near future provided suitable investment friendly climate is created in the state, which requires an active support from both the Central and State governments and also from the local people of the State.

Remedial Measures to Remove Industrial Backwardness in Assam

In spite of having a huge potential for industrial development, Assam remained an industrially backward state even after 46 years of economic planning. Although the industrial development process started in Assam even in the early British period with the development of tea and petroleum industry but the industrial development in the State could not be given its momentum due to various constraints faced by the State. Thus immediate steps must be taken for promoting industrial development in the State. The following are some of the important remedial measures to remove industrial backwardness in Assam :

1. Removing Bureaucratic Obstacles : The first step in the path of industrial development of the state is to remove bureaucratic obstacles by adopting the various policy of deregulation, delicencing introduced under economic reforms. The government should also take adequate steps to simplify procedural formalities on allotment of land, sheds, capital, interest, power subsidy, tax exemption etc.

2. Government support : The State government should provide active support for the promotion of new industries as well as for the expansion of the existing industries of the state. In the mean time, the State Government has announced its New Industrial Policy, 1997 to embark upon the high road of liberalisation, privatisation and globalization. The State Government has also introduced "1997 Incentive Schemes" to provide various subsidies and sales tax exemption benefit for the promotion of new industrial units and also for revitalization of the sick industrial units of the state. The Government should see that the schemes be implemented in proper shape and time.

3. Infrastructural Development : Adequate steps must be taken for the development of infrastructural facilities as early as possible. In this connection the State Government should try to develop power sector by inviting foreign investors for promoting new power projects in the state. Moreover, the State government should also try to develop the transportation and communication facilities, industrial sheds water supply, developed lands etc. adequately. Moreover, the State Government should also encourage private participation infrastructure development.

4. Ensuring Credit Flow : In order to remove industrial backwardness in the state, the various financial institution should ensure easy flow of credit in adequate proportion.

5. Revitalising SLPSUs : Revitalising State Level Public Sector Units (SLPSUs) will be an important step in the direction of removing industrial backwardness in Assam. Moreover, the State Government should try to adopt the path of privatisation of loss-making state PSUs for their revitalisation.

6. Revitalising CPSUs : In order to reorient the industrialisation process in Assam, the Central PSUs should be revitalised immediately. Moreover, the flow of Central sector investment to Assam must be increased considering its poor industrial base.

7. Developing Capital Market : In order to remove industrial backwardness of Assam, steps must be taken develop active capital market in the state for providing easy capital flow to industries. The newly established Guwahati Stock Exchange should be activated to enlarge its area of operations adequately.

8. Export Oriented Industries : The State should also try to develop export oriented industries so as to diversify its industrial base. The State Government may also explore foreign collaborations with the SSI who can make 100 percent buy back from the SSI units of the state.

9. Development of New Industries : The Government should also try to encourage the setting up of new industries in the area of fruit processing, vegetable processing, spice processing, aquaculture, horticulture based projects in the State.

10. Enlarging the SSI Base : In order to remove industrial backwardness of the State, the SSI base of Assam should be enlarged. Considering the huge volume of natural resources and Agro-based potential, the State should try to develop different types of small scale and village industries throughout the State.

11. Reviving Water Transport Route : In order to remove the problem of higher unit cost of transport, arising out of geographical isolation the Central and the State Government should try to revive the traditional water transport route linking Guwahati and Calcutta via Bangladesh immediately. Such revival of water transport routes would increase the competitive strength of industries in Assam to explore market both within the country and also for export promotion.

12. Developing Information Cell and Linkages : The State Government should take necessary steps to develop information Cell or data bank for updating the knowledge on new products, new processes, sources of raw materials, machinery, market linkages etc. in all the District Industry Centres (DICs). Moreover, necessary linkages may be developed with national and international organisations or institutions for information, upgradation of technology, skills etc.

Finally private investment is considered as one of the most important factors for industrialisation. During the last one and a half decade, Assam has witnessed a series of social and political upheavals. Insurgency problem is on the rise, resulting in a halt to private investment. Besides, the tea industry is not ploughing back its profits in the State. Given a conducive environment, proper infrastructure and a productive labour force, private investment will automatically flow in. Considering the problem of poor capital formation, small such industries seem to be best choice. Countries like South Korea, Taiwan are the best examples of such situation. In order to tap these possibilities, the State government should be able to bring back peace to the State, make the situation industrial friendly, lessen bureaucratic intervention to pave the way for investments. And, above all, people of the State must be mobilized and motivated to take part in a State-wide industrialisation process.

