The Economy of Assam can be described as an underdeveloped one. A state is  underdeveloped one when it is characterised by poverty, under-utilized manpower and untapped natural resources. Prof. Ranger Nurse states that underdeveloped countries are those which " Compared with the advanced countries, are under equipped with capital in relation to their population and natural resources."

The Indian planning Commission defines an Underdeveloped country as one " which is characterised by the coexistence, in greater or less degree, of unutilized or underutilized man-power on the one hand, and of unexploited natural resources on the other".

Eugene Staley defines an Under-developed country thus: " A country characterized (i) Mass poverty which is chronic and not the result of temporary misfortune and (ii) Obsolete methods of production and social organisation, which means that the poverty is not due to poor natural resources and hence could presumably be lessened by methods already proved in other countries". This definition of under-development is quite satisfactory. Thus, Assam, with its vast development potential untapped resources and poverty, can be easily described as under-developed state. 

We can now mention some important characteristics of the economy of Assam : 

1. Slow growth of state Income : The estimates of state income (Net State Domestic Product) show a steady but slow growth of the economy of Assam in the past few year. The State Income (SDP) for Assam, at current prices, stood at Rs. 946.00 crores in 1973-74 as against Rs.874.7 crores in 1972-73 showing an increase of 24.5 per cent in 1972-73 over 1971-72. The net national product of the country at current prices shows an increase of 24.5 per cent in 1973-74 over the previous year as the national product was calculated at Rs. 49,290 crores in 1973-74 as against Rs. 39,592 crores in 1972-73.

According to the revised series, State Domestic Product (SDP) at current prices stood at Rs. 1340.7 crores in 1974-75 as against Rs. 1318 crores in 1975-76 showing a decline of 2 percent over 1974-75. The SDP rose to Rs. 1521.9 crores in 1976-77 showing a rise of 16 per cent over 1975-76 and further rose to Rs. 1682 crores in 1977-78 showing a rise of 10 percent 1976-77. In 1978-79, the SDP stood at Rs. 1856.1 crores showing a rise of 10.5 per cent over 1977-78. In 1981-82, the SDP at current prices, increased to Rs. 2798.4 crores showing an increase of 50.7 per cent over 1978-79. The net national product of the country as a whole, on other hand increased from Rs. 87,253 crores in 1979-80 to Rs. 1,04,201 crores in 1980-81 showing an increase of 19.4 per cent over the previous year.

Again the state domestic product at current price rose by 11.3 per cent in 1989-90 over the previous year as compared to only 2 per cent in 1988-89. On the other hand, the rate of growth of national income in India was 10.4 per cent in 1988-89 and then declined to only 4.5 per cent in 1989-90. Again in 1990-91 and in 1993-94, the rates of growth of state income in Assam were 7.5 per cent and 13.8 per cent respectively. But at constant prices, the rate of growth of state income in Assam in 1993-94 was 9.2 per cent over the previous year.

This shows that the growth of state income in Assam could not keep pace with the growth of income for whole country in early although it showed marginal improvement in recent years.

2. Low per capita income : The per capita income in Assam is also very poor. It was Rs. 528 at current prices in 1970-71 and compares very unfavourably with the per capita national income of Rs. 636, much more so when viewed against the higher price level in Assam. Again the per capita income at current prices rose by 4.9 per cent in 1971-72. The per capita State income at current prices stood at Rs. 600.6 in 1973-74 as compared with Rs. 572.1 in 1972-73 and Rs. 535.5 in 1971-72. Similarly, the per capita state income of only Rs. 816 in 1976-77 shows a gap of over Rs. 200 with the per capita national income of Rs. 1049 in the same year. The per capita income at current prices rose further to Rs. 866 in 1977-78 showing a rise of 6 per cent over 1976-77 as against national annual increase of 8 per cent. The provisional estimated figure of per capita income at current prices stood at Rs. 1007.2 in 1978-79 and then the same figure increased to Rs. 1220.8 in 1980-81 and then to Rs. 5916 in 1993-94. But the per capita income of Assam in 1993-94(Rs.5916) compares very badly with per capita income of India (Rs. 7060) in the same year showing a gap of over Rs.1144.

