Towards Natural Resource-based Models of Development for North East India

Source: Research-Gate


A must article by our Senior Expert, Dr. Ajit K Neog, where he writes about the potential of natural resource development of NE-India.


  1. Introduction: Human life is a continuous struggle to achieve success in the race of economic development. Struggle involves economic activities which springs from human wants and desires. Wants are infinite and insatiable. They are satisfied through production and consumption of goods and services. Production involves use of natural resources, environment and technology. Unfortunately, resources are scarce and finite relative to the sum total of wants. This limits the capacity of an economy to produce its gross domestic product (GDP), which is a fundamental economic problem in any society. It necessitates symbiotic adaptation of wants, activities, natural resources and the environment at large.
  2. Types and Economic Properties of Natural Resources: It would be illuminating to understand what constitutes natural resources. Broadly speaking, natural resources cover both geography and geology. According to “The New Penguin Dictionary of Geography by A.N. Clark”, natural resources are the wealth supplied by nature and available for human use, including energy, mineral deposits, soil fertility, timber, water power, fish, wild life and natural scenery etc. Economists often classify factors as flow, stocks, continuous, etc. Natural resources like the Brahmaputra river water, gas, wind are classified as flow. Brahmaputra water is plentiful during the monsoon season. No doubt, it has got high ‘value-in-use’, as water is life. But being plentiful, it has got low marginal utility and also low ‘value-in-exchange’ or price. Hence river water in Assam and the North Eastern Region has hitherto been wasted. The same was the case with natural gas in the oil fields of Assam till the 1980s when it used to be flared up as an waste. The ‘flow’ category of natural resources including forests can be depleted, sustained or even increased by human activity. The ‘stock’ category of natural resources are those which are non-renewable and depletable. Examples of ‘stocks’ natural resources are hydrocarbon, metals and non-fuel minerals. Their stocks decrease with their use over time; they are scarce and prices high. Renewable natural resource is a category in itself. Any natural resource which is capable of being replenished partly or fully by natural means is a renewable resource. Examples are fish, timber and animal populations. Such resources are renewable at least as fast as they are consumed. It is to be noted that renewability does not imply that the resource cannot be made extinct. Resources like water, forest, sand, stones, bio-diversity can become non-renewable due to over exploitation, i.e. if they are used up at a faster rate than they are replenished by natural process. The ‘continuous’ category natural resource include solar and tidal energy.

Among the economists Alfred Marshall was one of the earliest to recognize the usefulness of natural resources for economic development. Land, according to Marshall, includes all the free gifts of nature such as mines, fisheries etc, which yield income. It extends to seas, rivers, waterfalls, rain, sunshine, winds, climate, space etc. To him, natural resources being gift of nature, has no supply price except for its utility. Natural resource and environment are synonymous nowadays.

  1. Concept of Development: Development has many facets. Economic development refers to economic transformation of a region or a country that leads to improvement of economic capabilities of its residents, their well-being and standard of living. It denotes not only the increase in the economic structure accompanied by technological, social, cultural and political reforms. Economic development is a movement and a process. It is not only to grow vertically but also to expand horizontally. It includes economic growth plus change. Development has a larger meaning than economic growth. Often it is equated with modernization, industrialization and human development.

Growth occurs as the economy increases utilization of its natural, material and human resources and learns to employ them more productively. Economic growth, however, may not bless every region or everyone equally. Over time, it has a tendency to increase relative inequality initially in the early stages of development and reaches a peak thereafter. Eventually, the growth process reduces inequality. This phenomenon is known as ‘Kuznets Curve’ (inverted U hypothesis), which states “more income equality today for less inequality tomorrow”. Human earnings depend on the use of environmental resources, among other things. Overuse of natural resources leads to environmental degradation. Researchers have discovered that the tendency of many form of environmental degradation is to follow an “inverted U” pattern. This phenomenon is christened by the development economists as the “environmental Kuznets curve”. We should keep these things in mind while studying natural resources.

