Nagaland and Act East Policy

Imtipong Longkumer

In order to judge the progress of any region, be it a country or a state, the economic parameter of measuring progress is one of the most important determinant. India is one of the fastest growing economies of the world with a growth rate of 4.2% in the 2019-20 and it is estimated that India will over throw China as the fastest growing major economy of the world in the coming years. In order to maintain and enhance the growth rate of GDP, the contribution of the various states of India to the GDP becomes imperative. Many major states have been contributing tremendously to the growth of our country and yet there are few more states which do not contribute much to the statistics of growth and development. Having said that it is also necessary to bear in mind, whether the respective states have the required infrastructure, resources and the right policy measure in order to contribute to the growth. The Government of India has been investing heavily in this regard by adopting various appropriate policy measures to enhance the contribution of those states which are not at par with the rest of the nation. One such policy which the government introduced is the Act East Policy, although initially during its inception in the year 1991 it was introduced as the ‘Look East policy. Later it was renamed as the ‘Act East Policy’ with the objective to promote economic cooperation, cultural ties and develop strategic relationship with countries in the Asia-Pacific region through continuous engagement at bilateral, regional and multilateral levels thereby providing enhanced connectivity to the States of North Eastern Region with the other countries in our neighbourhood. The North East of India has been a priority in the Act East Policy as it provides an interface between North East India and the ASEAN countries. Under the “Act East Policy” the government is relying on the 3C's (Culture, Connectivity and Commerce) to develop better relations with ASEAN nations. 

According to the state wise GSDP (Gross State Domestic Product) data released by the government of India for the year 2019-2020, the state of Nagaland was at a lowly 29th rank, with a GSDP value of Rs 0.319 lakh crore (US$4.5 billion). The state of Maharashtra was ranked 1st with a GSDP value of Rs 28.18 lakh crore (US$400 billion) in the same year and Andaman and Nicobar Island with the last rank of 33rd with a GSDP value of Rs 0.088 lakh crore (US$1.2 billion). The North Eastern state of Assam secured the 17th position with a GSDP of Rs 3.51 lakh crore (US$49 billion), Tripura was in the 24th position with a GSDP of Rs 0.597 lakh crore (US$8.4 billion), Meghalaya secured the 27th position with Rs 0.348 lakh crore (US$4.9 billion), followed by Sikkim in the 28th Position with a GSDP of Rs 0.325 lakh crore (US$4.6 billion), Manipur secured the 30th position with a GSDP of Rs 0.318 lakh crore (US$4.5 billion),followed by Arunachal with 31st position with GSDP of Rs 0.273 lakh crore (US$3.8 billion) and finally Mizoram with the 32nd position accumulating a GSDP of Rs 0.265 lakh crore (US$3.7 billion). If we look at the GSDP list from the different administrative region of India, the North-Eastern region ranks last i.e. 6th position with 5.61 (Rs lakh crore or INR Trillions) for the year 2020.

Nagaland is predominantly an agrarian economy with more than 60 per cent of the population depending on Agriculture and Allied activities for their livelihood. Also the Agriculture and allied sector is the largest employer of work force in the state with 45.47% of the working population engaged in agricultural activities (Census 2011). But the contribution of the Agricultural sector i.e., primary sector of Nagaland to the GSDP since the year 2011-12 to 2018-19 is consistently at a average percentage of 30.42% which, considering the fact that it employs the majority of the work force in Nagaland and 60% of the population depending on agriculture, is actually significantly less. The Contribution of the secondary sector, comprising of “Manufacturing”, “Electricity, Gas, Water Supply & Other utility services” and “Construction”, is far more less than the primary sector. The secondary sector is considered as the back bone of the economic development process which is contributing the least to the GSDP figures. The tertiary sector is the major contributor to the GSDP of Nagaland from 2011-12 to 2018-19. It has been consistently contributing to the GSDP at an average percentage of 57.94%. The sector includes activities like Transport, Storage and Communication; Trade, Repair, Hotels and Restaurants; Banking and Insurance; Real Estates etc.

The Nagaland Vision 2030 document published by the Government of Nagaland in the year 2016 envisioned the desired developmental directions and goals of the State of Nagaland in detail, herein the State would create conditions favorable for the all-round development of the people, fully integrated to the economy of the country and the world leveraging its unique geographical location to realize the benefits of the Act East policy. In the pursuit to take advantage of this favorable geographical location and rich resource available in the region to propel the economy to a developed state, we must take inspiration from the Yunnan Province Located in China's far southwest.

Like the NER of India, the PRC’s Yunnan province shares borders with many neighbours. The natural advantage of Yunnan’s 4,060 km border with Lao People’s Democratic Republic (Lao PDR), Myanmar, and Vietnam enables the province to act as a land-based connector between the PRC and ASEAN Yunnan is also close to Bangladesh, Cambodia, India, and Thailand. Together with Guangxi and Chongqing in the PRC, Yunnan is naturally positioned as a passage to both Southeast Asia and South Asia by land, with a strategic role in enhancing border stability and cooperation with neighbors. Also like the NER, Yunnan offers many types of terrain, rich flora and fauna, high tourism potential, and historic economic and cultural connect with ASEAN. Despite these natural advantages, both Yunnan (in the PRC) and the NER (in India) were less developed than other parts of their respective countries in themid-20th century. 

However, once the PRC undertook reforms and opened up its economy after 1979, Yunnan came to be positioned as a gateway to both. As a result, Yunnan’s real GDP growth averaged at 10.9% per annum between 2010 and 2016, well above the national average of 8.1% in the same period. The province recorded $21.3 billion worth of trade in 2016, with export at $12.7 billion and import at $8.5 billion, a near 60% increase from $13.4 billion in 2010.9 Key merchandise exports for Yunnan included agricultural products and fertilizers as well as labor intensive manufactured goods while imports chiefly comprised commodities and energy-related products. Services may be expected to expand with the rise of the tourism industry which was almost a quarter of Yunnan’s GDP in 2016, up sharply from 14% in 2010.10 Trade facilitation efforts have contributed to expanding trade links with ASEAN which is Yunnan’s largest trading partner. Merchandise trade between ASEAN and Yunnan totaled $6.0 billion in the first half of 2017, accounting for 63.1% of the province’s trade. 

Similar reforms can be initiate by the state government of Nagaland with due support from the centre to facilitate the growth of our economy and contribute to the Act east policy through engaging in trade with the ASEAN countries.

The writer is an Assistant Professor in the Department of Business Administration, St. Joseph’s College (Autonomous), Jakhama