Chapter VI

SECTORAL ANALYSIS OF THE ECONOMY

Sectoral Classification
Comparative economic scenario of NE
Economic Scenario ofNagaland
Primary Sector of Nag aland
Secondary Sector of N agaland
A case study on Dimul
Tertiary Sector

;)

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 CHAPTER VI
SECTORAL ANALYSlS OF THE ECONOMY

The economy of India, measured in USD exchange-rate terms, is the

twelfth largest in the world, with a GDP of around $1 trillion (2008). It
recorded a GDP growth rate of 9.0% for the fiscal year 2007-2008 which
makes it the second fastest big emerging economy, after China, in the world.
At this rate of sustained growth many economists forecast that India would,
over the coming decades, have a more pronounced economic effect on the
world stage. Despite this phenomenal rate of growth, India's large population
has a per capita income of $4,542, measured by PPP, and $1,089, measured in
nominal terms (revised 2007 estimate). The World Bank classifies India as a
low-income economy. India's economy is diverse, encompassing agriculture,
handicrafts, textile, manufacturing, and a multitude of services. Although two-
thirds of the Indian workforce still earns their livelihood directly or indirectly
through agriculture, services are a growing sector and play an increasingly
important role in India's economy. The advent of the digital age, and the large
number of young and educated populace fluent in English, is gradually
transforming India as an important 'back office' destination for global
outsourcing of customer services and technical support. India is a major
exporter of highly-skilled workers in software and financial services, and
software engineering. Other sectors like manufacturing, pharmaceuticals,
biotechnology, nanotechnology, telecommunication, shipbuilding, aviation ,
tourism and retailing are showing strong potentials with higher growth rates.
India followed a socialist-inspired approach for most of its independent history,
with strict government control over private sector participation, foreign trade,
and foreign direct investment. However, since the early 1990s, India has
gradually opened up its markets through economic reforms by reducing
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government controls on foreign trade and investment. The privatisation of
publicly owned industries and the opening up of certain sectors to private and
foreign interests has proceeded slowly amid political debate. India faces a fast-
growing population and the challenge of reducing economic and social
inequality. Poverty remains a serious problem, although it has declined
significantly since independence. Official surveys estimated that in the year
2004-2005, 27% of Indians were poor.

In modern economics, there are four main sectors of economic activity

i.e. Primary sector, Secondary sector, Tertiary sector and Quaternary sector.
Primary sector of the economy Involves the extraction and production of raw
materials, such as corn, coal, wood and iron. (A coal miner and a fisherman
would be workers in the primary sector.) Secondary sector of the economy
associated with the transformation of raw or intermediate materials into goods
e.g. manufacturing steel into cars, or textiles into clothing. (A builder and a
dressmaker would be workers in the secondary sector.) Tertiary sector of the
economy Involves the provision of services to consumers and businesses, such
as baby-sitting, cinema and banking. (A shop keeper and an accountant would
be workers in the tertiary sector.) Quaternary sector of the economy
Involves the research and development needed to produce products from
natural resources. (A logging company might research ways to use partially
burnt wood to be processed so that the undamaged portions of it can be made
into pulp for paper.) Note that education is sometimes included in this sector.

The economy of the North Eastern states is mainly rural and agrarian.
The region offers scope for cultivation of a wide variety of agricultural crops
because of its diversities in topography, altitude and climatic conditions. These
products are sold mainly in the local markets, and mostly in the form of
primary produce without significant value-addition. The pattern of agricultural

202
growth has remained uneven across regions and crops. The NER continues to
be a net importer of food grains even for its own consumption. In spite of
covering 7.7% of the country's total geographical area, NERproduces only 1.5
% of the country's total food grain production. Agriculture provides livelihood
support to 70 % of the population of NER. The extent of cultivable land in the
NE region varies from state to state. Land is a critical resource in many of the
NE State, and availability and management of land for agricultural activities
are essential.

The region's agricultural system is predominantly traditional. The

overall geographical land-to-man ratio for the NE region (0.67
Hectares/Person) is much higher than the National average (0.32
Hectares/Person). Among the NE State the geographical land-to-man ratio is
highest in Arunachal Pradesh (7.63 Hectares/Person) and lowest in Assam
(0.29 Hectares/Person).

Table: 6.1 Average Size of Holding (in Hectares) 2005-06:

State Marginal Small Semi- Medium Large Av.

Medium Holding
Size
Arunachal 0.48 1.30 2.66 5.50 12.83 3.31
Pradesh
Assam 0.37 l.37 2.63 5.16 65.60 1.17
Maninur 0.57 1.37 2.57 4.65 l.22
Meghalaya 0.49 1.25 2.41 4.50 0.00 1.33
Mizoram 0.61 1.38 2.33 0.00 1.29
Naaaland 0.56 1.10 2.60 5.95 14.71 4.83
Sikkim 0.42 I .40 3.00 6.00 0.00 1.66
T'ripura 0.33 1.40 2.50 6.00 0.00 0.60
All India 0.40 1.42 2.73 5.84 17.21 1.41

Source: CMIE Report on Agriculture, March 2006

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 Table: 6.2

Geographical Land to Man Ratio (Hectares/Person) [2001 Census]

State Geographical Population Ratio

Area [Ha] (No.)
Arunachal 8374300.0 l 097968 7.63
Pradesh
Assam 7843800 26655528 0.29
Manipur 2232700 2166788 1.03
Meghalaya 2242900 2318822 0.97
Mizoram 2108100 888573 2.37
Nagaland 1657900 1990036 0.83
Sikkim 709600 540851 1.31
Tripnra 1048600 3199203 0.33
All NE 26217900.0 38857769 0.67
All India 328726300 1028610328 0.32

Source: Basic Statistics ofNER, 2007.

Despite being rich in natural resources, development in the North

Eastern region has lagged behind the rest of the country. The region's economy
is generally characterized by low per-capita income, low capital formation, in-
adequate infrastructure facilities, geographical isolation and communication
bottleneck, inadequate exploitation of natural resources like mineral resources,
hydro power potential, forests etc., low progress in industrial field, lack of
private and foreign direct investment and high un-employment rate among the
relatively high literate people. The per capita income in the North Eastern
region on an average is Rs. 12,918/- as compared with the national average of
Rs. 17,947/- at current prices of2001-02. The population growth in the NER is
largely responsible for this low per capita income. CARG in NSDP shows that
Manipur, Meghalaya, . Mizoram and Tripura have been doing better than
national growth rate. Interestingly, Assam the so-called most developed State
in the Northeast has the lowest per capita income and lowest growth in NSDP.

204
 Nagaland Economy is mainly based on agriculture as more than 60% of
the population is engaged in this sector. The gross domestic product of the state
amounted to Rs. 6,500 million in 1990, in 1995 this figure amounted to Rs.
18,140 million, and in 2000 this figure stood at Rs. 36, 790 million. The
various kinds of crops cultivated in.Nagaland are corn, pulses, oilseeds, fibers,
sugarcane, potatoes, tobacco, millets, and rice. In spite of agriculture being the
main occupation of the people, the state still has to import food items from
other states. This has happened due to the fact that people followed
unsustainable agricultural practices such as the ]humming method which has
led to the loss of fertility due to soil erosion. This has hampered the growth of
the Economy in Nagaland. The Economy of the state ofNagaland also depends
on the forests as the state has a huge forest cover. The state has 33% forest area
and they are divided into 3 groups such as private forests, reserved forests, and
protected forests. The various products from the forests are sold all over the
country and this brings in revenue for the Economy of Nagaland. Nagaland
Economy also gets its revenue from the state's cottage industries. The cottage
industry in Nagaland manufactures pottery, weaving materials, and woodwork.
All the products that are manufactured by the cottage industry are sold all over
India and even exported to foreign countries. This has given a major boost to
Nagaland Economy. The Economy in the state ofNagaland depends on tourism
to a certain extend only due to the fact that tourism is limited in the state due to
its geographical isolation. Also the political instability in Nagaland has further
hampered the growth of tourism in state leading to the slow down of the
Economy of Nagaland. Nagaland Economy has grown but not at the rate that
has been expected. The main reasons for this slow growth have been that the
state has a hilly terrain which makes it difficult for the people to communicate.
The lack of education among the people and also the unstable political
condition has hampered the growth of the Economy in Nagaland. The state