Considering all these problems of industrialisation in the State, the State Government should take up appropriate schemes for the successful growth of endowment based industries both in the state and private sector. These would include both the infra-structural projects and direct industrial investments in the State. While saying this, it should be equally stressed that the Centre has also a responsibility for Assam in view of the need to fully utilise the practically untapped but huge development potential of the State. If needed the Centre should send a team of experts to prepare project and feasibility reports. Otherwise, it will be just a case of ‘bargaining federalism’ without any serious thought given to the national wastage involved in underutilization of national resources located within State territory.

Finally, the people of the State should also come forward with their inner zeal, active initiative and enterprise for the establishment and smooth running of various types of endowment-based industries, particularly small and medium scale industries, in the State without further delay. In the absence of such motivation from the people of the State, it would be impossible on the part of the State to achieve a solid base on its industrial sector.

Under the present regime of economic reforms introduced in the country as a whole, the State Government as well as the people of the State should take adequate initiative for accelerating the pace of industrial development in the State so as to reap maximum benefit from the policy of economic liberalisation adopted throughout the country.

Report of the Advisory Committee on Industries in Assam (1996)

The Government of Assam set up a 15-member Advisory Committee headed by the noted economist and Chairman, North Eastern Development Financial Corporation Ltd. (NEDFi) Dr. Jayanta Madhal to assess the industrial scenario and to recommend long term and short term measures for attracting investment in the State. Dr. Madhal submitted a two-volume report to the State government on 6th August, 1996. The main recommendations of the advisory committee on industries include a strategy to export the state’s untapped potential in agriculture and allied activities, measures for increasing power generation, tenancy reforms, action plan for industrial growth and the development of tourism as an industry in Assam.

The committee, having reviewed the entire industrial scenario in the terms of reference specified, has also suggested specific time frames within which it wishes its recommendation to be implemented. Apart from recommending an action plan for the industrial growth of Assam, the report suggest measures for the revitalization of the sick units in the public sector and for smooth flow of credit to industrial units, particularly those of the small scale.

The action plan for development was suggested after a thorough scrutiny of the Dinesh Goswami Report on economic development of the State, the L.C. Jain Committee Report on Clause Seven of Assam Accord and the Coopers and Lybrand report on development strategies for the State.

The report suggested that the Government should take concrete steps towards removing the constraints in getting the project going. Recommending a detailed development strategy through exploitation of agriculture and other untapped potentialities- such as horticulture, livestock farming, pisciculture and floriculture- the report observed that the double cropped area of the state, if increased from the present 20 percent to 60 percent in the next five years, will bring about a large surplus in the agricultural sector. This will provide a strong infrastructure for fostering industrial growth. The report suggests that big tea companies be invited to take up big plot of land and a practical example to farmers about the profitability second and third crops.

Apart from making elaborate suggestions on various measures to be adopted for increasing the volume of power generation from the abundantly available resources, the committee urged the Government for effective suitable tenancy reforms so as to enable industries to acquire as much land as required for their development.

The report finally recommends that tourism be developed as an industry and calls for improvement of transportation facilities, particularly those for inland water transport.

Economic Reforms

Economic Reforms and Industrial Development in Assam

Economic Reforms in India and in Assam and Industrial Policy Reforms

 

The entire world economy has been experiencing dramatic and momentous changes during the decade of late eighties and nineties. Various countries of the world are now favouring economic reforms because it promises more rapid and more sustained economic growth.

India has also adopted the policy of economic reforms during eighties and the first phase of economic reforms in India had its origin in 1985. Accordingly, India started to respond to various changes in the nature of markets and institutions, industrial organisations and structures and social relations of production in relation to increasing globalisation of economic process. But the first phase of economic reforms failed to yield the expected result in most of fronts and the country has been plunged into a serious balance of payments crisis. In order to restore both internal and external confidence, the second phase of economic reforms, comprising a good number of stabilisation measures, were initiated in 1991-92 by the Government of India. The memorandum submitted by the Finance Minister observed that, " The thrust will be to increase the efficiency and international competitiveness of industrial production, to utilize foreign investment and technology to a much greater degree than in the past, to improve the performance and rationalise the scope of the public sector and to reform and modernize the financial sector so that it can more efficiently serve the needs of the economy."