  1. Schools of Thought on Resource Endowment: There are some schools of thought on the evolution of natural resources. We want to focus on two such mythological schools which may help in understanding the current debate on natural resource regionalism or nationalism.
  2. Cornucopia School: According to cornucopia school, natural resources are in abundance and in inexhaustible store. The advocates of this school believe that with the utilization of such resources, people will live a time of abundance and peace like the golden age of past when the earth produced plentifully and people were in happiness and glowing health lived to a great age. Myth has it that golden age in Greece existed under the rule of Cronos ( also called Kronos, Cronus or Saturn) before the rule of Zeus. Cronos was the son of earth and sky, who seized the control of earth-the abode of natural resources including water. This school projects ‘Ram Rajya’, a great blessing through use of abundant water resource. Voila, watch the following myth about the fate of Tantalus. Tantalus was a son of Greek God Zeus. Because of his misdoings, Tantalus was banished by Zeus to Tantalus prison beneath the underworld. There Tantalus stood in widespread water up to his chin, but was unable to quench his intense thirst, since water receded every time he tried to drink. Imagine the fate of flood victims in ‘Majuli’ during flood season when water used to be abundant all around but no safe water to drink.

Doom Watcher School: The advocates of this school keep on watching the doomsday that may happen due to overexploitation of natural resources. They cite impending Promethean perils associated with Prometheus, the Greek God of fire and friend of mankind. Prometheus was an embodiment of forethought, and secret knowledge of future events which he did not reveal. He stole fire from heaven and gave it to men as gift.  Prometheus was hostile to Zeus. Zeus was the sky god of the Greeks and was active in the daily affairs of the world. Originally the earth was abundant in natural resources. Prometheus taught men to cheat Zeus. For this act, Zeus punished Prometheus by withdrawing the original abundance of the earth. Prometheus’ gift of fire to men is a technologically advance step like the process of two steps forward and one step backward, because  the price of technological advance ( a gift of iron age) was the grief and destruction. The advocates of the doom watcher school compare big dam or nuclear power projects with Prometheus’ peril. It can bring great benefits but without proper safe guards the benefits can be overshadowed by dark clouds (uncertainties) or even ruined by disasters.

Myths give valuable lessons on blessing and curse of natural resources. One must take a rational view in utilization of resources. Environmental sustainability, techno-economic feasibility, social acceptability must form the cornerstones of any project to utilize natural resources. SWOT (strength, weakness, opportunity, threat) analysis, social cost-benefit analysis, risk analysis, mitigation measures, environment impact analysis of such projects must be transparent and in public knowledge. Once such project gets executed, monitoring, concurrent evaluation, feedback and corrections must form its part and parcel.

  1. Ownership of Natural Resources in Indian Polity: The Constitution of India earmarks the domain of the Union government and States on the powers upon the natural resources. In Part IV (Directive Principles of State Policy) Article 48A states “The state shall endeavor to protect and improve the environment and to safeguard the forests and wild life of the country.” Under Article 246 in the Seventh schedule, three lists, viz. list –I (Union List), List-II (State list) and List- III (Concurrent list) are given. The following natural resources given in list I pertain to Union government viz. oil fields and mineral oil resources (entry 53 in list –I), mines and mineral development declared by parliament (entry 54, op.cit.), inter-state rivers and river valleys (entry 56, op. cit.), fishing and fisheries beyond territorial waters (entry 57, op. cit.), Survey of India along with Geological, Botanical, Zoological and Anthropological Surveys of India, and Meteorological organizations (entry 68, op.cit.). Public river water disputes are dealt under Articles 262 and 263.

