The Hindu Business Line : The changing skyline

A file photo of women workers on their way to the factory after plucking tea leaves in a garden on the outskirts of Guwahati, Assam. In tea plantation, Williamson Magor Group leads with the largest number of tea gardens, with as many as 48 in the State. —

Naba Sharma

In the coming 20 years, Guwahati will be the hub of economic and business activities of South East Asia, according to Coopers and Lybrand Economic Survey on North East in 1996.

“It is our resolve to turn Assam, with its ‘immense hydrocarbon and other resources’, into a Kuwait or another Middle Eastern country”, proclaimed Reliance Industries Ltd in a public declaration in Guwahati in 1996 while accep ting the Assam Gas Cracker project.

In July 2007 was published the Vision-2020 Document for the North East, envisaging an investment of Rs 14 lakh crore for the region.

All this created a sort of sensation. A sense of euphoria prevailed all over the region and scores of seminars, workshops and other academic discourses were held reflecting the mood of the people who seemed convinced of the bright prospects ahead.

The Government Information and Public Relations Departments and media too were busy publicising, “The Blueprint For The Future”, outlining the potentialities and resources of the region. There were no doubts that, after a long time, the North-East was finally set for a big leap forward.

Unfortunately, things did not move as expected. Except Arunachal Pradesh and Meghalaya, the rest of the region continues to lag in development.

In Meghalaya, the growth is visible, at least in certain sectors. For example, as many as 16 new cement factories have been set up in the State, of which 11 are now producing.

A steel plant, to be complete with a 30 MW captive power plant, too is being set up in Nongstoin. The interesting feature of the development in Meghalaya is that it is being spearheaded by the entrepreneurs of the region.

Mini-hydel projects

In Arunachal Pradesh, which is rich in water resources, mini-hydel projects with an aggregate capacity of 22,000 MW were approved and sanctioned.

Many of these projects are now in various stages of implementation under the supervision of Delhi-based Patel Engineering. These are in addition to the mega-projects under NHPC Ltd. Till December 2007, the Arunachal Pradesh Government, it is learnt, received Rs 159 crore as processing and upfront fees for the mini-hydel projects.

Assam, on the other hand, presents a mixed picture. The Ruias are investing in tyres, it is reported. They have already been allotted land for the purpose in South Kamrup, west of Guwahati. A motorcycle assembly plant too is due to be set up in the same area. The public sector Cement Corporation of India’s (CCI) Bokajan unit, one of the major industrial units of the State, is doing well. CCI also plans to set up a cement crushing unit at Kalain in Cachar district soon. But other private sector cement factories in the Umrangshu area of North Cachar Hills are not having a smooth sailing due to variety of reasons, the most important being the critical law and order situation in the area. The reign of terror unleashed from time to time by various terrorist groups will throw everything out of gear. For example, work on construction of the broad gauge rail link to Cachar has been badly hit due to the insurgency problem.

Of the major industries present in the North-East, the public sector Oil & Natural Gas Corporation (ONGC) is important but its operation is constricted because of strained labour relations and matters relating to complaints of lack of social commitments in the neighbouring areas. Oil India Ltd, however, seems to be free from such troubles at the moment, though it also from time to time has to face up to local demand, emphasising the need for its greater role in social cause.

tea plantation

Assam can hardly boast of any major private sector investment worth the name, except perhaps in tea plantation.

In tea plantation, Williamson Magor Group still leads with the largest number of tea gardens, with as many as 48 gardens, in the State.

On the other hand, Tata Tea’s identity has almost eclipsed after it underwent a lot of structural changes so far as tea is concerned.

Assam Carbon Ltd, one of the State’s oldest industrial units in the private sector manufacturing calcinated petroleum coke remained closed for some time in the past due to adverse market conditions.

Prag-Bosimi Synthetics, a textile unit, has remained closed since the mid 1990s.

The 1997 Industrial Policy of Assam, offering an array of incentives, did attract many investors to the State.

Certain limitations in the policy were subsequently removed in the 2007 North East Industrial Investment Promotion Policy.

Consequently, private sector investments by several major and medium industrial started pouring into sectors such as iron and steel, cement and consumer durables and among the big names were Godrej, Revlon and Emami. On March 27, 2008, the Government, by a notification, introduced certain modifications, which came virtually as a bolt from the blue to most investors.

The investment policy had earlier offered 100 per cent refund of central excise duty on value-addition for ten years, which was brought down to 40 per cent in the March notification.

Next, the non-payment of different subsidies (transport, insurance, capital etc) is another source of discontent among the investors.

Worse, the subsidies have been brought under the purview of income-tax.

The business community protested against the move but with little success so far. Many of the prospective investors are now believed to be having second thoughts about future investment plans in the State.

If that happens, many local ancillaries such as packaging, repackaging will be hard hit.

carbon trading

Globally Managed Service (GMS), which is carrying on carbon trading as per the Kyoto Protocol, 2002, a futuristic business concept aimed at containing global warming, is holding out promise. GMS is also connected with the upkeep of heritage buildings and bungalows in Assam.

The pursuit is most alluring to many investors because it is clean, hassle-free and devoid of risk of scams or scandals.

The co-founder and Chairman, Mr Ranjit Barthakur, prefers to go slow over it.

tertiary sector

A rise in investment in the tertiary sector is also evident. The service industry, hospitality industry, retailing, security service, tourism development are attracting many local entrepreneurs. Privatisation of education, both academic and professional, too has emerged as one of the most lucrative areas for investment. The Assamese middle-class, like their counterparts elsewhere, are eager to make investments for quick returns, maintaining at the same time a social face. For the comfort-loving Assamese entrepreneurs, the Guwahati skyline has changed a lot. The first generation real estate dealers and builders have virtually closed shop. A new crop of builders are gradually coming up, many of them exploring opportunities in urban areas outside Guwahati. Guwahati roads are becoming narrower every day with new cars of various models jostling with one another for space. One wonders if all these are the indicators of prosperity. After all, the overall picture remains dismal, notwithstanding the ambitious policy announcements, promises and assurances.

Participating in the programme held on the occasion of the release of the Vision-2020 for North East Document in Vigyan Bhawan, New Delhi, on July 2, 2008, the Meghalaya Chief Minister, Mr Donkuper Roy, rightly referred to the basic shortcomings of the region in sphere of development – the lack of infrastructure, resource crunch, poor governance, inadequate public investments due to the critical financial condition of most of the State Governments in the region and capping it all, corruption in high places.

The region, it appears, has a long way to go before it can catch up with the pace of development in certain other parts of the country.

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