The various policy measures introduced in the second phase of economic reforms include- (a) fiscal policy reforms, (b) monetary policy reforms, (c) pricing policy reforms, (d) external policy reforms, (e) industrial policy reforms, (f) foreign investment policy reforms, (g) public sector policy reforms, (h) trade policy reforms and (I) social policy reforms.

In the mean time, the State Government have also introduced the relevant economic policy reforms. The Government of Assam has also introduced the policy, of economic reforms as a part of national policy. The Government has already introduced New Industrial Policy in 1991 and then recently in 1997 and also incorporated other policy reforms like public sector policy reforms, fiscal policy reforms etc.

Among the various policy reforms introduced in Assam, mention may be made of industrial policy reforms. In 1991, the then Congress Government introduced the Industrial Policy, 1991 wherein various incentives and subsidies offered by the State Government for promoting a solid base of industrial development within the State. But unfortunately, this policy has failed to bring favourable change in the industrial scenario of the state and the state has failed to reap the benefit of economic liberalisation adopted throughout the country. Under the precarious situation, it has become imperative on the part of the State Government to redraft its new industrial policy considering its emerging problems and potentialities. Therefore, it has become imperative for the State to embark upon the high road of liberalization privatisation and globalization.

Accordingly, on 29th March 1997, the AGP-led State Government introduced its New Industrial Policy, 1997 with great promise. The AGP led alliance Government’s new industrial policy aimed to provide an effective thrust for "expeditious promotion and growth of all industries with a view to creating a strong industrial base and employment opportunities in various directions."

Impact of Economic Reforms on the Economy of Assam

It is really frustrating for the people of Assam and the North-East that the economy of the state as well as of the entire region did not face any impact at all of the liberalization process which has been underway throughout the country since the past few years and from which almost all the states, including even the backward ones, have benefited.

Although the process of economic liberalization has already been initiated but the private investors have been very shy of investing in the region. This point may be reflected from the fact that out of the total investment proposals of Rs. 5,88,000 crore received by the country during the first four years of liberalization since 1991, the share of all seven states in the North-East including Assam was only Rs. 4,200 crore. Moreover, total capital raised in the country from public issue of shares was about Rs. 30,000 crore during 1995-96 out of which the share of Assam and North Eastern states was paltry Rs. 5 crore which is as good as nothing.

There has been a lot of talk about the great potential of the food processing sector and development of floriculture, pisciculture. But very little has been done to develop these sectors.

Moreover, Assam is also facing a peculiar problem of flight of capital and exodus of business firms out of the State following insecure environment arising out the problem of insurgency.

Thus the economic reforms introduced throughout the country has failed to create any favourable impact on the economy of Assam. The country’s liberalization policy had no impact on the process of industrialization in Assam. Although industrial development gained its momentum in different states of the country as a result of economic reforms but Assam has completely failed to reap any considerable benefit in industrialisation process out of economic reforms. It needs to be recognized that the constraints coming in the way of industrial development in Assam are geographical isolation, lack of infrastructure shortage of power and lack of surplus capital.

The state has also failed to invite projects for the development of infrastructural sector. The power situation in the state still remained grim despite the state is having a huge potential for the development of hydro-electric projects and natural gas based power projects. The State has also failed to attract both domestic and foreign investors for the construction of highways and bridges etc. under Build, Operate and Transfer (BOT) scheme.

Investment climate in the State has not yet improved considerably. International confidence on the state’s economy is yet to be restored as the foreign investors did not show any active interest to participate in any major industrial and infrastructural projects. The flow of foreign direct in investment into the state is also very minimum.