As against in the Union list, the resources in the domain of States include water ( entry 17 in list- II), land ( entry 18, op.cit.), fisheries  (entry 21, op.cit.), gas & gas works ( entry 25, op.cit.) only. On the other hand, the following natural resources are in the concurrent list (List- III), i.e. forests (entry 17A, List- III) and protection of wild animals and birds (entry 17B, op.cit.). In the sixth schedule states /areas, the district councils enjoy jurisdictions over the use of land, forest (other than reserved forests), use of water course for agriculture, fisheries, issuance of licenses or leases for extraction of minerals and regulation of jhum (shifting cultivations).

  1. Relationship between Natural resources and Economic Development of North East India: We know that land is the basic natural resource on which agriculture, human and animal habitation, industrialization and other activities depend. Geographical area represents land. North East India comprises of eight States viz. Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura, which together account for 8.01% of India’s geographical area, 3.77% of its population and about 2.58% of Net Domestic product in 2012-13.

6.1 Relationship between Land and Agricultural Output: One of the principles of Economics is to study the relationship between ends (output) and means (resource). Here land resource is represented by State geographical area and output by the percentage share of Gross State Domestic Product (GSDP) emanating from agriculture and allied sector in the total GSDP. We denote geographical area by variable x (independent variable) and agri-GSDP by variable y (dependent variable). Data on these two variables are for the year 2011-12 and are compiled for the eight States (sample size n = 8) from official sources (see table- 1). We study the relationship between the two variables applying correction coefficient (r) and linear regression. It is found that the degree of relationship between geographical area (land resource) and agri-GSDP is 0.72922, which is positive and quite high. The regression equation has a positive coefficient of 2.29 in the explanatory variable x (geographical area) with a positive intercept of 14.90. These results are given in brief in box 1.


Number of states (n)      =  8

Reference year                 =  2011-12

Geographical Area           =  x

Agri- GSDP                          = y

r  = 0.72922

y = 14.90 + 2.29x







6.2 Relationship between Land-Man Ratio and Agricultural GSDP: Here land-man ratio is arrived at by dividing the State geographical area by the State total population (2011 census) and the ratio is denoted by x, the variable y is the same as in  para 6.1 above i.e . agri-GSDP for 2011-12 . The correlation coefficient (r ) between x and y is 0.68174, quite high. The linear regression equation has a coefficient of 3.4 and intercept of 17.28. It may be added that variation in land-man ratio is found to be more than that in agri-GSDP. The results are presented in box 2.


Number of states (n)      =  8

Reference year                 =  2011-12

Land-Man Ratio                =  x

Agri- GSDP                          = y

r  = 0.68174

y = 17.28 + 3.4x


6.3 Relationship between Rural Poverty and Agri-GSDP : Scholars say that poverty is more concentrated in rural areas where agriculture is the major economic activity and source of earnings of the people. We can hypothesize that rural poverty (y) incidence is a resultant of lower share of agri-GSDP (x) in GSDP. To test this hypothesis, we compiled data on rural poverty (under Tendulkar methodology) for the eight States and agri-GSDP for 2011-12. The estimated correlation coefficient (r ) is found to be 0.67948, positive and high. Regression coefficient is 0.87 and intercept 6.17. The results confirm that poverty is inherent in agriculture, which is a natural resource. Results are summed up in box 3.


Number of states (n)      =  8

Reference year                 =  2011-12

Rural Poverty                    =  x

Agri- GSDP                          =  y

r = 0.67948

y = 6.17 + 0.87x


6.4 Relationship between Overall Poverty and Income: Utilisation of various kind of resources in an economy ultimately gets reflected in the level of per capita income. Per capita income is an indicator of the level of development, the rise in which is expected to reduce poverty. In other words, per capita income (x) and poverty (y) are expected to have negative relationship. To test this relationship, we compiled data and per capita Net State Domestic Product (at current prices) and overall (rural plus urban) poverty percentage, both data for 2011-12 (table 1). The correlation coefficient (r ) is found to be negative and high, r=(-) 0.70274.  We fitted a double log (in natural logarithm) regression function, which yields negative regression coefficient of (-) 0.94 (approx.) and a very large intercept value. Results are given in box 4. It confirms our hypothesis. However, poverty declines only at very high level of per capita income. The results do not say anything about inequality.