3. Poor rate of capital formation : The State’s economy is characterised by poor rate of capital formation. The volume and rate of savings in Assam are very poor. Savings depends on the level of per capita income. As the level of per capita income in Assam is very poor, the savings potential of the State is thus low. Unfortunately, the marginal propensity to consume of the people of Assam is very high on account of sub-standard living conditions of the majority of the population. Possibly, there are large accruals of additional income in the rural sector. But there are inherent difficulties of mobilising these incremental rural incomes. Thus shortage of savings is the main root of capital deficiency in Assam.

4. Excessive dependence on agriculture : The state’s economy is depending too-much on agriculture. Colin Clarke and Kuznets state that economic development consists in the progressive enlargement of the proportion of tertiary occupation. Of the total working population of the state, about 77 per cent were engaged in agriculture and allied activities. But in Assam, cultivators and agricultural labourers together account for 64.1 per cent of the total working population as against 67 per cent for all states of India, according to 1991 census. District wise, Mikir Hills district has the highest percentage of agricultural workers (83.9 p.c.) followed by Goalpara (78.1.p.c) and Nagaon district (77.2 p.c.) The lowest percentage occurred in Old Lakhimpur (49.4 p.c.) and Sibsagar district (51.1 p.c.). Total number of workers in the manufacturing, other than household industry, constitute 2.8 percent of the total workers in the state while workers in trade and commerce account for 5.7 per cent. Further the percentage of income from agriculture was 57 in 1970-71 and then it remained 56 per cent, 54 per cent, 54.1 per cent in 1975-76, 1976-77 and in respectively compared with 45 percent for the country as a whole in 1975-76. In 1993-94, the percentage of income front agriculture in SDP declined to 34.1 percent as compared with 30.0 percent for all India. As non-agricultural occupations could not grow sufficiently due to lack of sufficient investment, the agricultural productivity per worker in Assam has declined from Rs.508.77 in 1951-54 to Rs.355.27 in 1969- 72. This shows how the agricultural sector of the state is over-burdened.

5. Population pressure and Unemployment: Population pressure in Assam is very heavy. The rate of growth of population in Assam is one of the highest in country. The growth rate in the decade 1951-61 was 34.97 was 34.97 percent against 21.64 percent for all India. Similarly, the growth rate during the decade 1961-71 was 34.95 percent in Assam as against 24.80% for the country as a whole. During the last fifty years(1921-71), the growth of population in Assam has been 215%. This high rate of growth is not entirely due to biological cause. A significant portion of the increase is due to the influx of people from outside and this trend has been continuing at least since the beginning of the century. Thus whatever development has been achieved in the State, it is being swallowed up by increased population. Thus the increasing trend in the growth of Assam’s population can be visualized from the fact that Assam’s population as percentage of all India has been increasing from 1.4 percent in 1901 to 2.2 percent in 1951 and then to 2.5 percent,2.7 percent and 2.6 percent in 1961,1971 and 1991 respectively. The overall population density per Sq. km. of the State is 284 which is higher than the national average density of 267 persons. In 1991, the total size of population of Assam is estimated at 2.24 crores as against 1.46 crores according to 1971 census.

As alternative occupations in the secondary and tertiary sector do not develop sufficiently, thus the increasing number of population is being thrown on land to eke out their living from agriculture. This tendency of increasing dependence on agriculture is creating disguised unemployment in the economy of the state.

6. Shortage of technology and skills: The economy of Assam is suffering from low level of technology and acute shortage of skilled labourers. Poor techniques and lower skills result in inefficient and insufficient production which leads to poverty. The technological backwardness of the State is even greater than that of all India standard. Thus the rate of development of the State is quite slow.