Thus it can be stated that state’s economy has not been able to derive any considerable benefit out of economic reforms. Considering such poor performance, the AGP led alliance Government has taken some steps recently to embark upon the high road of liberalization, privatisation and globalization. Announcement of New Industrial Policy, 1997 is a right step in this direction. Finalization of investment proposal of Assam Gas Cracker Project at Tengakhat with the Union Petroleum Ministry recently, privatisation of six state PSUs, decision to transfer all loss-making state PSUs to the joint sector, signing of MOU with US-based company Ogden Energy of New Jersey by the State Government recently on June 1997 for taking over a lease of the Bongaigaon Thermal Power Station (BTPS) for its renovation and upgradation, submitting proposals by another US based company, American Power Gen System Association for setting up a 300 MW coal based power project at Borgolai, inauguration of North Eastern Development Finance Corporation (NEDFi) at Guwahati, entry of some new Indian company for promoting new industrial projects like Premier Cryogenics Ltd., SVUI Projects Ltd. etc. are no doubt a strong indication of the change of investment climate in the State to a favourable direction.

Thus it is expected that Assam will soon be able to change the investment environment in the State adequately so that can reap the benefits of economic reforms at least belatedly.

Present state of Industrial Development in Assam and Future Prospect of Industrial Development in Assam under the Policy of Economic Liberalizations

The present state of Industrial Development in Assam is not up to the mark. Although the pace of industrialisation in Assam had its origin during the British period, with the growth of tea and petroleum industry but the State could not attain the required progress in its industrialisation path even after completing more than four decades of economic planning. In spite of having a rich potential for the development of different types resources based industries, the state could not achieve much diversification in its industrial base, leading to restriction of its industrial activities mostly into tea and petroleum. The factors which are mostly responsible for such industrial backwardness include-geographical isolation, lack of capital formation, lack of infrastructure, shyness of capital, insecure investment climate, lack of markets, lack of entrepreneurial motivation etc. All these constraints are always standing in the path of industrial development of the state. The poor state of industrial development in Assam can be reflected from the fact that the contribution of the manufacturing sector to the state income which was 15.6 percent in 1950-51, subsequently rose to 17.7 percent in 1960-61, remained at the poor level of 15.5 percent in 1993-94. Moreover, total number of registered factories in Assam which was 2677 in 1990 gradually declined to 2438 in 1993. There are at present 191 large industrial units and 18,637 registered small scale industrial units in Assam, out of which a good number of such units are lying in non-operational stage.

There are at present 51 state PSUs in Assam. But the state of affairs of these PSUs are not at all encouraging. At the end of 1996-97, 48 PSUs of the State had taken monetary assistance worth about Rs. 2500 crore over the past years and their accumulated losses stood at a total of about Rs. 1500 crore. Barring 3 units , all PSUs in the state were incurring losses continuously over the past years and had become dependent on budgetary support from the state Government. Recently, the state Government has taken steps to privatize this state PSUs for their revival.

Moreover, the investment environment in the state is considered to be insecure considering the growing problem of insurgency, prevailing in the entire region. The state is facing the problem of huge capital flight and exodus of business firms out of Assam due to growing problem of insurgency. Such insecure investment climate is always going against the interest of industrial development in the state. International confidence on the State economy is yet to be restored as the foreign investors did not show any active interest to participate in any major industrial and infrastructural projects.

Future Prospect of Industrial Development in Assam under the Policy of Economic Liberalization:

Although the process of economic liberalization could not create much impact on the industrial development of the State but the state is still maintaining a bright prospect for the development of different industries in the state under the policy of economic liberalisation introduced in the state.

In order to embark upon the high road of liberalization, privatisation and globalization, the State government introduced its New Industrial Policy, 1997 on 29th March, 1997 with a great promise. The new policy aimed to provide effective thrust for expeditious promotion and growth of all industries with a view to creating a strong industrial base and employment opportunities in various directions. With the introduction of this new policy, the prospect of industrialisation is brightened, considering the new package of incentives introduced in the policy. Thus under the new industrial policies introduced by both the Central and State Government, the future prospect of small scale and large scale industries are quite bright.

Secondly, steps are being taken to develop infrastructural facilities adequately which will pave the way for industrial development in the State. The announcement of the comprehensive economic package for the development of the North-East involving Rs. 6,100 crore by the Central Government for a number of new and ongoing project will definitely improve the infrastructural status of the region.