Number of states (n)      =  8

Reference year                 =  2011-12

Per capita Net Income   =  x

Overall Poverty                 = y

r= (-) 0.70274

Log y =548344.69 – 0.94 log x


6.5 Utilisation of Land and Water Resources: We now look at how much of land resources has been utilized under agriculture, plantation crops, horticulture and jhum in the region. For this, we compile agricultural census (2010-11) data on total area of operational holdings and find its percentage to State geographical area. We find that the percentage of total geographical area used for agriculture ranges from 4.58% in Arunachal Pradesh to 64.29% in Nagaland, compared to All-India figure of 51.93%. The figures for other States are as under Assam 38.23%, Tripura 27.22%, Sikkim 15.03%, Meghalaya 12.80%, Manipur 7.70%, and Mizoram 4.97%. It is evident that there is ample scope to expand farming in States other than Nagaland, Assam and Tripura.

Nature has gifted the North Eastern Region with abundant rainfall and water resources, though there used to be occasional droughts in some pockets. According to North Eastern Region Vision 2020 data, the region hosts 38% of India’s river waters. We find that utilization of water resources in the form of irrigation is negligible and uneven. According to official data, in 2010-11 the percentage coverage of irrigated area under all crop ranges from lowest 4.1% in Assam to highest 35.0% in Tripura compared to 44.9% for All-India and 98.0% in Punjab. The above figure for Meghalaya is 22.0%, Manipur 21.0%, Arunachal Pradesh 20.3%, Nagaland 20.2%, Sikkim 13.2% and Mizoram 9.1%. All these poor irrigation ratios, particularly of Assam, confirm the wastage of water resources reflecting Tantalus syndrome. Ground water resource is also getting polluted, which is a matter of serious concern. A recent news item (Assam Tribune, 3.1.2015) reported that ground water in 19 out of 27 districts of Assam suffer from arsenic contamination which has serious threat to health.

  1. Sketches of Some Development Models: After putting forward the resource analysis, we now move to present briefly some known and some unknown models of development.
  2. i) Rootless Development: Development brought by destroying historical, archaeological, cultural and heritage sites can be called rootless development, examples are destructions of parts of Numaligarh rampart in Golaghat district, Lachit garh in Kamrup (metro), Cotton College old buildings and some of its hostels, etc. Development divorced from cultural and heritage in the name of modernization and urbanization is growth without soul.
  3. ii) Development by Non-creative Destruction: This type of development model refers to deforestation, overexploitation of natural resources and environment, killing of wild animals (rhinos) and endangered species, pollution, climate changes, global warming, etc which strike at survival of man, animal and the Nature. Other examples of this model are terrorism, insurgencies, conflicts, clashes, witch hunting, industrial disasters, etc.

iii) Ruthless Development: This is a kind of model which believes in “becoming cruel today to be kind tomorrow”. Higher taxes, excessive prices of essential goods and services, abnormal electricity tariffs with irregular power supply, lack of safe drinking water, mass unemployment and such other maladies bring ruthlessness and impoverishment to the common people. This model widens inequality, brings polarization. Such type of development model is inhuman.

  1. iv) Development through contractors: This is a type of model where contractors, middlemen, commission agents, hoarders, linkmen with the government etc. rule the roost. So-called Syndicate Raj is a glaring example of this model. The system works on the basis of “referees- rules-rewards” crony capitalism, rent seeking and blackmailing are part and parcel of this model. The actors in the model are parasites. The entire economy of the North East region is called informally a ‘contractors’ economy.
  2. v) Development by Cheating: This is a model of development in which actors play the role of work sharks (eg. late comers to public office, taking full pay with little or no work), cheats, thieves, tax dodgers, misappropriators, fraudsters, bribe takers, free riders, kickbackers, shadow bankers, chit fund organizers etc. Kleptocracy and nepotism are integral to this model. Some scholars argue that government (particularly coalition variety) is a market place where power and patronage are bargained, bought and sold leading to scams like telecom scam, commonwealth game, Coalgate, Saradha scam etc. Such a model ruins/ damage the society and economy.
  3. vi) Development by deprivation: This is a model which envisages bringing so-called development by depriving the citizens from employment and social benefits but encouraging immigrants without passport. The immigrants encroach government land, open space, forest land, parks and riverine areas depriving the indigenous landless persons. In the job market mainly the informal sector market, they crowd out the domestic workers.

