Dialogue  January - March, 2009 , Volume 10  No. 3


Neo- Liberal Paradigm and Development in Arunachal Pradesh: A Vision for Future


Jajati K. Pattnaik*



Understanding Neo -Liberal Paradigm


Neo –liberal paradigm rooted on the philosophy of free market, free trade and open door policy sought to redress the crisis of ‘Keynesianism’1 delegitimising the state regulated capitalism. The western trajectory of LPG development based on liberalization, privatization and globalization was contemplated to be a panacea for the crisis-ridden nations.2 The state was to retreat from the economic sector to propel the market forces for domestic growth and flourishing global trade.3 De-territorialisation became the common idiom in economic integration. In the backdrop of this, India circumspectly treaded on neo-liberal path mooting structural reforms in the nineties. It formulated Look East policy in 1991 for developing economic co-operation with the East Asian neighbours. India became a member of Mekong Ganga Co-operation, BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral, Technical and Economic Co-operation), a summit level partner in  ASEAN (Association of South East Asian Nations), and  subsequently, a member of East Asia Summit in 2005.  Interdependence replaced state centralism. India was cognizant that all the regions have tremendous potentialities in geographical sense and  its dividends should be reaped by the people through direct and participative way. It viewed the geo-economic   importance of north  east India as the link between East and South East Asia in an era of regional and global co-operation.4 In this context, north eastern states  through cross border market  corridor could  bring  India’s economic integration with the East. Justifying India’s Look East Policy, External Affairs Minister, Shri Pranab Mukherjee said,  “Geography is an opportunity and the very geographical location of the north east makes the doorway to South East Asia and East Asia and vice versa, a doorway to India.5 Comprehending these factors, this paper seeks to study the contours of development in Arunachal Pradesh in a holistic perspective.


Development in Arunachal Pradesh  

                                                                                                                                                                                              Located in the north east of India, Arunachal Pradesh shares international  border with Bhutan ,China  and Myanmar. It is inhabited by twenty six tribes and more than one hundred sub-tribes. The total population of the state  marked in   the census of 2001 is 10,97,968. Out of this, the male population is 5,79,941and the female population is 5,18,027. The population growth rate during the last decade (1990-2001) was 27percent. The average rate  of literacy  reflected in the census of 2001 is 54.30 percent. Arunachal Pradesh  exclusively banks upon the assistance of the centre for plan investment as a special category state.6

     Responding to the trends of neo-liberal regime and India’s Look East policy, Government of Arunachal Pradesh introduced reforms in various sectors to steer the course of development. It created a new Department called Trade and commerce in 1998 to facilitate the border trade. The Government located Bleting (Namtsering), Bongkhar and Dongshengmang of Tawang district in Indo-Bhutan border, Pangsau pass (Nampong) in Changlang district of Indo-Myanmar border, Kibithoo of Anjaw district, Bumla and Kenzamane (Zeminthang) of Tawang district, Gelling (Kepangla Pass) of Upper Siang  district, Mechuka (Lolla pass) and Monigong (Dumla pass) of West Siang district in Indo-China border as possible trading points.7 It is also considering for infrastructure development in Indo-Bhutan and Indo –Myanmar border for beginning  formal trade. The World Trade Centre (Mumbai) is also in touch with the state government to open  up one  centre at Itanagar  contemplating the potentiality of border trade in consonance with the Look East policy of the Centre. The Mumbai Centre is keen to promote trade by  organizing business exhibitions , creating business Centre for meeting, conference workshop, and video conferencing, facilitating research studies, training on foreign language and dealing with the trade missions.  Materialisation of this would renew urban centres, open up vistas of business opportunities, empower the trading community and bring all round development of the state.8  Experts on border trade also suggest   for rebuilding the old Stillwell road to connect Ledo with Kunming in yunan province of China through pangsau Pass and Wauling at Mongya. They expect that the reopening of this strategic route would enhance the prospect of cross border trade with China as well as Myanmar.9 The connection of Stillwell road to the Asian High way project through Hukwang valley of Myanmar may expand economic  co-operation and  pave the way for formation of growth triangles or growth zones in future.10 However, its success depends upon the pragmatic considerations and the multilateral approach of India, Myanmar and China. The following table number exemplifies the district wise trading points of border trade.



