CHAPTER - I
Economic Situation

NATIONAL ECONOMY:

1.1.0 The growth of National economy in terms of Gross Domestic Product (GDP) at constant (1993-94) prices has been estimated at 4.0 per cent for the year 2002-2003 (Quick Estimates as compared to the growth rate of 5.8 per cent (Provisional Estimates) achieved in 2001-2002 as released by the Central Statistical Organisation, Government of India. The Per Capita Net National Product at constant (1993-94) prices has been worked out at Rs 10964 in 2002-2003 (Quick Estimates) as against Rs 10774 in 2001-2002 (Provisional Estimates) and at current prices the same was Rs 18912 in 2002-2003 (Quick Estimates) as against Rs 17947 in 2001-2002 (Provisional Estimates). In respect of Per Capita Net National Product, the year 2002-2003 (Quick Estimates) registered a growth of 1.8 per cent in real terms and at current prices the growth of the same was 5.4 per cent. As per in real advance estimates for the year 2003-3004 the Gross Domestic Product (GDP) is likely to increase by 8.1 per cent at constant (1993-94) prices and by 11.9 per cent at current prices as compared to the growth rate of 4.0 per cent and 7.6 per cent respectively in the previous year. The Per Capita Income in real term during 2003-2004 is likely to attain a level of Rs 11684 as compared to the quick estimates for the year 2002-2003 of Rs 10964.

1.1.1 The annual point-to-point inflation rate based on the Wholesale Price Index (Base 1993-94=100) remained below 2 per cent till the end of May 2002, and rose thereafter in between 3-4 per cent. The latest annual point-to-point inflation rate for the week ended 18^th January 2003 has touched 4.4 per cent and may creep up further if global oil prices continue to rise. Inflation rate based on Consumer Price Index (CPI) for Industrial Workers remained moderate during the year despite draught, indicating comfortable availability of food items. The CPI (IW) based inflation rate declined from 4.7 per cent in April 2002 to 3.2 per cent in December 2002.

1.1.2 Agricultural and allied sector growth is likely to register a decline in the current year due to the severity of drought. The adverse weather conditions affected the crop prospect heavily on Kharif crops. The food grains production in 2002-2003 is likely to be lower which is estimated at 183.2 million tonnes compared to last year’s production of 212.02 million tonnes (fall of 13.6 per cent). The sharp fall in current year’s food grain production, which is the lowest since 1996-97, is mainly due to the decline in Kharif production from 111.5 million tonnes last year to 90.3 million tonnes in the current year (fall of 19.09 per cent). The food grain production of Rabi season is also likely to drop to 92.9 million tonnes compared to last year’s 100.5 million tonnes (fall of 7.5 per cent).

The estimated production of Rice is 77.7 million tonnes in 2002-2003 as against 93.1 million tonnes in 2001-2002. The production of Wheat is likely to be 68.9 million tonnes as against 71.8 million tonnes in 2001-2002. The estimated production of Coarse Cereals and Pulses are 25.1 million tonnes and 11.5 million tonnes respectively in 2002-2003 as against the production of 33.9 million tonnes and 13.2 million tonnes respectively in 2001-2002. Effect of drought is expected to be severe on the production of commercial crops also. Only Jute and Mesta production at 11.5 million bales in 2002-2003 as against 11.6 million bales in 2001-2002 fared better as severity of drought was not felt in Jute and Mesta producing States.

The production of Tea has increased steadily from 761 million kilograms in 1995-96 to 847 million kilograms 2001-2002; the percentage of increase is 11.3 per cent. Coffee is another important plantation crop and its production in the country has grown to reach over 306 thousand tonnes in 2001-2002 from 170 thousand tonnes in 1990-91. There is a steady growth in Rubber production too and 97 per cent of the country’s demand for natural Rubber is met from domestic production. The production of Rubber has increased from 580 thousand tonnes in 1997-98 to 638 thousand tonnes in 2002-2003.

The Index of Agricultural Production of 46 crops including plantations crops with base triennium ending 1981-82=100 (revised) has decreased to 156 (provisional) in 2002-2003 from 177 (provisional) in 2001-2002 thus showing a decline of 11.9 per cent during the year.

1.1.3 The Index of Industrial Production with base year 1993-94=100 has increased to 170.5 in 2002-2003 from 167.0 in 2001-2002. It has displayed some definite signs of improvement in the first eight months of the year 2002 showing an overall growth of 5.3 per cent over the same period of 2001. The Mining and Quarrying sector showed a growth of 5.7 per cent followed by 5.4 per cent and 4.0 per cent growth by Manufacturing and Electricity sectors respectively during the period. The two key elements, which led this improvement in Index of Industrial Production growth, were Capital goods, which grew by 9.9 per cent and consumer non-durables, which had growth of 12.7 per cent.