vii) Voiceless Development: This is a model as per which voices of the weaker sections, working poor, unorganized domestic workers, unemployed are not heard or refused to be heard by those in the helm of powers. The above sections lack empowerment.

viii) Visionless Development: This type of model gives more priority to present generation’s consumption than to future generation’s needs. It encourages exploitation of natural and other resources for the present benefit to such an extent as to leave hardly anything for the future. It leads to growthless future with no vision. It violates the principle of inter-generational equality.

  1. ix) Sustainable Development: This model envisages development to last not only for the present generation but also for the future generations. Under this model, it has to be ensured that the stocks of overall (natural and manmade) resources rise with the population over time so that development momentum is sustained. It is a ‘live and let live’ type of model. Sustainable development has at least four pillars:
  • environmental sustainability, (b) social sustainability, (c) economic sustainability, and (d) sustainability of political institutions.
  1. x) Inclusive Development : This model implies that all the citizens are stake holders and partners in the development process, hence all should be included. It echoes the ideal of ‘development of the people, by the people and for the people’. ‘Inclusive growth’ which was introduced in India’s Eleventh Plan (2007-12) is a part of inclusive development model at the macro level. Initiatives launched by the Prime Minister in 2014 like “Sabka Saath Sabka Vikash” (i.e. together with all, development for all), “Chalein Saath Saath” (i.e. forward together we go), “Jan Dhan Yojana’ on financial inclusion are in line with the models of inclusive development.

Development models mentioned above are neither exhaustive nor mutually exclusive. They are illustrative. Some elements may overlap. Some of the models are informal. Development can not be painless as the process involves sacrifice by some and gain by others. There will be both winners and losers. Winners must not take all. Losers must be compensated and their concerns addressed.

  1. Suggestions and Conclusion: There can not a single universal model of development for all. Suitability of development models to a particular region depends on historical, geographical, institutional, sociological, demographic, technological, cultural and local factors. The models hitherto prescribed by the Planning Commission and Finance Commission were based on trickle-down or top down approach under the assumption of “one size fits all.” In spite of this, two models are talked about in the country. One is Kerala model with excellent performance in literacy, education, health, population control, life expectancy, social services, migration and standard of living. The North East will take a long time to arrive at Kerala’s level of excellence. The other is Gujarat model which gives priority to agriculture, irrigation, power supply, drinking water, education and security.

North Eastern region has been suffering from backlog in all the socio-economic parameters. It is in race against time to clear the backlogs and development deficit. Though the region is abundant in natural resources like water and soil, our study shows they are far away from utilizing the potential. Rational and optimal utilization of such resources with people’s participation is a hope for sustainable development. The region is heterogeneous not only within itself but also within each state. Locally rooted development model based on renewable natural resources incorporating their strength, weakness, opportunity and threat (SWOT) can be a suitable option for North Eastern Region. Conversion of resources to finished products in the local areas can maximize local value addition instead of selling them in the form of raw material. This will bring inflow of money to rural areas and stop outflow, besides ensuring employment, self-sufficiency and economic security. We can illuminate the impact of such a model with the examples of successful water hyacinth craft project, medicinal and aromatic plants project promoted by North Eastern Development Finance Corporation (NEDFi) in different parts of the region. North Eastern Region is a net importer of food grains and consumer goods (except tea) and industrial goods. Our study shows that there is huge potentiality to raise per hectare productivity of rice from the current level of 2036 kg in Assam to raise to Punjab’s level of 3989 kg (about 2 times higher). It needs more utilisaiton of water resource, among other factors. There is huge demand for organic farming products, floriculture, horticulture, vegetables, spices, non-vegetarian products, aquaculture, bamboo & cane plantation, ethanol crops, vermicomposting, etc., which can be produced locally without extensive land. We would also suggest that the region should aim for bringing green revolution, blue revolution and golden (horticulture) revolution for which natural resources are locally available. Prime Minister’s announcement of the North Eastern Region as Natural Economic Zone (N.E.Z.) at Kohima in the Hornbill Festival in December 2014 seems to be a prelude in this regard. However all these needs capacity building, skill development, infrastructure build-up, technical progress, pro-active governance with best practices in public administration and delivery, among other things. Much is expected to depend on the attention given to the region by the newly set up NITI (National Institution for Transforming India) Ayog in the time to come.



