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North-East States must focus on farm and services sectors, says Sanjay Kathuria

Abhishek Law Kolkata | Updated on January 03, 2020 Published on January 03, 2020

Sanjay Kathuria. File photo

The N-E States are more connected now with other States and neighbouring nations, says World Bank economist

The economic potential of the North-East can be achieved through reforms and the region’s participation in cross-border value chains. The North-East’s strengths lie in agriculture and services, says Sanjay Kathuria, Lead Economist and Coordinator, South Asia Regional Integration, World Bank.

These issues have been discussed in a report titled, ‘Playing to Strengths: A Policy Framework for Mainstreaming Northeast India’.

In an interview with BusinessLine, Kathuria talks about the North-East playing to its strengths, regional trade agreements and the need for long-term peace for the region to achieve its economic potential. Edited excerpts:

What are the strengths that the North-East needs to tap?

What we say is that there has been work on connectivity in the North-East under the Act East initiatives. We have seen investments in hard infrastructure that include connecting the North-East (States) within one another, with the rest of India and with the neighbours. This needs to be complemented with softer initiatives like trade facilitation, cross border logistic investments, having through transit and so on.

Connectivity is happening, which is an added thrust.

On top of that there are two global trends that looks to be favourable for the North-East. One is that there is an increasing demand by affluent consumers for responsibly produced agri-products and services. The second one is the growing share of services in manufacturing. The region, we think, is strong in human resources for services and it is very strong in producing agri-products in organic or near-organic conditions.

So one shouldn’t hesitate in saying that the strengths lie in agriculture and services and not manufacturing. There is nothing wrong in not having a major manufacturing sector. Even countries such as New Zealand and Australia have grown rich by focusing on the primary sector.

Will the current economic slowdown affect investments in North-East?

Slowdowns are cyclical trends. A long-term development path is what we are looking at. The message remains that play to your strengths and you can cater to high-value and conscious consumers. This will not happen overnight. It is a long-term development agenda.

In the context of development of North-East, do free trade agreements play a role?

Free trade agreements are somewhat peripheral right now to the North-East. The region currently exports a very small portion of its output. It imports much more than it exports. Free trade is an issue much more for the rest of India.

As a separate issue, the world is moving towards bilateral, regional or sub-regional trade agreements rather than working at the multi-lateral system.

How important are law and order issues and stability of State governments for the North-East to realise its potential?

On a very general level, investment comes when there is stability, political and otherwise. Obviously, States that are stable will gain compared with ones which are witnessing disturbances. Within the North-East you can see that Sikkim developed because it had stability. It can be an inspiration for other N-E States to replicate that model and get investments. Also realise, you come from a base which is low; and so development possibilities are that much higher. So once you sort things out, investments will flow in.

Published on January 03, 2020
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