205
government is making an attempt to boost the economy by developing the
infrastructure and also by setting up new industries. Nagaland Economy has
grown over the years but not at the rate that has been expected. But now with
the state government making efforts, the Economy of Nagaland is bound to rise
in the near future. Economy of Nagaland presents a host of sectors that
collectively generate revenue for this northeastern state of India. Agriculture is
the mainstay ofNagaland. As much as 70% of the total population ofNagaland
is engaged in farming activities. Terrace and jhum cultivation are the two
methods by which crops are grown in the state of Nagaland.
PRIMARY SECTOR:
Agriculture is one of the significant contributors to the net state domestic
product and is the largest employer of the workforce in the State. It was the
mainstay of the people ofNagaland during 1950s, when almost 96.5 percent of
the population was dependent on agriculture. Though the dependency for
emp.loyment on agriculture since declined to 70 percent in the 1970s and
further to 65 percent by 2000, it continues to be the main source of livelihood.
Shifting and terrace cultivations remain the dominant forms of land use
practice in the State. Agriculture in Nagaland is considered a prime source of
revenue for the state. Economy of Nagaland gets a major boost through the
agricultural activities of the state. Terrace and jhum cultivation are widely
practiced by the tribal communities of Nagaland. The crops that have a high
yield in the state of Nagaland include rice, tobacco, oilseeds, pulses, fibers,
potato and sugarcane. The local people of Nagaland earn their living by
growing a number of crops in their fields. One of the major reasons behind the
flourishing agricultural economy of Nagaland is the developed state of
irrigation in the place. The water channels that are controlled by bamboo sticks
provide unhindered irrigation facilities to the crop fields of N agaland. Apart
from major crops the farmers of Nagaland also produce plantation crops like

206
coffee, tea and cardamom. Potato and sugarcane are the two prime cash crops
that generate revenue for the N agaland economy. Then there are many
vegetables that are grown by the peasants of Nagaland like that of canots,
chillies, onion, melon, spinach leaf, cucumber, brinjal, tomatoes and mustard.
Sugarcane, maize, yams, potato, millet and arums are considered as the
principal crops of Nagaland state. The farmers ofNagaland grow their crops on
the basis of the rain conditions in the place.
Table: 6.3

Geographical Statistics of the State: (2005-06)

SL. Particulars Area (000' ha)

No.
1 Total Geographical Area 1657.9
2 Cultivabnle Land 626.00
3 %1 Cultivable Land of Geographical Area 37.76
4 Total crop Area 363.42
5 Net Sown Area 312.77
6 % Net Sown Area of Cultivable area used 49.89
7 Area sown more than Once 50.65
8 Net Irrigated Area 64.49
9 Gross Irrigated Area 74.29
10 % Gross Irrigated Area of Gross Cropped Area 31.58
11 Non arable Land 67.34
12 Cultivable Waste Land 58.37
13 Fallow land 157.21
14 Current fallow 72.71
15 Forest land 862.93
16 % area under Forest 52.05
17 Annual Area under shifting cultivation 19.00
18 Cropping intensity(%) 116.00
19 National Cropping Intensity 140.00

Source: Statistical Handbook of Nagaland, 2007.

On an average, the state produces 360.00 mt. of cereals, 75.00 mt. of

oilseeds and 28.00 mt of pulses. The productivity for major cereals is 16.51
q/ha, which seems to be at par with the National average. Rice cultivation
occupies an area of 0.896 million ha in NEH with highest area(28.57) being in
Tripura. Nagaland has 0.146 million ha (16.3%) under rice cultivation with

207
production of 0 .206 million tonnes indicating the average productivity of 1.41
ton/ha. According to the productivity levels, it falls under Low Productivity
Group (yield 1.0-1.5 ton/ha). Besides agricultural crops, the state produces
around 150.00 mt of vegetables and 157.00 mt of fruits. Almost all kinds of
fruits are being grown in the region. However, orange, passion fruits, banana,
pineapple are some of the major fruit crops in the state. Besides fruits large
number of vegetable crops and spices are also grown in the region and detail of
the same has been shown in the following table.

Table: 6.4

Agri- horti crop production scenario in the State (2006-07):

SL. Commodities Area %of Production Productivit

No. Cultivated y
(000' ha) Area (MT)
(q/ha)
1 Creals 218.00 34.82 256880.00 16.51
2 Oilseeds 61.00 9.74 70210.00 12.30
3 Pulses 30.00 4.79 37500.00 9.33
4 Commercial Crops 1.07 0.27 '.)5510.00
5 Vegetables 13.32 2.12 7600.00 I 12.11
6 Total area under field crop 319.70 51.07 617.40 61.70
7 Fruits 16.53 2.64 5300.00 95.00
8 Plantation crops 6.3 1.01 1986.00 12.37
9 All horticultural crops 36.15 5.77 14886.00 148.86

Source: Statistical Handbook ofNagaland, 2007.

Table: 6.5

Production and Requirement of Major Commodities in Nagaland: (2006-07)

Production Projected Projected Surplus/Deficit (<Yo)

Production (m Requirement (m
tons/yr) tons/yr)
Cereals 0.2060 0.311 (-)33.8
Meat 63.25 0.022 (-)9 .1
Fish 49.00 0.0219 (-)74.9
E22 (million nos.) 868 358.200 (-)85.8
Milk 74.18 0.109 (-)55.0

Source: Statistical Handbook of Nagai and, 2007.

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 Present level of food production is not sufficient to achieve the food self
sufficiency at household level. The state has been found deficient in almost all
the agricultural commodities like rice, fish, meat, milk, egg etc. among various
commodities, the region is highly deficient in egg production (86%) followed
by fish (75%) and milk production by (55%) in spite of the fact that there is
tremendous potential for fishery as well as backyard poultry rearing in the
region. So far in meat production is concerned, the state seems self sufficient to
some extent compared to other state of the North East. Per capita availability of
egg, meat, fish and milk has also been worked out for the state and it has been
observed that the per capita availability of egg, fish and milk is significantly
low in the state as per the recommendation of ICMR. Keeping these facts in
view, holistic approach of agriculture development in the state is need of the
hour, wherein all the components of agriculture like agri-horti crops, animal
forestry are integrated in a complementary way.

Table: 6.6 ')

Wastelands percentage in NER and India

State Area Wasteland Area % of Wastelands

to Total Area
Arunachal Pradesh 83743.00 18326.25 21.88
Assam 78438.00 20019.17 25.52
Manipur 22327.00 12948.62 58.00
Mezhalava 22429.00 9904.38 44.16
Mizoram 21081.00 4071.68 ]9.31
Nagaland 16579.00 8404.10 50.69
Sikkim 7096.00 3569.58 50.30
Tripura
All India
10486.00
3166414.00
1276.03
638518.31
12.17
20.17
'I
Source: Basic Statistics ofNER, 2006.

The problem of land degradation is much senous m the states like

Manipur, Nagaland including Sikkim, where more than 50% of total
geographical area is defmed as wastelands. Hence immediate measures are

209
required to rehabilitate these states with indigenous tree crops not only to
maintain ecological balance but also for augmentation of fuel, fodder, timber
and food. Despite food self-sufficiency at the national level, the country has not
attained food security at a household level particularly in tribal states of eastern
Himalayas. Hence a considerable proportion of rural population is still under
nourished and they meet their nutritional requirement through non-
conventional means, i.e., by consuming various wild plants animal resources.
To meet out the food security at household level, efficient use of soil, water
and forest resources is the need of the hour. Once water is harvested and
recycled into the system, the cropping intensity can be raised from 118% to
more than 200%.