7.Lack of infrastructure : From the very period Assam was a neglected State partly due to its geographical features. The State was lagging in respect of transportation, communication, electrification and credit facilities etc. than most of the other states of India. Due to this infrastructure backwardness, industrialisation, the major wheel of economic development, started very belatedly in Assam. The surface transport facilities by Roads, Railway, and Waterways within Assam and the links with the neighbouring states and rest of India are not adequate and subject to severe hardships during the monsoons. The Railway route length in Assam covering the entire North Eastern Region is 2200 km of Metre Gauge and 266 km. of Broad Gauge. The P.W.D. Road length (as on 31st March 1990) is 30,086 km. 0f which only 6389 km. stretch of Brahmaputra. One more bridge at Pancharatna, which is urgently required is now under construction. The length of total road per 100 sq. kms in 1968 was 18 km. in Assam as against 29 km. for all India. Postal and Telecommunication services in Assam were not very satisfactory. Postal services are improving gradually in recent years. But telecommunication system needs more attention.

Assam is still deficient in respect of generation and consumption of power. The per capita consumption of electricity in Assam was only 78 Units in 1989-90 which was barely 33 per cent of the national figure of 236 units during the same year. Total power generation in Assam is very minimum at present and it stood at 1068.3 Million kwh, in 1992-93. The potential of generation of thermal (coal and natural gas) power is also high. At present, various hydro and thermal power projects are under construction. The pace of rural electrification in Assam was very slow. Electrified villages comprised only 6.4 per cent of the total villages of the state in 1973-74 as against 100 per cent electrification in the village of Haryana and 78 percent in Tamil Nadu. In 1992-93, 83 percent of total villages in Assam are electrified.

In case of banking facilities the state is lagging far behind the national position. in 1991, a bank office in Assam covers on an average, 17 thousand person as against 12 thousand persons for the country as a whole. Further number of bank offices per 100 sq. kms was only 0.2 in Assam as against 3.7 for all India in the year 1971. Per capita bank credits in Assam stood at Rs. 52.5 in 1977 as against Rs. 238.6 (approx.) for all India and in 1992, the same figure further declined to Rs. 46.0 only. The state is also lacking in a sound administrative machinery which is very essential for spending up the pace of development.

8. Under-utilisation of natural Resources : Assam is a land of potentialities. Various natural resources are available within the state. Unfortunately, due to its geographical isolation, Assam was a neglected state from the very early period. Gradually Assam’s importance was realised as sufficient natural resources were found available in this region. But till now, various resources, viz. water, minerals, forest, land etc. remain under-utilised or even untapped due to various difficulties, such as their inaccessibility, shortage of capital, lack of proper attention, primitive techniques, transport bottlenecks and the small extent of the market. Assam has 28 per cent of the total hydro power potential of the country, which remains under-utilised. Further, a vast quantity of mineral resources and forest products still remains under-utilised. Thus in this way due to lack of proper attention, the natural wealth is being wasted.

9. Lack of industrial development : Assam is lagging behind other states in regard to industrial development. This due to absence of large investments in industry during preceding plans and Assam’s geographical isolation. The industrial sector in the state has been centralised around some major industries, i.e., Tea, Jute and Oil. The volume of private industrial investment in Assam is very low due to heavy risks involved in the investment. These risks are both natural risks, arising through natural calamities like flood, droughts and political risk as the state itself is a border state. Further geographical isolation of the state inhibits private investment from other regions. This is aggravated by transport bottlenecks. The consequential higher unit cost of transport act as a further disincentive to external private investment in the state. That Assam had been an industrially backward state in the country will be apparent from the fact that during 1969 per capita value added by manufacture in Assam amounted to Rs. 28.00 only as against all India figure of Rs. 51.00. Further, per capita gross output in industry in Assam stood at Rs. 128.00 as against all India’s Rs.220.00 during the same period.  Again, total income (product) from industry (mining, manufacturing and construction) in Assam constitutes only 18.0 per cent, 19.9 per cent and 19.5 percent of the total net state domestic product (at current prices) during 1973-74, 1977-78 and 1993-94 respectively.