District                      Trading Point                                 Border

Tawang                   Bleting (Namtsering                   Indo-Bhutan Border

                                Dongshengmang and


Changlang                Pangsau Pass                              Indo-Myanmar Border

Anjaw                     Kibithoo 

Tawang                   Bumla,                                        Indo-China Border

                                Kenzamane (Zeminthang)                     

Upper Siang            Gelling (Kepangla Pass)

West Siang              Mechhuka (Lolla Pass)              Indo-China Border

                                Monigong (Dumla Pass)

Source: Introduction,Department of Trade and Commerce, Government of Arunachal Pradesh, at http://arunachalpradesh.nic.in/trade/html/introduction.htm                                                         

    The new industrial policy of Arunachal Pradesh was announced in 2001 to promote industries in private and cooperative sectors for sustainable development.11 The state industrial policy, 2008 which is the continuation of earlier policy with certain changes intents to create an investment friendly atmosphere for industrial growth  providing ample scope for local entrepreneurs to set up industries based on locally available resources. The policy also lays emphasis on agro-based industries, horticulture, plantation produce, medicinal and aromatic plants, textiles, and handicrafts, food processing, engineering and allied industries. It also gives stress to create industrial estates by providing adequate infrastructure, export promotion industrial parks, export promotion zones, special economic zones, border trade centres and industrial cluster development. The investors are allowed to have hundred percent equity and ownership of industrial units for fifty years. The ownership of such industrial units is to be reviewed and modified after the expiry of such period. Besides this, facilities for liberalized licensing policy and the institutional credit are also stressed in this policy.12 Since the new industrial policy is in its infancy, the efficacy of it banks upon its successful implementation and the availability of outside investors and local entrepreneurs.  

     The state has declared tourism as an industry and gives emphasis to explore cultural, adventure and eco tourism potentiality of the state.13 Culturally viewed, Tawang monastery displays artistic splendor in the western part of Arunachal Pradesh.  On the other, Buddhist monasteries in the Eastern part reflect the rich heritage. The Parsuram Kund on river Lohit remains a Holy Centre for Hindu pilgrimage. Since India has deep cultural and religious linkage with the South East Asian countries, cross country tourism in the cultural sector can be promoted to boost up Look East policy. Besides this, the possibilities of skiing resorts, biosphere reserves and wild life sanctuaries also provide ample scope for adventure and eco tourism.  But the success of tourism as an industry depends upon the connectivity, private sector participation and the development of tourist infrastructure in the state.                                            The Government  approved hydro electric policy in August 2005 to tap hydro energy considering different aspects of the society. The five major river basins in the state viz; Kameng, Subanasiri, Siang, Dibang and Lohit provide huge potentiality for developing hydro power projects. The total hydro power production from eighty nine projects is approximately  figured at 49,126 MW by the Central Electricity Authority.   The significant of  those policies are: (a) the run-off-river  hydro power projects would be developed evading storage facilities in high dams; (b) the developers must accord prior permission from the government  to implement any project; (c)during the project formulation or investigation, the state government agencies must be consistently associated; (d) the Central Government and the developers must take the state government into confidence in all matters; (d) to develop any project preference would be given to the investing agency; (e) the government permits private sector participation for the development of hydro power projects and the private sector companies shall have the option to implement  projects on Build, Own and Operate (BOO) or Build, Own and transfer (BOT) basis; (f) the developers shall provide twelve percent  free power to the state government and the  latter also reserves the right to purchase additional power if it necessitates;            (g) the state Government can enter into equity participation if it intends; (h) rehabilitation and resettlement policies are to be implemented by the state government and this is to be financed by the developers as per the guidelines of the Government of India; (i) the developers are to spend certain amount of the project to meet social obligations and respect the customary  of the state.14 Arunachal Pradesh has allocated few power projects to National Hydro Power Corporation (NHPC), North Eastern Electricity Power Corporation (NEEPCO), (National Thermal Power corporation  (NTPC) and other private bidders. The policy makers anticipate that if the hydro power potentiality of the state is fully harnessed it would float hydro dollars and convert Arunachal Pradesh into a donor state instead of a borrower one. It would also enable cross border energy integration for reaping the dividends on multiple fronts. However, its success depends upon the efficacy of common South and South East Asian grid, security factor and multilateral approach made by India and the neighbouring nations.


A Vision for Future


     The above study indicates that the state is poised to bring prosperity through these policy reforms. The question here arises how far they affect the common human being and raise the capability of the people achieving overall growth and development. Any development would be viable when it is inclusive in nature. In this context, the following lines may be taken as necessary inputs while envisioning the development of the state.                                                                                                        The nomenclature of border trade that seems promising for the neo liberal pundits, no doubt, would bring prosperity in the region, but its road map is to be prepared cautiously for the future. It should be two way traffic for ensuring growth and development in the region. Indian exports should sufficiently balance the imports from China and other South-East Asian nations. Otherwise, Arunachal Pradesh would be a dumping ground for the foreign products and it would adversely affect India’s economic interest in the long term perspective.                             