Two industries, which have experienced striking revivals in the current year in the industrial sector, are Steel and Cement. The Textile industry is a key area where India has an opportunity for labour intensive exports. In the Oil and Gas industries, Crude Oil production has increased from 21.24 million tonnes in 2001-2002 to 22.09 million tonnes in 2002-2003 (April-November) registering an increase of 4.0 per cent. Natural Gas production rose to 20.61 billion cubic metres during the year 2002 (April-November), which was 4.5 per cent higher than that in the corresponding period of previous year. The Coal and Lignite production was 352.60 million tonnes during 2001-2002 as against 332.58 million tonnes during 2000-2001, showing a growth of 6.0 per cent.

The Small Scale Industries registered a higher growth rate than the overall industrial sector in terms of Number of Units, Production, Employment and Exports. During 2002-2003, the number of Small Scale Industry (SSI) units was estimated at 35.72 lakh against 34.42 lakh in the previous year registering an increase of 3.8 per cent. The estimated value of production increased by 7.5 per cent i.e. Rs 514292 crore in 2002-2003 from Rs 478456 crore during 2001-2002, while employment went up to 199.65 lakh persons from 192.23 lakh persons during the same period.

India continues to make progress on export-oriented production in Electronics and Computer technology. Software exports have grown at a compound growth rate of over 50 per cent per year for the last five years. Hardware exports have also grown sharply and reached a level of Rs 5871 crore in 2001-2002 showing a growth of 22.6 per cent when compared with the previous year. Software exports at present level is $1 billion a year.

1.1.4 India’s foreign exchange reserves position has strengthened substantially from a reserve draw down of US$1.28 billion in 1990-91 to a reserve build-up of US$11.76 billion in 2001-2002. The balance of payment (BOP) has been in an overall surplus since 1996-97, with reserves rising, on an average, by US$6.21 billion per annum during 1996-97 to 2001-2002. The current account deficit has come down from a level of 3.1 per cent of GDP in 1990-91 to a current account surplus of 0.3 per cent of GDP in 2001-2002. On the capital account, inflows have remained buoyant (except in 1995-96) bolstering the resources during the period.

India’s balance of payments of 2001-2002 exhibited mixed development. While exports, on BOP basis remained stagnant at previous year’s level. Imports declined by 2.8 per cent, thus resulting in a decline in merchandise trade deficit, as per cent of GDP, from 3.1 per cent in 2000-2001 to 2.6 per cent in 2001-2002. The consequential trade deficit came down from US$14.37 billion in 2000-2001 to US$12.70 billion in 2001-2002. The net capital flows increased from US$8.41 billion in 2000-2001 to US$10.41 billion in 2001-2002. The provisional estimates for import and export at current prices stood at Rs 2,13,225 crore ($43,882 million) and Rs 1,85,211 crore ($38,115 million) respectively for April-December 2002. The total foreign exchange reserves (including gold and SDRs) at the end of March 2002 amounted to US$54.11 billion as compared with US$42.28 billion at the end of March 2001.

The Tenth Five Year Plan (2002-2007) has been prepared against a backdrop of high expectations and aims at achieving an average growth rate of the Gross Domestic Product (GDP) at 8 per cent per annum over the period of 2002-2007. The decadal average annual growth rate of the Indian economy, after fluctuating around 3.5 per cent for the decade of the 1950s, 1960s and1970s, took a quantum leap to 5.7 per cent in the decade of the 1980s and further the annual rate of growth rapidly accelerated to around 7.5 per cent during 1994-95 to 1996-97, making India one of the fastest growth countries in the world.

ASSAM’S ECONOMY:

1.2.0 The growth of the State’s Economy seems to be encouraging during 2003-2004 and is likely to register an upward trend of growth in the coming years. The advance estimates of State Domestic Product for the year 2003-2004 indicate that the growth rates of Net State Domestic Production (NSDP) is estimated at 6.2 per cent at constant (1993-94) prices and 10.5 per cent at current prices as compared to the growth rates of 3.9 per cent and 7.8 per cent respectively for the year 2002-2003. As per the said estimates the Per Capital Income is likely to attain a level of Rs 6403 at constant (1993-94) prices and Rs 12593 at current prices during 2002-2004. In terms of Net State Domestic Product (NSDP), the State’s economy registered an annual growth of 3.90 per cent at constant (1993-94) prices during 2002-2003 (Quick estimates) as against a growth rate of 3.09 per cent during 2001-2002 (Provisional estimates). At current prices the NSDP recorded a growth of 7.82 per cent in 2002-2003 (Quick estimates) as against 4.09 per cent growth recorded in the preceding year. So far as Per Capital Income is concerned a growth or 2.66 per cent in real term was recorded in 2002-2003 as against 1.95 per cent recorded in 2001-2002. At current prices, the Per Capita Income registered a growth of 6.53 per cent in 2002-2003 as against 2.95 per cent growth in 2001-2002. The share contribution of Agriculture sector in NSDP of Assam in 2002-2003 was 29.60 per cent at constant (1993-94) prices and 30.34 per cent at current prices as against 31.43 per cent and 31.69 per cent respectively in 2991-2002. The share contribution to NSDP in respect of Mining and Quarrying. Manufacturing and Construction during 2002-2003 were 4.73 per cent, 9.23 per cent and 6.63 per cent respectively at constant (1993-94) prices and at current prices the same were 4.77 per cent, 9.74 per cent and 6.75 per cent respectively. The Trade, Hotel & Restaurant sector had largest share of 15.26 per cent at constant prices and 14.76 per cent at current prices during the year as against the share of 14.83 per cent and 14.94 per cent, respectively during 2001-2002. The overall performance of the economy of the State during the year under report was by and large encouraging as discernible from the positive growth rates witnessed to some important sectors of the economy of the State.

1.2.1 Due to adverse affect of natural calamities like floods etc. the performance of the Agriculture Sector during 2002-2003 was not upto expectations. During the year, the total production of Foodgrains Crops covered by the crop forecast in the State has been estimated at 38.94 lakh tonnes as against 40.23 lakh tonnes in 2001-2002. As per available estimates, the production of Winter Rice recorded decrease to 26.71 lakh tonnes in 2002-2003 from 27.13 lakh tonnes in 2001-2002. Similarly, the production of Summer Rice showed decrease to 6.22 lakh tonnes in 2002-2003 from 6.53 lakh tones in 2001-2002 and the production of Autumn Rice also declined to 4.45 lakh tonnes in 2002-2003 from 4.88 lakh tonnes in 1001-2002. Thus, the production of Rice which is the most important Cereals Crop grown in the Sttae has recorded a decrease of 3.01 per cent during the year. The production of Wheat also decreased to 0.78 lakh tonnes during 2002-2003 from 0.85 lakh tonnes in the previous year. The production of Pulses was marginally lower at 0.60 lakh tonnes in 2001-2002 as against 0.55 lakh tones in 2002-2003. The production of Rape and Mustard also decreased to 1.30 lakh tonnes in 2002-2003 from 10.11 lakh tonnes during 2001-2002. So far as the production of Jute is concerned, the same recorded increase to 6.91 lakh bales in 2002-2003 from 6.75 lakh bales in the year before while the production of Mesta recorded a marginal increase to 0.25 lakh bales during 2002-2003 from 0.24 lakh bales in 1001-2002. In view of the mixed performance of the agricultural sector the General Index of Agricultural Production (base triennium ending 1981-82=100) for the State has recorded only a nominal increase to the point of 165 in 2002-2003 (provisional) from the point of 164 in 2001-2002. Preliminary information available for the year 2003-2004 indicate a better production performance in respect of crops like Winter Rice, Maize and Sesamum while a fall in production is also indicated in respect of crops like Jute, Mesta & Sugarcane during the year under reference.

1.2.2 In the Manufacturing and Processing sector of the State, a mixed performance in production could be observed during the year 2002-2003. Provisional production data available for the year shows a positive growth in the production of industrial items like Refinery Products, Cement, Fertilizer etc. over the production level of the previous year. On the other hand a decrease in production has been noticed in respect of items like Tea processing, Grain Mill Products, Paper, Jute Textile etc.. during the said year. The overall industrial scenario of the state is expected to improve considerably in near future due to efforts made by the State Government through announcement of new Industrial Policy mostly aimed at attracting private investors from outside.

The general Index of Industrial Production of the State (Base 1993-94=100) stood at 132.46 in 2002-03 as against 125.87 in 2001-2002 thereby recording an increase of 5.2 per cent over the year.