India occupies 2% of the world's geographical area, 16% of its

population and 12% livestock. At the time of independence, the country had a
total population of 350 million and produced only 51 million tonnes of food
grains. Today the population has crossed 1 billion marks and food grain
production has also increased to 206 million tonnes. However the major share
of food grain production (55%) has been achieved from 37% of the cultivated
areas, which have good access to water, whereas only 45% of the food grain is
produced in the remaining 63% rain fed areas. An analysis of the food
production indicates that production from the high input belts, i.e., from the
37% areas have almost reached a plateau. The emphasis therefore should be
given to increase the production from 63% rain fed areas where agricultural
systems are Complex, Diverse and Risk prone (CDR). It depends on the
recycling of within farm resources and off farm waste. Crop rotation, mixed
farming and intercropping etc are some of the characteristics of CDR
agriculture. However, the sustainable use of natural renewable resources will
be facilitated when the feed is grown, the animals are fed and the excreta is

210
recycled on the farm m away that muumizes the use of imported inputs
including energy.

NER as a whole and Nagaland in particular has tremendous scope to

promote agriculture, horticulture together with' animal husbandry.
Nevertheless, region is deficient not only in food grain production but also in
the production of meat, egg, fish and milk, etc. Even today, many farming
families living in far flung areas of Eastern Himalayas are malnourished in
spite of the fact that India has achieved self sufficiency in food grain
production at National level. Thus, the attempt of all policy makers,
researchers, NGO's, funding agencies and farmers should be to work for
achieving food self sufficiency at household level. To achieve this, integrated
approach of land use is required even in shifting cultivation areas.
Unfortunately, in many cases, the commodity oriented development is being
done which in long run will not be able to make the region self sufficient in
food production. Crop, livestock, poultry, horticulture, agro-forestry, fishery
etc should be seen as essential components of agriculture. Since any particular
component cannot bring food security at household level, all these components
should be interlinked for better growth of agriculture in the region. Further, to
meet out the meat requirement, particularly of tribal communities, priorities
should also be fixed to promote beef cattle rearing in tribal states like
Nagaland.

Many farmers here are now beginning to take up modem farming

techniques, employing new means to maximize their production. This change
was witnessed during Agri Expo held recently in Dimapur. The State
government distributed twenty six tractors and seventy four power tillers
among the farmers from eleven State Districts during the Expo. The local
farmers were happy to notice modern machinery which will help them increase

211
the productivity in the farms. Vijili Kikon, a Wokha District farmer while
attending the function, said: "The land is very rocky and, therefore, difficult to
till but with the help of this power tiller we will be able to develop more
fields." Many farmers were thrilled to see tiller machines for the first time
though they have heard that these machines have long been used by farmers in
Punjab. Talimeren, a farmer belonging to Mokokchung District, said: "I am
happy that the government is helping us with such machines. With these power

tiller and tractors the quality of crop will be better and we will grow more too."
The State government has declared 2006-2007 as the year of the farmers. And
as part of this initiative a number of farmers from different parts of Nagaland
were honoured by the Chief Minister Nephieu Rio. Visezo Nagi, another
farmer, said: "I am one of the beneficiaries and got power tiller this year. The

power tiller will boost the agricultural productivity. I thank the Nagaland
Government for helping the farmers." People in Nagaland are eager to catch
up with the rest of the country, as they believe the five decades of violence has
kept them lagging behind for long time. Addressing the Agri-Expo meet the
Chief Minister said the agriculture sector should be harnessed to the optimum.
Besides helping the farmers, it will promote economic growth of the State, he
said. Phugoto Aye, the Director with Nagaland Development Outreach, said:
"The whole scenario in Nagaland has undergone a change today. People now
talk of improving life to move ahead in life despite occasional clashes between
varying sections, For sure Nagaland is undergoing a silent revolution -a
revolution of progress."

At the same time, agriculture sector in Assam too is the only major
source of food supply in the state and thereby providing regular supply of
food to the increasingly growing population of the state. It is unbelievable
that, during the pre-independence period, food surplus state of Assam
become a food deficit state due to high rate of population growth and a
212
comparatively slower growth rate in the production of food grains. Total
production of food grain in Assam has increased from 16.79 lakh tones in
1960-61 to 36.79 lakh tones in 2005-06. In 2005-06 Assam produced nearly
1.78 percent of total food grains produced in the country. Agriculture in
Assam has been the major source of supply of raw materials to various
important Agro-based industries in the state. Tea plantation is the source of
raw materials for the famous age old tea industries of Assam. In 2003-04,
about 2.71 lakh hectares of land were under tea cultivation in Assam.
Moreover, Sugar industry, Vanaspati mills, Oil crushing mills, Rice husking
mills, Sericulture etc. are also getting their necessary raw materials from the
agricultural sector of the state. Besides agriculture can provide a market for
industrial product as increase in the level of agricultural income may lead to
expansion of market for various industrial production of the state.

Lack of marketing linkages has been one of the key disincentives to

Naga farmers in producing surplus. In order to meet these needs, the
;\
Department of Agriculture is in the process of creating agricultural marketing
infrastructure through private sector and cooperatives. This should incorporate
grading, storage and transport. Linkages are also being explored with markets
outside the State. The department has taken up identification of viable
commercial crops, identified through crop zoning maps. The initiatives at
marketing of local varieties of ginger outside the State, through NEPED
programme, have been quite successful and have resulted in increasing
realisation to the farmers. Agricultural Produce Market Committees (APMCs)
are being set up to market the surplus produce and enter into contract fanning
kind of practices. Identification of Trade Centres will further strengthen the
marketing infrastructure for commercial crops. The improvement of other rural
infrastructure, especially roads, better communications will greatly help in
strengthening the agriculture marketing network in the State. India is the 2nd

213
largest - producer of fruits in the world, of the 3 88 million tonnes of fruit
produced world wide, 8.5% are grown in Indian orchards. The paradox is that
our share in the global export market is not even 0.1 %. GOI has therefore,
identified both fresh fruits and finished products as focus areas. National target
is to capture at least 1 % share of the global trade. Nagaland has immense
potential for horticulture because of the varying soil and agro-climatic
conditions. The present horticulture crops of various fruits cover an area of
about 43 000 Hectares with an annual production of a little over 5, 00,000
tonnes. However, with proper planning and investment, the cultivated area
under horticultural crops and production can easily be quadrupled.
India is one of the world's richest countries in terms of its biological
diversity. The Western Ghats and North-East India are among the 25
international biodiversity hotspots. It has been estimated that over 81,000
species of fauna and 47,000 species of flora are found here. Nearly 15,000
flowering species are endemic to India. Nagaland, though a small state in terms
of area, has a rich and varied heritage of biodiversity. It vafies from tropical
rain forest to alpine vegetation and from evergreen forest to sub-tropical
climatic vegetation. N agaland already boasts of the tallest rice plant in the
Guinness Book of World Records. Naga King Chilli is a contender for being
the hottest in the world. There are numerous rare and endangered species of
plant and animal life in Nagaland's forests. The Blythe's Tragopan Pheasant,
the State bird, and the Mithun, the State mascot, are themselves rare species in
the world. The State has a great wealth of herbal medicinal and aromatic
plants. However, limited documentation has been done so far. Biotechnology
and environmental research facilities need to be created on an urgent basis
because N agaland' s biodiversity, . although very rich, is also fragile and
endangered due to increasing population and the pressure to bring more areas

214
under cultivation. The potential of Nagaland's biodiversity contributing to the
State's economy is immense.
INDUSTRIAL TRENDS

The expected overall annual growth of industry in the Tenth Plan period
(2002-2007) at around 8. 7 per cent is short of the targeted growth rate of 10
percent for the Plan period. Given the recent performance, however, the
Eleventh Plan (2007-2012) target of 10 percent annual industrial growth
appears achievable. As the country enters into the first year of the Eleventh
Plan, the sustained growth of the industrial sector is crucially dependent on
removing the infrastructural impediments, especially, in the power sector. A
capacity addition through investment is critical for accelerating growth in
industry. The investment scenario looks quite optimistic, particularly with
rising domestic savings rates and FDI inflows. Sustained economic growth,
fiscal consolidation and an enabling policy envirorunent will continue to
provide incentive to capacity addition in industry and sustaining its high
growth. Adequate expansion of employment in the industrial sector,
particularly in the organized segment, requires attention. The formation of
appropriate skills through a wide variety of vocational training as well as
optimal degree of flexibility of labour laws is important aspects in this regard.
Progress on these fronts will determine how much progress is made 111

generating employment in the organized industry in the years to come.

