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Indrajit Borah
Date of Publish: 2016-05-04

Assam - Indigenous Capital, Development 

and Administrative Competency

Do the incidents like leaking question papers, evaluation anomalies, cows devouring answer scripts and very recently, answer scripts burning; not hint at the critical aspects of administrative competency vis-à-vis underdeveloped economy of Assam? Further, the underdeveloped nature can be illustrated by none other than the socio-economic & fiscal indicators. At 2011-12 prices, the per capital income of Assam was 30 per cent below the national average in 2004-05 and 45 per cent below national average in 2011-12. On the fiscal front, the growth in development spending has not kept pace with that in non-development spending. And, most of the anti-poverty programmes suffer from considerable leakage and inefficiencies in their implementation.

Now, beyond customary fiscal prescriptions by the planning commission in its “Assam State Development Report 2002”, let’s look at the socio-economic relations of the triad - indigenous capital, development and administrative competency.

The missing chronology of indigenous capital

The indigenous capital in Assam has remained undeveloped owing to long persistence of colonial-marinated primitive feudal structure. Under British rule, the administration was systematically organized to facilitate colonial exploitation and thereby created foundations for underdevelopment. The indigenous capital formation process in the sectors of interest to the colonial ruler like tea and minerals was suppressed. The business acumen of Maniram Dewan was the victim of this process. Likewise, the feudal wealth, once under Ahom royal patronage later became subservient to the British colonial rulers and after independence; it was not diffused by land reforms in totality. On obvious reasons, the traditional feudal wealthy could not initiate any entrepreneurial breakthrough to the extent to compete the national capital. For instance, the Jamindary wealth of Hemen Barooah could be capitalised not beyond the plantation sector.

At national level, the inward-looking government policies after independence led to a distribution-oriented economic process; rather than efficiency-led one. The state capitalism could not promote environment for new capital formation, instead it was commandeered by already consolidated industrialists, traders and social-economic power groups. The anti-incumbent political upsurge may have immediate alternative socio-economic formulations. However, as long as the socio-economic discourse bargains only for populist electoral money, the economy cannot unleash the production potential by breaking the prolonging feudal relations. With increased state role in public life, the asphyxiated picture of ineffective public finance can be elucidated by the vicious cycle of underdevelopment, innate corruption and affiliated poor administration.

Identity, Insurgency and Underdevelopment

The modern Assamese identity today has its roots in the inclusion process of different identity groups on the rise of Ahom rule in the Brahmaputra valley. The boundary of the multi-ethnic social base was further widened with the induction of different groups of people from various parts of British India. In this process, the formation of Assamese identity has always been associated with the alienation-centric discontents due to migration and infiltration issues since independence. The sense of deprivation in the minds of Assamese middle class due to lack of job opportunities, the 'outsiders' significant role in Assam's industry and trade, and the fear of being culturally dominated imparted a strong emotional content to the Assam Movement. Certainly, there have been reciprocal relationships between the identity-conflict and underdevelopment in multi-ethnic Assam. To large extent, the phenomenon of insurgency may also be viewed as the by-product of identity movements. Today, the economy has been distressed by both the causes and consequences of insurgency.

The “Assam Accord” type package-based solution to the vexatious problem of underdevelopment has its historical milieu. The middle class aspiration leading to Assam movement was politically resolved as a law and order issue by the Union Home Ministry. The rationalisation of Assam Movement by “defending cultural identity without the economic question” type narratives camouflaged the underdevelopment characteristics like public money dependent subsistence relations and scarce capital formation. In fact, this movement was the culmination of the failures of Indian planning in generating effective fiscal money for capital growth. The region specific effects of the sector specific development policies of the central government resulted in asymmetric spatial distribution of resources in favour of historically better off states.

Dualism and  Regional Dualism

The inherent contradiction of traditional agrarian economy with the capital-intensive mode of production has definite explanation to the underdevelopment trap. Again, the regional dualism, a legacy of colonialism is nothing but economic subordination of geographical underdevelopment by industrialised capital. Even after liberalization, the trending of private national and multinational capital influx indicates that it has confined to already developed states. Conceptually, any dualism in developing economies should be reduced by the trickle down effects. Agriculture has to provide the resources, labour as well as capital, for expanding the industrialised sector. In reality, the anticipated trickle-down effects hardly ever happened. In spite of substantial growth in later decades, the problem of duality that characterized Indian economy has remained unattended.