    While implementing India’s Look East policy and promoting the exports of our country with the neighboring nations, Arunachal Pradesh   should not treated as a mere bridge, rather enough opportunities should  be created for its’ contribution in the export basket  of our country.

       Adequate steps should be taken for developing human resource in the professional and techno-managerial field through public-private partnership. Massive entrepreneurial development programmes are also to be launched in order to inculcate a sense of entrepreneurship among the locals. The success of the new industrial policy of the Government hinges upon the development of skilled human power and a class of indigenous entrepreneurs.

    Traditional knowledge system of  Arunachalee society based on herbal medicinal plants is to be protected and there should be special packages for the local entrepreneurs for developing herbal and aromatic industry. Global magnets or multinational corporations at no stage of development should manipulate the knowledge system for their commercial aggrandizement.                                                                           The artistic craftsmanship of the of the Arunachalee people in weaving, wood craving , bamboo and cane making products should be properly explored and special packages should be provided for the development of handicraft industries on an individual or co-operative basis. Gender specific self-help group micro-enterprise schemes may be encouraged by the Government   to revamp this sector .

     Cultural, adventure and eco tourism sectors  are to be augmented on priority basis for the inflow of domestic as well as foreign tourists. The bottlenecks in tourism are to be removed through public-private partnership. And materialization of this would generate employment and ensure development on a sustainable basis.                                                 Energy trading across the border through common South Asian grid is an optimistic proposition. But its efficacy is to be assessed by the stark realities and the nature of cost-benefit effect involved in it. The realistic premise is that untapped hydro power potential of 55,157 megawatt, if developed, would usher prosperity and ensure clean and renewable energy meeting India’s growing energy requirements in future.  While implementing those projects, both public as well as private bidders should strictly adhere ecological as wells rehabilitation norms of the Government. Specific care should be given for the protection of rich flora and fauna along with adequate compensation for the displaced population in the  region.                                                                       Infrastructural bottlenecks are to be addressed  and Trans Arunachal   Highway should  be accorded top priority for intra-state connectivity. Development of transport infrastructure would have multiplier effect upon the economy and bring all round development of the people.

   Delivery system should be augmented for effective governance. Transparency and accountability in the system should be ensured by the civil society at the grass root level through public participation, social auditing and invoking right to information. Traditional village councils and panchayat Raj institutions may have a significant role in this context. Further, institutional reforms are also to be carried on to bring flexibility in the system.

     Interface between academia,  civil society ,industry and policy makers  is to be stimulated for removing the pitfalls in the process of development ,and  to suggest measures in long term persespective for     inclusive development.

     To conclude here it, may be  said  that  this is not the epilogue of this  discussion. Further intellectual exercise and scholarly introspection of neo- liberal paradigm and its’ contextualization in Arunachal Pradesh  would  help us in deriving new inputs  for dissecting the intricacies of the subject in future.


End note and References


1. Keneysianism refers to state intervention in  unbridled capitalism. For details refer, John Maynard Keynes, Oxford Politic(Oxford: Oxford University Press, 2003), p.292.  

2. Jean Grugel, Pia Riggirozzi and Ben Thirkell-White, Beyond the Washington Consensus? Asia and Latin America in Search of More Autonomous Development, International Affairs, vol. 84, n.3, May,2008 pp. 502-503. 

3. Martin Hartmann and Axel Honneth, Paradoxes of   Capitalism, Constellations,  no.1, 2006 pp. 44-45. 

4. Speech by Hon’ble Minister of External Affairs, Shri PranabMukherjee,athttp://www.carnegieendowment.org/news.letters/SAP/pdf/july07  

5. Ibid. 

6. A Development Profile of Arunachal Pradesh, at http:/arunachalplan.nic/in/html/docs/1_arp.pdf 

7 . Introduction, Department of Trade and Commerce, Government of Arunachal Pradesh, at http:/arunachalpradesh.nic.in/trade/htm/introduction.htm

8. Centrally Sponsored Schemes, Department of Trade and Commerce, Government of Arunachal Pradesh, at http:arunachalpradesh.nic.in/trade/htm/central schemes.htm 

9.  K. Alam, The Prospect of “Cross- Country Border Trade of Arunachal Pradesh” in S Dutta(ed.) Cross- Border Trade of North East India (Greenwich Millenium: Hope India Publications, 2002), pp.164-165 

10. Ibid. 

11. New Industrial Policy 2001, Arunachal Pradesh, Department of Industries, Government of Arunachal Pradesh, Itanagar 

12.  Arunachal on Fast Track towards Industrialisation,Arunachal Times, February 23, 2009. 

13. op.cit. , n.6 

14. Hydro Electric Power Policy 2005, Govt. of Arunachal Pradesh, Itanagar


Dialogue (A quarterly journal of Astha Bharati)

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