Nagaland has very few organised industries. For geographical and

historical reasons the area has remained isolated and consequently
undeveloped. As in the case of similar backward areas, sufficient reliable
statistics are not available on resources potential and other economic
indicators. Lack of infrastructure and entrepreneurial talents, limited physical
resources, difficult terrain and restrictions on the entry of outsiders into

215
Nagaland acted as constraints on industrial development. The main center with
some active industrial activity in the state is in Dimapur. As the Inner Line
Regulations do not apply to Dimapur, a number of small industries have come
up with active technical, managerial and financial assistance from outside.
Dimapur, being an entrepot centre for trade and commerce with Manipur and
the eastern parts of Assam enjoys a vast market for the locally produced goods.
There are few small scale manufacturing units and repair shops at this centre.
In most parts of Nagaland, industry is mainly confined to handicrafts. The
villagers produce their requirement of cloth, baskets, furniture, implements etc.
using traditional tools and techniques. Since attainment of statehood in 1963,
the Government has been making strenuous efforts for industrial development.
From mid- l 970s to early 90s a number of forest- and agriculture-based
industries such as paper, plywood and sugar were started. But the long-drawn
insurgency not only affected the daily Lives of the people but also the spirit of
industry. Further, there were limitations of managerial skills, overstaffing and
'.)
lack of adequate direction. As a result, the potential for industrial growth and
its lateral benefits of employment generation and income have remained
largely untapped.
Since attainment of statehood in 1963, the Govermnent has been
making strenuous efforts for industrial development. From mid-1970s to early
90s a number of forest- and agriculture-based industries such as paper,
plywood and sugar were started. But the long-drawn insurgency not only
affected the daily lives of the people but also the spirit of industry. Further,
there were limitations of managerial skills, overstaffing and lack of adequate
direction. As a result, the potential for industrial growth and its lateral benefits
of employment generation and income have remained largely untapped. The
current situation has improved, marked by peace and stability. This will help
I
revive the spirit of entrepreneurship and give necessary momentum to Ji

216
industrial growth. Signs of interest, both from the Government as well as from
the private sector are visible today. The number of industries has gone up in the
past two decades. As per the State records on employment, by the end of
March 2000, there were 1014 establishments in the organised sectors, of which
851 were in the public sector and the remaining 163 (32 large and 131 small
units) in the private sector. The total employment provided by them was76,
938. Out of this, the share of the public sector was 72,834 and the remaining
4,104 came from the private sector. The employment of women in the above
period was 11,375 in the public sector and 1,213 in the private sector. When
disaggregated by districts, Kohima/Dimapur had 313 organised sector
establishments. This was followed by Mokokchung district, with 196
establishments and Zunheboto with 120. In 1981-82, Nagaland had only 305
small-scale industries. This increased to 1360 in 2000-2001. The distribution
of the small-scale units is, however, very uneven. Among the various districts
of the State, Dimapur has the largest number of small-scale industries,
'I
followed by Mokokchung. While good connectivity of Dimapur has
contributed to the district's growth, the reasons for very thin distribution in
other districts include lack of communication infrastructure, high overhead
costs, lack of trained personnel, inadequacy of raw materials and limited
support services.
The current situation has improved, marked by peace and stability. This
will help revive the spirit of entrepreneurship and give necessary momentum to
industrial growth. Signs of interest, both from the Government as well as from
the private sector are visible today. The number of industries has gone up in the
past two decades. As per the State records on employment, by the end of
March 2000, there were l 014 establishments in the organised sectors, of which
85 l were in the public sector and the remaining 163 (32 large and 131 small
units) in the private sector. The total employment provided by them was76,

217
938. Out of this, the share of the public sector was 72,834 and the remaining
4,104 came from the private sector. The employment of women in the above
period was 11,375 in the public sector and 1,213 in the private sector. When
disaggregated by districts, Kohima/Dimapur had 313 organised sector
establishments. This was followed by Mokokchung district, with 196
establishments and Zunheboto with 120. In 1981-82, Nagaland had only 305
small-scale industries. This increased to 1360 in 2000-2001. The distribution
of the small-scale units is, however, very uneven. Among the various districts
of the State, Dimapur has the largest number of small-scale industries,
followed by Mokokchung. While good connectivity of Dimapur has
contributed to the district's growth, the reasons for very thin distribution in
other districts include lack of communication infrastructure, high overhead
costs, lack of trained personnel, inadequacy of raw materials and limited
support services.
Table: 6.7
Government of India Industrial Offices as on 31.03.2006 ')

Particulars Kohima Dima- Tuen- Kiphire Leng- Mon Total

pur sang Ieng
Small - 1 - - - - 1
Industries
Service
Institute
(SISI)
Office of the I - - - - - I
Development
commission
(Handicraft)
Ministry of
Textiles
North I - - - - - 1
Eastern
consultant
Ltd.
(NECON)
Kha di 1 1 - - - - 2
Gramdyog
Bhavan

218
 Directorate - l - - - - 1
ofKhadi &
Village
Industries
Commission
(KVIC)
Source: Statistical Hand Book of Nagai and 2006.

Table: 6.8
Farms and Others as on 31.03.2006

Particulars Kohima Dim a- Phek Mokok- Wokha Zunhe- Tuen- Mon Total
pur chunl! boto sang
Bee 2 - - - - 1 1 - 4
Keeping
Farm
Citronella 1 2 I 6 1 1 ')
.) 2 18
Farm
Hand 1 - - - - - - - 1
made
Paper Unit
Pine apple - - - - 1 - - - 1
Fibre
Plant
Cottage - 1 - - - - - - I
Match I
Industries
Splinter - 1 - - - - - - 1
vender
unit
Source: Statistical Hand Book ofNagaland 2006.

Table: 6.9
N 00 f PMT Regc.l S S ..
I U mts
. rn
. T ra d e WISC 2005 - 2006
Particulars Kohima Dima- Phek Mokok- Wokha Zunhe- Tuen- Mon Total
pur chunz boto sana
Mfg. of good 6 65 4. 5 2 15 2 - 99
products &
Beverage
Mfg. of - 2 - - - - - - 2
Textile
Mfg. of 4 102 4 4 2 23 16 - 156
weaving
appard
Training and - - - - - - - - -
Dressing of
Leather
Mfg. wood & 1 22 - 2 - 6 - - 31

219
 wood
product
except
furniture
Mfg. of pipe 3 6 - - l - - - 10
Publishing I I - I - - ..,
Printing &
- - .)

Reproduction
of recorded
media
Mfg. of cake - 3 - - - - - - 3
Refined .
Petroleum
products
Mfg. of - 2 - 1 -
chemical &
l 1 - 5
Chemical
Products
Mfg. of - 21 2 - 3 4 l 1 32
Rubber &
Plastic
Products
Mfg. of other - 24 6 4 3 6 4 - 47
Non Metallic
Product
Mfg. 8 100 4. 8 7 IQ, 20 5 162
Fabricated
metal
Products
Mfg. of - 8 - - - - - - 8
machinery &
Equipment
Nee.
Mfg. of - l - - - - - - 1
motor vehicle
trailers &
and semi
trailers
Mfg of 7 132 12 9 2 ..,
50 18 ~) 233
Furniture
Maintenance 5 ..,
17 .) 2 - - - - 27
& repair of
personal
vehicle &
motor cycle
Maintenance 1 10 - 1 - - - - 12
& repair of
personal and
 house hold
goods
Computer - 2 - - - - - - 2
and related
activities
Other - 2 - - - - - - 2
business &
activities
Health and - 1 - - - - - - 1
social work
Recreation 5 13 - - - I - - 19
cultural &
Sporting
activities
Other 6 65 1 3 2 3 7 - 87
services
activities
State Total 47 599 36 40 22 119 69 lO 942
Source: Statistical Hand Book of Nagaland 2006.