In the phase of growing economy, the isolation of the agrarian sector from the industrialisation process in terms of transferring resources will further increase in dualism. The urban workforce demand in Assam has mostly been fulfilled by the migrating population since colonial days. There has been traditionally high urban unemployment rate due to mismatch of the required and the available skills for the industrial workforce.

Disguised Entrepreneurship

The historical development of mode of production in Assam could not accomplish the necessary material base and time required to transform into a capitalist system. In the monetization process of primitive economy by colonial integration, the local entrepreneurship and indigenous resource based production modes were wrecked. During this period, a merchant class from mainland India was introduced as intermediary class to subserve the interest of the colonizers. Later, the peripheral design pushed this merchant class to a narrower economic horizon investing in trading rather than in manufacturing as industrial entrepreneur.

An under-developed economy is often characterized by lack of positive factors for opportunity-driven over necessity-driven entrepreneurs. The entrepreneurial traits acquired in the capital formation process are dynamic and influenced by social, economic and environmental factors. Unless the indigenous population internalise an entrepreneurial culture, this chronic underdevelopment menace is here to stay. There must be well factored non-subsidised indigenous enterprises, independent of the electoral politics and populist money. Can an entrepreneur as the organizer of the factors of production overcome the socio-economic factors, colonial rule or egalitarian abstract doctrine?

Indigenous Modes of Production and  Administrative Competency

The peripheral underdeveloped economy subservient to capital elsewhere by unequal regime of exchanges has been the colonial legacy. The hunt for oil in the oil-bearing areas of Assam formed an important part of the colonial enterprise which was replaced by the Indian state monopoly after independence. In reality, this change of guard never dripped to the basic foundation of the underdeveloped economy. The tea industry in Assam also experienced similar patterns of expansion and exploitation.

The undermining of indigenous productive base has resulted in asymmetrical and futile special economic packages and central assistance. In return, the dependency on the heavy imports of primary, consumer and non-consumer commodities has increased. For instance, Assam imports 74 percent of its milk products, 92 percent of its meat requirements and 94 percent of its eggs from outside the region. In spite of natural abundance of water resources, the state imports half of its fish requirements from outside. As a valid indicator of this dismal picture, the credit deposit ratio of all the scheduled commercial banks in Assam has been worked out at 42.79 percent as on 31st March 2015 against national average of 77.4 percent for the period.

Since independence, all protest movements in Assam were centered on the demands for the greater share of central public finance and public sector investments. In fact, the public money can have either very limited or even adverse implications on entrepreneurial development without a revolution from the people within. Unless an entrepreneurial class comes up with indigenous production base; no socio-economic force at present is in a position to defy the administrative competency. And, no subsistence design of public money driven alternatives can break the prolonging feudal-based relations.

The trend Reversal for Indigenous Capital

Now, what are the potential sources for indigenous capital formation? The public finance has been the basic source of funds in the form of schemes, salaries, aids and subsidies. Can the huge leakages from the public exchequer, indemnified by feudal wealth be transformed in to a legitimate source of capital? As per reports, the extremist groups could accumulate huge extortion money over the years. The surrendered members have substituted some business activities in trading, services and public sector contracting in Assam. Will they contribute significantly towards the indigenous capital formation process with fair competitive advantage?

The entrepreneurial development is a historical process, which cannot merely be replicated by state patronage or skill development programmes. In developing economies, the consistent income level of the middle class population is the main driver for opportunity-based entrepreneurship. The Assamese middle class in the organised sector has enjoyed some favourable conditions that have positively affected its consumption behaviour. Can they be incentivised for entrepreneurship by undoing the public money driven barriers? If entrepreneurship is the response to the disequilibrium between the perceived opportunities and their exploitation at any point of time, then the forces leading to the acuity for new opportunities by Assamese middle class must challenge the prevailing administrative competency level as well.

The Way Forward

There is no dearth of avenues for indigenous capital, once the business acumen and the innovative ideas of an entrepreneur catch the right opportunities. The government, business and social entrepreneurs should take well-defined roles to create an entrepreneurial ecosystem for the self-sustained growth of the state. In this direction, the central government’s planning to promote start-ups in North-eastern states is praiseworthy and an opportunity to garner.

Indrajit Borah

( Indrajit Borah is a freelance writer based in Delhi. He takes special interest in public policy analysis. He can be reached at indrajitborah@yahoo.co.in. )


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