Thirdly, the ongoing process of economic reforms has also brightened the prospect of development of both small, medium and large scale industries considering the huge development potential of the state. In a capital scarce economy like Assam, the development of small scale industries will be quite suitable. Besides, economic reforms have widened the scope of developing large scale industries in Assam in certain specific areas like-Petrochemicals and down stream industries, Natural gas based project, power generation, textiles, food processing etc. Assam Gas Cracker Project, Tengakhat to be promoted by Reliance Industries Ltd. is an off-shoot of economic reforms introduced in the State. Assam is also having a wide scope for the development of power generation projects for which some foreign investors have shown their interest. There is also a wide prospect for the development of downstream industries based on petrochemicals already available from Bongaigaon Refinery Petrochemicals Ltd. (BRPL) and would be available from Numaligarh Refinery and Assam Gas Cracker Project.

Fourthly, the establishment of North Eastern Development Finance Corporation Ltd. (NEDFi) at Guwahati has also widened the scope of industrial development under the process of economic reforms.

Finally, it no longer appears to be in vogue to consider the geographical isolation has the potential of turning into an advantage instead. Isolated as the North-east is from the rest of the country, Coopers and Lybrand has taken note of its close proximity to South-east Asia, the fastest growing region in the world. The agency has attributed the North-east with the potential of becoming a strategic base for investors wishing to tap the markets of South-east Asia.

Thus it is expected that a good number of large scale and medium scale industrial projects may be developed in Assam in near future provided suitable investment friendly climate is created in the State. This requires an active support from both the Central and State Governments and also the active participation of the local people of the State. However, the Government of India will have to play a much greater and active role in Assam and the North-east for promoting industrialisation process. The Centre must provide the infrastructure, if not, then provide counter-guarantees and other necessary incentives to private investors in creating the infrastructure, without putting any burden on the State Government. The State Government should also take active steps to promote an investment friendly environment for attracting private investors, both domestic and foreign, so as to develop different small, medium and large scale industries based on the industrial potential of its state. In this connection the steps taken by the Government of India for setting up three Industrial Growth Centres in and an Export Promotion Industrial Park at Amingaon near Guwahati are right steps in this direction.

 

 

INCOME

 

State Income and its Measurement

Like national income, the State income represents total amount of income originated within the territory of a particular state during a particular period. The estimation of state income provides the most comprehensive single indicator of the level of development of a particular state. Normally, income is deemed to originate in the territory on which the income-generating economic activity takes place. Thus any amount of income originating within the boundary of Assam is known as the State Domestic Product (SDP) or the State Income of Assam. The Directorate of Economics and Statistics, Assam is authorised to measure the state income for every year regularly. A combination of the income and inventory or product methods are generally applied by the department concerned for the measurement of state income in Assam with fair success. On different occasions, the product method and the income method have also been applied separately by the department concerned.

Sources or Sectoral Contribution of State Income in Assam

Sectoral contribution of state income reveals a clear idea about the contribution of various production sectors to the state income and its various sources. Among the various sectors, agricultural sector has been contributing the major portion of state income from the very beginning and earned a notable position in this regard. The following table shows the sectoral contribution of state income in Assam.

Table No. 5.1

Sectoral contribution of State Income or State Income by Industrial Origin

( in Crore of Rupees)

Industry

At 1948-49 prices

At 1980-81 prices

 

1950-51

1970-71

1980-81

1985-86

1990-91

1993-94

A. Primary Sector : (Agriculture, Forestry, Fishery, Mining and Quarrying) 

1.Agriculture :  

B. Secondary Sector : 

1.Manufacturing: 

2. Construction :

3. Electricity, Gas and Water supply :

C. Tertiary Sector :                                1. Transport,Communication and Trade                             2. Finance and Real Estate :

3. Community and personal services

Net State Domestic Product at Factor Cost

 

136.0(66.6)

106.7 (52.2)

31.3 (15.3)  

31.6 (15.0)  

0.7      (0.3)

----

 35.4(17.3)

20.5 (10.1)

                 1.5     (0.7)

              14.6   (6.5)

 

204.4(100.0)

 

 

 

 

 

175.8(45.9)

 

123.1(32.1)

79.5(20.7)

70.0(18.3)

9.5(2.4)

---

 

 

 

116.8(29.3)

51.3(13.5)

6.1(1.6

 

(14.2)

 

389.9(100.0)

 

 

126.8

(52.0)

 

 

1183.7

(50.2)

277.0

(11.8)

163.4

(6.9)

102.8

(4.4)

10.8

(0.5)

810.2

(36.2)

316.0

(13.4)

265.1

(11.2)

229.1

(9.7)

2356.1

(100.0)