Table: 6.10
Number of SSI unit Employees:

District Unit/ 2000- 2001- 2002-03 2003-04 2004-05 2005-06

Employees 01 02
Ko him a No. of SSI 49 35 39 20 ii 24 25
including No. of 335 556 512 280 161 278
Peren Employees
Dimapur No. of SSI 125 114 129 299 350 255
No. of 1793 1565 1202 2749 4096 2345
Employees
Phek No. of SST 6 7 2 2 25 12
No. of 35 54 16 24 264 142
Employees
Mokokchung No. ofSSI 42 66 73 44 26 17
No. of 415 678 623 509 282 204
Employees
Wokha No. of SSI 14 11 25 12 17 13
No. of 118 117 161 135 172 178
Employees
Zunheboto No. of SSI 38 56 60 132 84 35
No. of 44] 567 380 1252 733 312
Employees
,..,
_.,
Mon No. of SSI 13 14 8 7 8
No. of 144 358 153 21 47 44
Employees
Source: Statistical Hand Book ofNagaland 2007, Basic statistics ofNER 2006.

221
 ll

The industrial base ofNagaland is narrow. The majority of the industrial

units/village industries are based on local forest products, agro-products and
traditional handloom and cottage industries. The State has established six
growth centres for industrial development. However, they have not been able
to satisfactorily meet the objectives for which they were envisioned. Nagaland
had only 73 industrial units including small scale industries, government
emporiums, and district industrial centres and specialised farms in 1980. This
increased to 1160 in 1999-2000. The total No of PMT Regd. S.S.l. Units in
Trade wise 2005-2006 is 942. Again it increased to 1064 small-scale units
during 2006-07. The paper mill established at Tuli in Mokokchung district and
sugar mill in Dimapur faced serious difficulties. The sugar mill has since been
closed down. New initiatives are necessary after careful survey of the
developmental potentials of different regions. The development industry in
Nagaland has provided an impetus to the economic growth of this north eastern
state of India. The proliferation of large scale and medium scale industries has
>I

helped to raise the standard of living of the local inhabitants of Nagaland.

Nagaland is rich in minerals resources. Mineral reserves such as petroleum and
natural gas, nickel cobalt-chromium bearing Magnetite, marble,
dirnensional,/decorative stones, coal etc has been found. The huge reserves of
more than 1000 million tones of high chemical grade limestone in the eastern
Nagaland is a major prospect for setting up of industries. Endowed with ideal
infrastructure, Nagaland supports several industries. Some of the well known·
industries of the north eastern state ofNagaland are:
D Bamboorelated industries like paper mills, plywood factories etc.
D Cottage industries like spinning, weaving, cane works etc.
0 Sugar mills.
The industrial development in Assam is mainly repressed by the state's
physical and political isolation. Assam is a landlocked state in the eastern

222
periphery of India. It has connected to the mainland by narrow corridor, which
is prone to floods and cyclones. Moreover, poor transportation infrastructure is
another reason for its curtailment. Since Assam is a major producer of crude oil
and natural gas in India, several oilfields are found in its upper region. It has
four oil refineries at Guwahati, Digboi, Numaligarh and Bongaigaon,
respectively. Assam also has a chemical fertilizer plant at Namrup,
petrochemical industries at Namrup and Bongaigaon, paper mills at Jagiroad,
Panchgram and Jogighopa, sugar· mills at Barua Bamun Gaon, Chargola,
Kampur, cement plant at Bokajan, and cosmetics plant (I-ILL) at Doom Dooma,
etc. Some other industries found here are jute mill, textile and yam mills, silk
mill, etc. Sadly the status of industries in Assam is though little impressive but
in comparison to the all India level it is very must in infancy. The overall
performance of Manufacturing and Processing sector of the State has shown
more or less a stable picture in the scenario of State's economy during 2006-
07. The growth of Manufacturing Sector in Gross State Domestic Product has
recorded at 5.42 per cent in real terms (1999-2000 prices) ahd 12.25 per cent
growth registered in current prices during 2006-07 over the previous year.
Provisional data available for the year 2006-07 has shown positive growth in
the production of industrial items like, Jute, Fertiliser, Coal etc. over the level
of production of the previous year, while negative growth observed in the
production of items like, Tea, Petroleum Crude, Wheat Flour, Cement etc. as
compared to the previous year. However, the General Index of Industrial
Production of the State reduced to 152.82 in 2006-07 from 159.10 in 2005-06.
The Kohima District Milk Producers' Union Limited, popularly known
by its brand name, KOMUL, was established during 1985-86 by the State
Department of Veterinary and Animal Husbandry, 'to promote dairying and
related sustainable economic activities to facilitate the emergence of a dignified
and equitable society in rural Nagaland through value based democratic

223
institutions'. It was to be a farmers' movement through cooperative dairying.
Today, it has become a success story and a household name. But at the start, no
one wanted to take charge of this department's dairy development programme.
When Dr Akho Yhokha, armed with a Ph.D. from Nottingham University, UK,
took over as managing director, in a dilapidated office on the outskirts of
Dimapur, with no proper road connectivity, people laughed at him as he
walked to his work through flooded drains. Official apathy was not far behind.
Remarks like 'Nagaland is no Gujarat' and' ... Nothing works in Nagaland, will
this work?' were hurled at him. By 1987, unimpressed with the slow progress
of the project, the National Dairy Development Board (NDDB), which had
funded the project, also left the scene and the state had little resources. Dr
Yhokha's response was, 'Give us a chance'. And he and his team, with a
meager daily collection of only 100-200 litres, and a mini plant, refused to
give up. They quietly went on establishing more cooperatives. By 1989-90, the
daily milk collection reached 1000 litres. The skeptics now began to turn
around. The State Government began to take more active ii\terest. And, with
the start of the 8th Plan, in 1992, the Central Government gave a one-time
grant to set up the Union's Central Dairy Plant, with an installed daily capacity
of 10,000 litres. But the real breakthrough came when KOMUL products like
curd and lassi hit the market. KOMUL today handles about 5000 litres of milk
per day. A fleet of milk vans traverses a total of over 500 km twice daily just to
collect milk. Its diversified products are sold all over Nagaland and in
neighbouring states as well, especially Assam, through a dozen dealers and 150
retailers. KOMUL has over 3300 registered farmer-members and 106 primary
level Dairy Cooperative Societies (DCS). Among them are 18 women'
societies. With the creation of Dimapur District, the name has been changed to
Dimapur District Cooperative Milk Producers Union Ltd but the brand name,
KOMUL, has been retained. In 2002, the Nagaland State Dairy Cooperative

224
Federation Ltd (NSDCF Ltd) was established as parent State level body to
replicate the programme of cooperative dairying in all potential districts. The
Mokokchung District Cooperative Milk Producers Union has since been
established. And both these district unions operate under the NSDFC Ltd,
using the brand name KOMUL. During 1998-2000, Nagaland Dairy Industry
was declared one of the top 10 fastest growing dairies in India. On 26th
January, 2003, Dr Akho Yhokha was honoured with the Governor's Medal.
Now, a close examination of the industrial composition of Nagaland
reveals that Nagaland ·sadly lacks in engineering, chemical and other basic
industries. This is a fundamental handicap to the growth of the industrial
economy of the state. Nagaland can not think of establishing large units of
basic industries. But the technical and economic feasibility of the setting up of
a light engineering industries producing small. machines, tools and equipment
for industries and agriculture and doing repairing and servicing work should be
explored. Attention should also be paid to the development of industries
providing other basic inputs of agriculture as the development of agriculture
and industry is closely interdependent in an underdeveloped region like
Nagaland. The industrial development must form a coherent part of the overall
development of industries in India as a whole. Simultaneously, with this basic
principle Nagaland should develop all those industries for which its natural
advantages exceed those of other regions in the country and correspondingly
no major industries should be set up in the state for which the location
advantages on all India scale are· not clear. However, there is hardly any
industry in Nagaland with such relative advantages.
TERTIARY SECTOR
The greatest challenge facing India is to build an effective, efficient,
scalable and sustainable infrastructure. India's economy continues its high
growth curve; its lack of infrastructure becomes an ever increasing concern.