The performance of Mining Sector in the State was not much satisfactory during 2002-2003. As per provisional data available the production of Petroleum (Crude) decreased by 1.6 per cent during 2002-2003 over the previous year. Production of Coal, another important mineral item also decreased by 4.8 per cent during the same period. However, the production of Natural Gas (Utilized) has increased by 1.8 per cent and that of Limestone by 1.5 per cent during 2002-2003 over 2001-2002.

The Index of Mineral Production of the State (Base 1993-94=100) decreases to 97.47 in 2002-2003 (P) from 101.76 in 2001-2002. In percentage term the decrease was 4.2 over the year.

1.2.3 The overall Power Supply position in the State continued to be erratic during the year under report. The installed capacity of power has remained i.e., 574.400 M.W. for six consecutive year. i.e. from 1997-98 to 2002-2003. On the other hand, the Generation of Power has decreased from 934.960 (MU) in 2000-2001 to 840.406 (MU) in 2001-2002 and further to 746.094 (MU) in 2002-2003. During 2002-2003 the estimated requirement of Power for the State was 3500.000 (MU) while the availability was 3304.737 (MU) thereby resulting shortage by about 5.60 percent. In order to meet the shortage of Power Supply the State continued to purchase power from other sources. The net import of power by the State was 2582.737 (MU) in 2002-2003 as against 2461.182 (MU) in 2001-2002.

1.2.4 The total number of reporting Scheduled Commercial Bank Offices (including Regional Rural Banks) in the State at the end of March 2003 was 1216. The volume of Deposits and Credit of these Banks stood at Rs 12921.31 crore and Rs 3695.12 crore respectively at the end of the aforesaid period. The Credit-Deposit Ratio in the state as on March 2003 was 28.6 per cent, which was quite unsatisfactory when compared to the ratio of 59.4 per cent at the National level during the same period.

1.2.5 The behaviour of Price level can be observed from the movement of Consumer Price Index Number for the Working Class Population and the Wholesale Price Index Number for Agricultural Commodities. The average Consumer Price Index Number for the Working Class Population (Base 1982=100) for the State displayed a price rise of 2.16 per cent in 2002 over 2001 as against 0.73 per cent increase recorded in 2001 over 2000. The annual average Wholesale Price Index Number for Agricultural Commodities (Base 1993-94=100) stood at 161 in 2002-2003 as against 163 in 2001-2002 and 162 in 2000-2001. The Index thus displayed a marginal decrease of 1.22 per cent in 2002-2003 over 2001-2002. As far as the behaviour of Retail Prices of essential commodities is concerned, it has been observed that most of the commodities recorded moderate rise of different variations in their prices. However, the price situation in the State during 2002-2003 was found to have remained more or less steady.

1.2.6 As regards the Employment Sector, the number of persons employed in organized economic activity (comprising both Public and Private Sectors) was found to have decreased to 10.84 lakh at the end of December, 2002 (Provisional) from 11.31 lakh at the end of December, 2001 recording a decrease of 4.2 per cent over the period. The employment of women in organised sector of the State was 321.9 thousand at the end of December 2002, which was 29.7 per cent of the total employment. As regards the scenario of manpower supply and demand, the data available from the Employment Exchanges of Assam revealed that the total job seekers in the Live Register increased to 15.72 lakh at the end of December 2002 from 15.25 lakh at end of December 2001 thereby showing an increase of 3.1 per cent. But placements have decreased to 747 from 942 during the same period showing a decrease of 20.7 per cent.

In order to increase employment avenues through generation of gainful employment opportunities the Government has been implementing various schemes like Employment Assurance Scheme (EAS), Swarnajayanti Gram Swarajgar Yojana (SGSY) and Special Swarnajayanti Gram Swarojgar Yojana (Special SGSY) etc., at the same time which also aims at upliftment of rural people at the grass root level. The concept of Self Help Group (SHG) has been introduced to bring a revolution in the field of self-employment. Under the SGSY Scheme, a total 58,458 Nos. of SHGs have been formed covering about 7,02,000 Nos. of poor families till the end of the year 2002-2003. Further, 34,660 Nos. of women SHGs are also functioning in the State under SGSY as on March 2003.

It is encouraging to observe that more and more people of the State are taking keen interest in availing opportunities offered through implementation of these schemes. A positive development is already under way in various key sectors of the State’s rural economy as evident from the achievements made in their respective areas.

Over the recent few years the State has had to pass through a lot of constraints such as stringent financial position, insurgency problem and recurrence natural calamities in the shape of floods, erosion and at times draught, thereby making the task of desired development difficult. However, despite of such constraints, the State has been able to achieve considerable progress in diverse fields as reflected in the growth of SDP of the State for the last two-three years.