10. Poverty : The state’s economy is characterised by long standing poverty. With the increase in the size of population, growing inequality of income and increased price level, the degree of poverty in Assam started to increase as the number of occupations could not grow satisfactorily. Dandekar and Rath in their study "Poverty in India" has estimated from the NSS consumer expenditure data of 1960-61 that about 48 per cent of Assam’s population was lying below the poverty line on the basis of minimum nutritional needs. Further, the extent of poverty in Assam was aggravated during 1970-71. It has been estimated that the consumer price level in Assam is About 20 per cent higher than the All India level. The poverty line of Rs.40.00 (according to planning commission's approach document) may be taken correspondingly as Rs. 48.00 at Assam prices. Taking Rs. 48.00 as the poverty line, it was estimated that number of persons below the poverty line in Assam would be 5.53 lakhs (40.14 per cent) and 107.12 lakhs (77.38 per cent) in urban and rural areas respectively making a total of 112.65 lakhs (73.67 per cent) for the state as a whole. Again the planning Commission’s Expert group Report (1993) shows that the number of persons lying below the poverty line in Assam was 89.6 lakh (39.0 per cent). Thus the Extent of poverty in Assam is gradually increasing day by day creating suffering for the millions of people living below the poverty line.

Various problems are attached with the initiatives to develop the economy of Assam. Although every state has its own share of special problems, Assam may be described as a major ‘problem state’ with its geographical isolation, proneness to natural calamities, sensitive borders, disturbed law and order conditions and other factors. Factors impeding economic growth in Assam can be classified into Economic and non-economic factors.

Economic factors : Following are the main economic factors which are responsible for creating problems of economic development in Assam :

1. Rapid growth of population : Population pressure in Assam very heavy. This is a very disturbing factor as the increasing number of population is a liability rather than asset. Census date shows that Assam has one of the highest demographic growth rate in the country, the growth rate in the decade 1961-71 being 34.95 per cent against 24.80 per cent for all India. During the last two decade 1971-91, the growth rate of population in Assam was 53.26 per cent. A significant portion of the increase is due to the influx of people from outside. The rate of growth of occupation and wealth in Assam cannot keep pace with this high rate of population growth creating problems of unemployment, poverty and inequality of income in the states.

2. Natural Calamities : Assam is unfortunately one of those few states which are every now and then visited by natural calamities such as floods and droughts. Experience and a study of the problems connected with the Brahmaputra and its tributaries suggest that it will be a long time before the problems of flood are adequately tackled. Total damages to crops, cattle, houses, public institutions in Assam has been increasing year by year, i.e., from Rs. 13.2 crores in 1970 to Rs. 24.6 crores in 1972 and from Rs. 11.98 crores in 1976 to Rs. 39.80 crores in 1980 and then to Rs. 306.6 crores in 1989. Thus production and income of the State faced setbacks in every year due to floods and revenues are being diverted for flood relief in every year. Total diversion of revenue for flood relief has been increasing from Rs. 104.74 lakh in 1962-63 to Rs. 286.32 lakh in 1974-75 which accounted to 2.6 per cent and 1.8 per cent respectively of the state total revenue. Thus a good volume of state’s resources has been diverted for making repairs and for giving relief to the flood victims. Had there been no such burden, this amount of resources would have been available for development plan purpose. Further, natural calamities in Assam make speedy implementation of plans difficult.

3. Geographical isolation of the state and its difficult terrain : Geographical isolation is a characteristic feature of the state which always goes against its development strategy. From the very early period Assam was a neglected state partly due to its geographical isolation which restricted capital flow into the state’s Economy for industrialisation of the state. Geographical isolation of the state involves higher unit costs. Further, lack of contact, lack of attention and lack of supervision by the centre are all the results of geographical isolation of the state. The difficult terrain of Assam surrounded by hills, rivers and dense forest leads to increase in the cost of administration cost of developmental projects, besides making mobilisation of resources particularly difficult.