225
To sustain and realize India's growth potential, the government of India has
tabled ambitious plans to boost infrastructure investment from historic levels of
3-4% of GDP to around 9% by 2012. The Planning Commission's current
infrastructure investment estimate within the 11th Five-Year Plan period stands
at US$ 490 billion. These plans do not include private capital expenditure
investments, which will lead to an even greater demand for infrastructure-
related services and products. But many business people harbour doubts that
these plans will come to fruition because of resource gaps faced by the public
and private sectors. But the cost to the economy of not dramatically improving

infrastructure will be huge. Even though India's US$ 1 trillion economy is

growing at 8-10% per annum, most analysts agree its lack of infrastructure
costs the economy between 1.5% and 2% of GDP per annum. This equates to
between US$ 95 billion and US$ 134 billion lost in cumulative GDP by 2012.
The Indian government recognizes that it faces a significant task. On one hand,

public sector borrowing restrictions and the lack of construction resources

mean it has to approach the private sector to help fund and implement their
plans. On the other hand, the _private sector faces significant resource and talent
issues of its own to cope with extra demand for construction. The current five-

year plan for infrastructure sets aside an average of 30% (US$ 145 billion over

five years) in PPPs and purely private infrastructure-related projects.

Telecommunications, roads, ports and airports are the main targets for the
higher share of private funding, reflecting recent significant steps taken by the
government towards embracing the private sector.
The National Highways Authority of India has led the way by

successfully completing the Golden Quadrilateral project through revenue

sharing arrangements with private contractors, introducing model concession

agreements as well as acquiring land in a practical manner. The government

did not interfere when the telecommunications private sector innovated by

226
introducing leapfrogging technology to eliminate the need to lay an expensive
network of land cables. Further, the government has "pre-approved" 11
international and domestic consultancies to advice on infrastructure related
projects to make the bidding process simultaneously quicker and more
transparent. Additionally, it has authorized a viability-gap financing
mechanism for projects that do not meet purely return-oriented targets, and
recently set aside a US$ 100 mi11ion fund to finance the exploration and design
of designated projects. However, there are many areas that still lack clarity and
need attention. First among these is the lack of "bankable" projects. General
project funding requirements are easy to determine, but private sector players
complain there are no clearly articulated projects defined in a way that they can
readily start executing. Even if clearly defined projects existed, pricing and risk
management, especially between public and private entities, will need more
sophistication and should move away from a traditional "cheapest supplier"
mindset. For example, two ultra-megawatt power facilities have been
negotiated on 40-year fixed price contracts. While in the shbrt term this may
seem like a great deal for the government, it has unwittingly introduced
unsustainable pricing and risk policies that may deter future private players
from bidding by such risk distortion.

Government officials and private sector players agree on one thing,

though: comparisons between China and India regarding infrastructure
development should stop, since the two systems are so unlike one another
when it comes to large-scale planning. Indian officials like to portray China as
a centralized polity that has no problem or issue with moving large populations
to make way for critical infrastructure projects. Of course, this view misses the
underlying tensions between centre and provinces. But one thing is clear, and
put best by Nandan M. Nilekani, Executive Co-Chairman, Infosys
Technologies, India; Member of the Foundation Board of the World Economic
227
 11

Forum: "At the end of the day, it's easier to build a road than it is to build a
democracy".

The current state of the country's infrastructure and the government's

new proposals to increase expenditure to 9% of GDP by 2012 (see chart)
II
I
formed the basis of a workshop organized by the World Economic Forum and
the Confederation for Indian Industry (CU) ahead of the India Economic
Summit. The private meeting comprised a broad array of stakeholder groups
including government officials, private sector players, global engineering
firms, consultants, financial intermediaries and multilateral organizations,
including the World Bank.

Graph: 6.1

lnfrastruct
um Spi1u1dlng

(h\\it;;i!I ififf;;.J:.lttl<Oluf<l ift.\"(!!)lin!'.!tilr;Y.p;;¢1!i0 !() fil!,;6:\;7$ii< fr<lf'O

$ZD1 IXIW<'.111f<l ttK•1ru ~~on. t<> 5->~2 ~"1fflci !M n tfil.

nm ~4.!l1~
1,FV1"-W!

$50(1

Building on the findings of the World Economic Forum's Engineering &

Construction: Scenarios to 2020, participants noted that the central
government has made a lot of progress on changing mindsets by actively
involving the private sector and making the bidding process for projects more
transparent. Financing for projects in general did not seem to be an issue, but

228
participants called for greater depth in private sector bonds to match project
tenures.
The tertiary sector is the sector which produces services, that is,
something that does not contain any physical material element in them. It
covers transport and communication, commerce, organised banking and
insurance, professions, construction, Government and allied services and
domestic services etc. An endeavor is made here to describe a picture of the
tertiary sector ofNagaland. The tertiary sector of the economy ofNagaland has
been growing over the years. In service sector in 1964, the total numbers of
Government employees were 8311 in the state. According to the 1971 census
the population of Nagaland was 5, 16,449 and out of this 26,234 were
Government employees and the number of total working population were
2,62,298 which means that nearly 50% of the population were non-workers.
Out of the 26,234 Government employees in 1971, 704 were Gazetted officers
and 208 Class I & 496 Class II officers.
Table: 6.11
ff IS t fl 'b U tlJOO 0 fG overnmen t Emp I ovees rrom 1964 - 2004 :
Year Class I & II Class III Class IV Total
1964 287 5395 2629 8311
1967 475 8105 6866 15446
1971 704 12116 13414 26234
1981 1684 23060 19702 44446
1987 2238 27395 22769 52402
1991 2656 30185 25108 57949
1997 3507 33399 27611 64517
2001 4648 42440 26360 73448
2004 4992 52007 17341 74340
Source: Statistical Hand Book ofNagaland 2007.
By 2004, the total number of Gazetted officers rose to 4992 out of the
total of 74340. The very exception is that, the Government of Nagaland has
imposed restrictions on the employment policies for the non-Nagas. It is the
policy that the Government of Nagaland to reserve 80% of the vacant posts in
any department for the Nagas and only 20% of the vacant posts are reserved for

229
other tribes and scheduled castes, but even the latter must be indigenous
inhabitant of Nagaland. The basic objective of the policy is for the enlistment
and uplifting the economic and social conditions of the indigenous Naga
people. This policy has helped a lot for the betterment of the local people;
nevertheless it has also proved to be a disincentive towards the economic
condition of the state. The policy has also led to discrimination between the
people of Nagaland. As regards the Employment Sector in Assam, the number
of persons employed in organized economic activity (comprising both Public
and Private Sectors) was 11.19 lakh in the year 2006 thereby registering a
decrease of 1. 78 per cent in employment over the previous year. The
employment of women in organised sector of the State was 3 81 thousand at the
end of 2006 which was 34.0 per cent of the total employment. The most
alarming feature of the State is growing unemployment problems. The job-
seekers specially educated job-seekers are increasing year by year. As per data
available from the Employment Exchanges of the State it is revealed that
during 2006 the number of job-seekers on the Live Register of Employment
Exchanges has stood at 12.0 lakh in 2006.
The disruption of partition not only increased transport costs but it also
dislocated the traditional markets of the North-East. It also increased
transactions cost and reduced access to finance. The transport disruption was
all around. The road distance to rest of India increased, connectivity through
waterways became poor, and loss of access to the port of Chittagong meant
international markets also became less accessible. Coupled with these, poor
power sector development and difficulties of getting financial credit have also
contributed to poor development of industries in Assam. We look at the status
of infrastructure development in Assam. At various stages the Central
government has recognized the need to pay special attention to infrastructure
development in the North-East. A number of initiatives were taken in the