Table 1:  Statewise Geographical Area (million hectares), percentage share of Agricultural GSDP in total GSDP at current prices (2011-12), Land-Man Ratio (hectare) in 2011, Rural Poverty (%) in 2011-12, Overall Poverty(%) and Per capita income (Rs. at current prices) in 2011-12.

State Geog. Area

(Mn hect.)

Agri –GSDP (% share) Land-Man Ratio (hect.) Rural Poverty (%) Overall Poverty(%) Per-capita Income (Rs.)
Assam 7.844 24.58 0.25 33.9 32.0 36,415
Arunachal Pradesh 8.374 40.94 6.05 38.9 34.7 70,159
Manipur 2.233 24.80 0.78 38.8 36.9 32,641
Meghalaya 2.243 15.73 0.76 12.5 11.9 54,648
Mizoram 2.108 17.93 1.92 35.4 20.4 55,886
Nagaland 1.658 25.78 0.83 19.9 18.9 60,578
Sikkim 0.710 8.10 1.16 9.9 8.2 1,24,791
Tripura 1.049 21.32 0.29 16.5 14.1 54,077


Source:           i) World Bank, Strategy Report (June 2007), Report No. 36397-IN.

  1. ii) Govt. of India, Agricultural Statistics at a glance 2013.

iii) Govt. of India, Economic Survey (2013-14), Statistical Appendix.


Select Reference:

Marshall, A.               :           Principles of Economics (8th edition), 1962, ELBS, London.

Meier G.M.                :           Leading Issues in Economic Development, 2007, OUP, New

& Rauch  J.E.                          Delhi

Cotterell, A.               :           A Dictionary of World Mythology, 1986, OUP, New Delhi.


Evans, B.                     :           Dictionary of Mythology, 1970, Dell Publishing, New York.

Saikia, K.N.                 :           Lower Subansiri Mega Dam Dispute, 2012, Global Law                                                            Services, Guwahati.

Koutsoyiannis, A.      :           Theory of Econometrics (second edition), 1979, Macmillan,                                                    Delhi.

Neog, A.K.                  :           “Models of Industrial Development with reference to North                                                   Eastern Region” in Silver Jubilee Souvenir, Assam Economic

& Statistical Service Association (1982), Gauhati.

World Bank                :           Development and Growth in Northeast India, Strategy                                                             Report (June 2007), Report No. 36397-IN.

Govt. of India,           :           North Eastern Region Vision 2020 (Released in 2008)



Mali, D.D. & Neog, A.K.:      Report on Impact Study of Water Hyacinth Craft Project,                                                         2013, NEDFi, Guwahati.

-do-                 :           Report on Impact Study of NEDFi’s R & D Centre for                                                                  Medicinal and Aromatic Plants, 2013, Guwahati.

Neog, A.K.                  :           “Prof. N.C. Das Memorial Lecture on Economic Development                                                 of North East India: A Glimpse”, Deptt. of Commerce,                                                              Gauhati University, 2013.


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