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Working Paper-5 Final Working Paper No. CDS/05/2020 Impact of Central Funds on the Economic Development of Arunachal Pradesh Nirod Chandra Roy June 2020 Centre for Development Studies Department of Economics Rajiv Gandhi University Rono Hills, Arunachal Pradesh Working Paper No. CDS/05/2020 Impact of Central Funds on the Economic Development of Arunachal Pradesh Nirod Chandra Roy June 2020 Centre for Development Studies Department of Economics, Rajiv Gandhi University Rono Hills, Arunachal Pradesh PREFACE The Centre for Development Studies (CDS) was set up as a research adjunct at the Department of Economics, Rajiv Gandhi University (RGU), Itanagar, Arunachal Pradesh, with a generous grant from the Ministry of Finance (Department of Economic Affairs), Government of India. The objectives of the Centre include the creation of high-quality research infrastructure for students and researchers and faculty members, in addition to sponsoring and coordinating research on various developmental issues having policy implications both at the regional and national level. Publishing working/policy papers on the research outcome of the Centre, monographs and edited volumes are among the key activities of the Centre. The present working paper by Prof. N.C. Roy, titled, ‘Impact of Central Funds on the Economic Development of Arunachal Pradesh’, is the research outcome of a project on the inflow of funds from the Centre in Arunachal Pradesh. It is the fifth in the series of working paper published by the Centre for Development Studies. The working paper primarily highlights the processes that has resulted in the improvement in the quality of life of the people in the state, as an outcome of the overall economic development witnessed in recent times. The study attempts to quantify the role of the inflow of funds from the Centre to the State and its impact on the development process. Arunachal economy has witnessed a trajectory of growth which is well marked by its noticeable gradient. Unlike other states of the country the development programme in the state was launched only after independence. Till 1962, the year of Indo-China war, a gradualist approach towards development was undertaken. The war, drastically altered the vision of development towards the borderlands and the Government of India reoriented its policy to accelerate the growth of the Arunachal economy. This has resulted in the steady flow of funds from the Central Government to the State. The study by Prof. N.C. Roy is an attempt to quantify the effects of central funds upon the growth of income and other development indicators of the State. This working paper, with its focus on the impact of central funds on the economic development of the State, will be interest and use to policy planners, academics, researchers and students. I congratulate the author for the excellent time bound work. Date: June, 2020 Vandana Upadhyay Coordinator, Centre for Development Studies Department of Economics, Rajiv Gandhi University ACKNOWLEDGEMENTS The process of transformation of the many heterogeneous insular tribal economies into a single economy, the Arunachal economy and its slow but steady ascendancy on the trajectory of growth began with the launch of the development programme by the Government of India in the days following the independence of the country. The dynamic forces unleashed by the operation of the development programme which was crafted with all care by people like Pandit Nehru and Verrier Elwin, the famous anthropologist, effected a gradualistic transformative process which worked through both horizontal and vertical dimensions. Horizontally, the barter-fed insularity of the different jhum-based tribal economies was lifted by the introduction of money which created the inter-tribal transactional space. Vertically, the monetising traditional economies took on the path of integration with the national economy. However, the changes experienced by Arunachal Pradesh are not only translative and transformative but also ameliorative. The magnitude of ameliorative content in the transformational process can be gauged by the fact that the quality of life of the people has improved markedly. This study highlights the process of the improvement in the quality of life as captured by economic development in the State and tries to quantify the role of the inflow of funds from the Centre in it. True that the role of the Central funds is not confined to effecting changes in the economic domain only; the limitation of this study is that it focuses only on the economic development. The non-economic dimensions of development though highly relevant to the understanding of the process of economic development are kept beyond the scope of the study. In order to quantify different relationships, a model of growth of the Arunachal economy is formulated. In fact for the last one decade I have been trying to construct a growth model of the Arunachal economy. The efforts