230
1990s. A committee was constituted in February 1990 under the chairmanship
of L C Jain, Member of the Planning Commission. A high level commission
was set up under the chairmanship of S P Shukla in 1997 to tackle the problem
of backlog in basic minimum services and infrastructure needs of the N011h-
East. The recommendations of these committees were reflected in programmes
announced by various Prime Ministers. Thus, an economic package of Rs 6100
crore for specific projects in NE states as announced in October 1996 by the
then Prime Minister H.D.Deve Gowda included fourth rail-cum-road bridge
over the Brahmaputra at Bogibeel, upgradation of Guwahati airports and a few
industrial growth centres in addition to some road projects, drinking water
supply schemes and health care programmes. He also introduced the N011h-
East sub-plans in all Central Ministries for which l 0 per cent of their budgets
would be earmarked.
The strategy and approach of the State Government have been to provide
the basic infrastructure requirements of the people such as roads, water supply,
power supply, schools, hospitals, etc. The State has been largely successful in
this and a large part of the infrastructure is now in place. The achievements of
the State in providing infrastructure showed that 13.96 percent of the villages
had pucca roads as on ·31 March 1986, which increased to 2 9 .24 percent as on
31 March 2000. Similarly, the percentage of villages having primary schools
increased from 92.0 percent to 96.6 percent during the above period. There was
an increase in the percentage of villages with primary health centre from 18.0
percent to 26.3 percent. The percentage of villages having facilities for potable
drinking water increased from 67.6 percent to 75.2 percent during the same
period. However, the State has been grappling with challenges to maintain the
assets created in this hilly, geologically fragile, high-rainfall State. Though
significant progress has been made, Nagaland still remains underdeveloped and
inaccessible. The High Level Commission on Transforming the N011h-East

231
constituted under Sh R.P. Shukla, Member of Union Planning Commission,
during 1996 estimated that the infrastructure gap for North-East India was Rs.
97,000 crore. For Nagaland, the estimate was Rs. 11,000 crore. These figures
reflect the extent of further investments required to come at par with other
states of India. Such requirement of funds cannot be met from plan funding or
assistance from Central Government alone. The State will also have to evolve a
model of development, which will require people's participation and
willingness to be partners with the Govermnent in the process of development,
change and prosperity.
An efficient transport system is a prerequisite for sustained economic
development. It is not only the key infrastructural input for the growth process
but also plays a significant role in promoting national integration, which is
particularly important in a large country like India. In a liberalised set-up, an
efficient transport network becomes all the more important in order to increase
productivity and enhancing the competitive efficiency of the economy in the
world market. The transport system also plays an important i·ole of promoting
the development of the backward regions and integrating them with the
mainstream economy by opening them to trade and investment. Investment in
the tertiary sector accounts for 465 of the total investment in the state of
Nagaland and within the sector, Transport and Communication accounts for
61 % of the investment. Though transport by itself will not bring about any
development is conceivable without it. It is undoubtedly the most single need
of the state. Unless the remote hill-top villages scattered far and wide in the
state can be linked with each other and with the commercial centre, the
economy which has remained stagnant for centuries is likely to remain so. The
rail network in Nagaland is nominal (13 Ian). The only airport in the State is at
Dimapur. Surface transport is the main method of communication in this land-
locked hilly State. This has resulted in the development of an impressive

232
network of public and private sector road transport system. The road length of
national highways is 365.38 km and of state roads is 1094 km. During 1996-
97, the road density was 1107 per thousand sq. km as against the all India road
density of 749 per thousand sq. km. However, road transport has been
handicapped by inadequate development and poor maintenance of roads. All-
weather roads linking the scattered villages are a prerequisite for development
of potential areas. This holds true for agriculture, social, industrial,
entrepreneurial and mineral development. As many villages are still not
covered by all weather roads, the villagers have been deprived of proper socio-
economic development in education, primary health care, and ready access of
farmers' products to the market.
The total number of telephone has increased from 48.7 million on March
31, 2003 to 54.63 million on 31 December, 2007 registering a 46.27% growth
rate over last September, 2007. The telecommunication services in India have
improved significantly .since independence, with the opening of telecorn sector
to private investment and establishment of an independent regulator. On
October 1, 2000, a PSU viz, Bharat Sanchar Nigam Limited (BSNL) was
formed to takeover all the services, providing functions of the erstwhile
Department of Telecommunication Services (DTS). All the district
headquarters are now well connected with 60 telephone exchanges as on March
'04 and the Telecommunication Deptt is in the process of expanding its
network to cover all the recognized villages in the State, 1059 villages already
connected during 2003-04. The State Government is also planning to set up
Community Information Centre in Block Headquarters and also open more
new Telephone exchanges in backward area for training data base and
application oriented end use. Internet facilities are available in Dimapur and
Kohima; Laying of optic fibre cable to enable Video conferencing facility is
available at Kohima and is expected to be commissioned soon at Dimapur.

233
 Money is the life blood of economic development and the degree of
monetization of an economy is a direct indication of the level of development
attained by it. Now a principal test of the degree of monetization of the
economy of a country or a region is the structure and the efficiency of the
financial & Credit institutions operating therein. At the National as well as
state level, there are large number of financial institutions provides a variety of
financial services for the promotion of infrastructure facilities which contribute
to develop large, medium and small scale industries. The State has a reasonable
banking network in place. All the major banks have branches in Dimapur and
Kohima, while other districts are served by the SBI and other State level banks.
Poor C: D ratio in the North East in general and particularly in Nagaland has
been one of the major hurdles in the industrialization of the State. In order to
provide adequate credit linkage to the industrial sector, the Nagaland Industrial
Development Corporation Ltd. (NIDC) which is also acting as SFC shall be
strengthened to cater to the needs of the entrepreneurs in the services of IDBI,
SIDBI, NEDFi, NMDFC, NSDFC and commercial banks foi channeling credit
for industrial development of the State. In Nagaland on March 31, 2004 the
number of scheduled commercial bank branches in Nagaland was 69 down
from 70 as on March 31, 2000. The bank deposits were Rs 1223 crores and
bank credit was Rs 206 crores. On March 31, 2004, as compared to the national
average of 58.72 % the credit deposit ratio in Nagaland was as low as 16.84 %.
The Financial institutions operating in Nagaland are NEDFi, IDBI, SIDBI and
NABARD. Till March 31, 2005, NEDFi sanctioned a total of Rs. 1237 lakh to
various projects located in Nagaland. In comparison to this the total number of
reporting Scheduled Commercial Bank Offices (including Regional Rural
Banks) in the State of Assam at the end of June, 2007 was 1279. The volume of
Deposits and Credit of these Banks stood at Rs.26039 crore and Rs.11068 crore
respectively at the end of the said period. The Credit-Deposit Ratio in the State

234
at the end of June, 2007 was 43.8 per cent as against all-India ratio of 71.5 per
cent.
The Indian postal system currently provides 3 8 services which can be
broadly divided into four categories of activities- viz, Communication (letters,
postcards, and newspapers), Transportation (parcels, money orders). Money
order services were introduced in 1880. The post office saving bank is the
largest bank in India in terms of network, no. of accounts and annual deposits.
It has deposits amounting to Rs. 323842.58 crore as on March 31, 2006. The
state of Nagaland has shown a steady growth in respect of postal service
facilities. In 1987 there were only 255 post offices which have increased to 328
in 2005, out of which, rural area accounts for 92.68 percent. In terms of per
capita availability, one post office serves 3788 population in the state against
5462 of all India average. As special distribution of post office in Nagai and is
concerned, 51.24 sq. Km is served by one post office against 21.26 sq. Km of
all India average in 2000. The postal communication system is far better in
'\
Nagaland, since it is compared withthe all India average.
Nagaland is not self-sufficient in power generation. The State purchases
power from neighbouring states to meet its requirement. The annual energy
consumption of 225 MU provides a very low per capita consumption of about
130 units per year only compared to an Indian average of 370 units. The
current peak demand is estimated at about 75 MW but it is restricted to only 50
MW. The quality too is low, with frequent curtailment and interruption,
transformer failures and low voltage. The bulk of the power in Nagaland is
purchased from the North-Eastern Grid, which is expected to be power surplus,
with large hydel projects coming on-stream in other states. The total existing
installed State generation capacity is 29 MW, all based on hydropower. Current
mean availability from this is about 90MU (2002 onwards). Under the central
sector there is an operational 75 MW hydel plant, from which the State

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receives a share of 12 percent of the generated power. The 24 MW Likimro
Hydro Electric Project has been commissioned and a few minihydro projects
are under construction, which will add about 3 MW to the existing generation.
A thermal power plant is planned to be set up at Dimapur within the next two
years. Power generation, transmission and distribution are managed by the

Nagaland Department of Power (DoP). The DoP's current financial situation is

dire with a revenue collection of Rs. 19 crore against a power purchase bill of
Rs. 36 crore (2001 ). The State suffers from high transmission and distribution
(T&D) losses, estimated at 58 percent. Due to old and overloaded T&D
infrastructure, technical losses form a significant fraction. In this regard, it may
be mentioned that the State Power Department does not have the facility to
undertake an audit of power transmission of distribution. Consequently, no
detailed projection or analysis of segment-wise demand is available in the
State. However, an investment projection of Rs. 4,500 crore (US$ 900 million)
has been made to raise the generating capacity of the State to 450 MW, based
on a notional per capita consumption target of 1,000 units.'\The power supply
position in the State of Assam is also not much encouraging since last few
years. The installed capacity of generating plants in the State has also come
down to 415.5 MW in 2006-07, from 574.4 MW in the previous year as
reported. During 2006-07 the generation of power has slightly moved upto
867.539 MU in 2006-07 from 808.047 MU in 2005-06. The per capita
availability of power in the State is 116 Kwh in 2006-07. In order to meet the
shortage of power supply, the State continued to purchase power from other
state and private power traders. Assam is also lagging behind most of the other
states in the country in rural households' electrification by electrifying 77 per
cent villages till date, out of which 20 per cent of the households in the villages
have electric supply, as per report available. However, for better improvement

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of the power supply position in the State various projects have been undertaken
and are in progress.
Most of the Naga villages are located on hilltops, which make supply of
drinking water a challenging task. Therefore, water has to be normally
supplied, through gravity, from a source located at a higher altitude than the
village. The number of villages having protected water supply sources in 1963
was only 59. Now, 1304 (fully covered-261, partially covered-1043) of the
1376 villages/habitations (approximately 95%) have been provided with
drinking water supply. Under the ongoing water supply schemes, the remaining
72 villages/habitations will also be covered during 2004. Efforts are also being
made to augment the water supply/distribution in the State, both in the rural
and urban areas, to keep pace with the increasing requirement of water as the
population grows. The objective is to achieve the recommended norm of 40
lpcd (litres per capita per day). Attempts are being made to involve the
community in implementation and maintenance of the water supply schemes.
In spite of the high decadal growth rate in population, the health profile
of Nagaland has shown tremendous success, particularly in the expansion of
primary health care system, the progressive increase in the number of trained
health providers and the low infant mortality rate. Nagaland's crude birth rate
is higher than the all India figures but the State's infant mortality rate is much
lower. The vital statistics of every married woman producing four children
during her productive phase has resulted in a total fertility rate of 3.77. The
couple protection rate, i.e use of contraceptives, is 30.3 percent. This shows
there is need for improvement in the health profile indicators in the State. The
health profile of Nagaland impresses when compared with the rest of the
country. For instance, against an all India maternal mortality rate (MMR) of
4: 1000, the figure for N agaland is 1: 1000 live births. Similarly, while the all
India infant mortality rate (IMR) stands at 68 per 1000 live births the

237
corresponding figure for Nagaland is 42.1 per thousand live births. On the
other hand, the State represents the highest decadal growth of population in the
country (64.4 percent), with a total fertility rate of 3.77, a demographic
challenge for anyone. The comparative figures, especially those with
developed countries, provide an interesting and challenging picture. It shows
the distance Nagaland has still to travel to reach its goal of providing long and
healthy lives to the people. Nagaland's tribal customs, cultural norms and
cultivation practices find expression in the dietary behaviour of the people. One
of the direct results is a higher calorie intake than the average citizen of the
country. The calorie intake per capita per day is 2398 in rural areas and 2165 in
urban areas, according to the National Sample Survey, 55th Round 1999-2000.
The corresponding all India figure is 2149 and 2156. Macro-nutrient deficiency
is not visible in most of Naga soc.iety. Nonetheless, presence of anemia is
common among the women and children of the State, as in the rest of the
country. Some micro-nutrient deficiencies, as evidenced by prevalence of
diseases like night blindness, however, are seen amongst children. Vitamin A
deficiency not only leads to ocular problems but also contributes to increased
susceptibility to infections and malnutrition.

Another social overhead under tertiary sector, an ingredient of

infrastructure which is extra economic but which has got a fundamental
economic importance that economic growth can hardly be expected without it
and Education is the one among them. The type of education a society has
reflects the needs and aspirations of the particular society and has a great
bearing on its soda] order. This reciprocal relationship between educations and
the needs and aspirations of society provide focus and perspective to the people
and they, in turn, shape society for harmonious and progressive living. Till the
end of the Seventh Plan there was no Higher Secondary School, which has
been uncaptioned during the Eighth Plan with 3 Government Higher Secondary
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Schools, while at the end of the plan there were 10 Higher Secondary Schools
in the state of Nagaland and it increased to 34 all inclusive of Private Higher
Secondary Schools. During the Plan Period of 1961-62, the total number of
High Schools was only 13, which increased to 61in1971-72, 102 in 1981-82,
179 in 1991-92, 321 in 2002-03 and 332 in 2006-07. There were 61 Middle
Schools during 1961-62 which increased to 482 in 2002-03 and 484 in 2006-
07. Again there were 522 Primary Schools in 1961-62 which have increased to
1501in2002-03 and 1509 during 2006-07. During 1961--62 there was only 1
School of Professional Education which increased to 2.. in 2006-07. During
1981-82 the total number of Law College were 2 in the state which has
increased to 3 in 2006-07. Between 1961 and 2001, Nagalands literacy rate
increased from 17.91 percent to 6 7.11 percent. While N agaland' s literacy rate
was higher than the national average in the period 1981 to 2001, the extent of
improvement has not been as high as in some of the other North-Eastern states
like Mizoram (literacy rate 88 percent). When disaggregated by gender, the
literacy rate is higher amongst men than women. Naga women's literacy rates
are comparable with the all India literacy rates. The enrolment rate in the State
is 64 percent as against 95 to 100 percent in the developed nations. This, of
course, is not to belittle the remarkable achievements of the State but to
establish the ideal and to map out the extent of the journey still to travel to be
at par with the best in the world. Since statehood in 1963, the Government of
N agaland has taken a number of steps to strengthen the educational base. The
establishment of educational institutions on priority basis, provision of
incentives for learning like scholarships, reservation of seats in higher
educational centres, construction of hostels and development of libraries are
some of the components that the Government has built into its integrated
approach to promote education. The growth in the number of educational
institutions after the creation of Nagaland State has been significant.

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 To conclude the chapter, we have observed that while the economic
progress in Nagaland during the last five year plans lagged far behind the all
India rate of progress in many important areas, and while it cannot be denied
that the state could have achieved higher rates of growth within the limits of
available resources had there been better planning, it is equally undeniable that
Nagaland began to lay the minimum foundation for economic development
during the period under review. More specifically, the whole administrative
machinery of the state was reoriented during the Third and Fourth Five Year
Plan, the infrastructure of the State's economy was laid in a small way, and the
cooperative method of economic organization began to take root in the soil of
the state. The pattern of outlays and expenditure during the various plans of
Nagaland as shown in different Tables indicate that except during the Third
Plan period, most of the schemes envisaged in the annual plans were
implemented spending more or less the plan outlays. The provisions and actual
expenditures of the Second, Third and Fourth Five Year Plans reveals that
!)
topmost priorities was given to agriculture, transport and communication and
social services. The Fifth Plan also gave high priority to agriculture and allied
services (27%), transport and communication (25%) and social services (30%).
This clearly indicates that there has been no major shift in priorities and
strategies. The high priority for transport and communication is quite
justifiable since the long term development of the state largely hinges upon the
development of transport. A peculiar feature of investment in transport and
communication in Nagaland during the Second, Third and Fourth five year
plans was that it was exclusively devoted to the purchases of motor vehicles
because other forms of transport have little scope in the state. The high
percentage of investment in social services in an underdeveloped state like
Nagaland is quite understandable once we interpret those as investment in
human capital. ***************

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