however, lacked continuity. Then the sponsorship came form the Indian Council of Social Science Research (ICSSR), New Delhi. It is the financial grant of the ICSSR which enabled me to engage research assistants, collect adequate secondary and primary information and take the theoretical model to the testing ground. The theoretical model performs reasonably well in the empirical testing. At the very onset, I would like to thank the Centre for Development Studies (CDS), Department of Economics, Rajiv Gandhi University (RGU), Rono Hills for accepting my research study and deciding to publish it as a working paper of the CDS. I am thankful to Prof. Saket Kushwaha, Vice Chancellor of Rajiv Gandhi University for his support and encouragement to the CDS and the Department of Economics. Special thanks are due to Prof. Vandana Upadhyay, Coordinator, Centre for development Studies for taking the trouble and the initiative to publish this study as a working paper. My sincere thanks goes to Prof. Tamo Mibang, former Vice Chancellor of Rajiv Gandhi University for his continuous support. I would also like to thank all my colleagues in the Department of Economics, Rajiv Gandhi University for their support and encouragement in this long academic journey of mine. In carrying out this research I have got advice, suggestions, and help from many people and institutions. I should start expressing my gratitude to the ICSSR, New Delhi which sponsored this study. While carrying out this study I consulted JNU and Gauhati University Libraries. I am thankful to the staff members, officials and reprographers of these libraries. Prof. Atul Sarma, fromer Vice-Chancellor, Arunachal University extended me advice on many occasions. In fact, some of the ideas got filtered into this Report out of discussions which, formally and informally, I had with him. I remain deeply grateful to him. My thankfulness goes to all my colleagues in the Department of Economics especially to Prof. S. K. Nayak who advised and helped me in the estimation of the growth model. Ms. Sreeja Sathisen provided secretarial assistance, to whom I express my thankfulness. Two research assistants Dr. Brojen Das, and Mr. Kirnya Eshi worked in the project. Both of them provided invaluable service to the successful completion of the project. Mr. Vijay Kumar Prasad did the typing work, Dr. Jawan Singh Rawat did some computational work including provision of computer lessons to me and Dr. Bedabrat Saikia helped me in the development of some ideas of technological change in agriculture of Arunachal Pradesh. I remain thankful to them all. Last but not least, I must express my gratitude to all those people belonging to both the autochthonous and migrant categories, whom I have interviewed formally as well as informally and developed my ideas about the workings of the Arunachal economy. In fact, it is these people who supplied the basic information which forms the kernel in the empirical part of this study. Nirod Chandra Roy Rajiv Gandhi University, Itanagar June 2020 SUMMARY The growth trajectory of the Arunachal economy trapped long in a growthless low- level equilibrium shifted upward in the years following the independence of the country when the Government of India launched the development programme. This programme, inspired by the national desire to lift the disadvantaged to the level of the better-off, and to bring about regional parity, was operationalised by a steady inflow of resources and new technology in an area which, then a part of Assam, was one of the least developed regions of the country. It will be germane to provide a glimpse of the situation prevailing at the time of independence: in the entire area of 83743 sq km forming now Arunachal Pradesh there were only three primary schools with an enrolment of 30 students and so the overall literacy rate of an estimated population of 268 thousand was just a little above zero. There were no modern hospital facilities, nor were there much infrastructural facilities such as roads and highways. The vast expanse of the land with a very sparsely-settled population – the density was then as low as three people per sq km-lacked any connectivity. The overwhelming majority of the people of this State which is 96 per cent hilly and only 4 per cent plains practised the swidden cultivation, the slash-and-burn method which is known as jhum cultivation or jhuming in the North-East India. The level of technology used in production was very low. There was no modern industry, nor was there modern tertiary sector except a security outpost in Pasighat, now the headquarters of the East Siang district. The jhum-dominated agriculture and home-based handicrafts kept the level of productivity of the economy so low that there was hardly any net surplus to be accumulated into capital. Lack of modern health services, the low level of income, illiteracy and a very low level of road connectivity are the image of a society trapped in stagnation.
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