4. High Cost Structure : Cost structure in Assam is very high. This is due to Existence of higher price level in the state in comparison to other states. According to K.K. Bhatia’s standard basket method, showing preliminary estimated of indices of comparative costline of selected centres of different States of India with Delhi as the base, the index for Digboi (Assam) is higher by 18% over Delhi. This index for Digboi is again the second highest in the country following Bombay. If Digboi is taken to represent Assam and the average of the 16 centres to represent India, then according to this Index (standard Basket Method) it is 21% higher.

Taking all these into consideration, broadly speaking, it is felt that the consumer price level in Assam may be taken to be about 20 per cent higher than all India average. The cost structure in Assam is thus very high and this has raised the cost of all the projects under different plans. This had added an additional strain on the financing of development project in Assam. Besides due to this high cost of living, chances of raising tax rates and the volume of savings for financing developmental plans become narrow and the cost of Administration increases due to high cost structure. Thus this high cost structure is always going against the development of the economy of Assam.

5. Poor transport and Communication facilities : Assam is lacking a sound transport and communication system. Geographical isolation, difficult terrain and lack of attention are some of the basic factors which are responsible for poor development of transport and communication facilities. Both the railway and road transport facilities in Assam are very minimum according to its need. Assam accounts for 3.9 per cent of the total railway route length of the country during March, 1993 but in case of broad gauge lines it accounts for measure 0.35 per cent of the total B.G. routes of the country. Expansion works like preparation of new railway lines: Conversion metre gauge lines into broad gauge lines, extension of national highways, construction of new bridges over Brahmaputra, development of well connected transport facilities and sound communication system etc. are not up to the mark. In the absence of all these above mentioned facilities, a region cannot develop industrially. In recent years, steps have been taken to improve the transport and communication system of the state without which the development of the economy is impossible.

6. Capital deficiency : Capital deficiency is a characteristic feature of underdeveloped countries. This characteristic is nothing peculiar to Assam when the whole country is suffering from capital deficiency. But this is serious handicap with which the state’s economy is involved. The problem of finance assumes serious proportions, both because agriculture and small business dominate the economy and also because neither the Government nor the corporate sector saves enough to meet the cost of its own Investment projects. The volume and rate of savings in Assam are very poor. Savings depend on level of per capita income. As the level of per capita income in Assam is very poor, the saving potential is low. Unfortunately, the marginal propensity to consume of the people of Assam is very high on account of sub-standard living conditions of the majority of the population. Thus, inspite of having huge development potential, the State’s economy cannot develop due to lack of capital formation. Further, a sizeable section of the population earning its livelihood in Assam is of a migratory character. A substantial portion of the savings of such seasonal migrants is not available for being ploughed into Assam’s economy as it is remitted outside, Similarly, the corporate sector and trade are substantially in the hands of persons exercising control from outside and they are remitting profits outside Assam. A recent study has been made by an Expert team sponsored by I.D.B.I. on the basis of available statistics of rail and road borne trade. The study indicates that which commodity flows into and out of Assam are more or less balanced at the level of about Rs. 200 crores annually, there is a regular outflow of monetary income from Assam to the extent off Rs. 63 crores annually. This heavy amount of outflows of capital is creating a heavy pressure on the financial condition of the state besides making the pace of development slower.

7. Waste of natural resources : Inspite of having huge amount of natural resources, the State’s economy still remains largely under-developed and involves itself into the wastage of huge quantity of natural resources. Investment in Assam are mainly channelised towards exploitation of rich resources viz. tea, jute and oil, which is reflection of the continuation of old colonian pattern of investment. Barring the setting up of a fertiliser factory and three refineries no significant utilisation has come about. Assam has 28 per cent of the total hydro power potential of the country, which remains under-utilised. The vast coal resources have not been exploited (Except for traditional use of the Railway etc.) despite several possibilities for use as fuel for production of power, for production of coke and as base for several chemical industries. The forest resources in Assam are also under-utilised, particularly in the matter of non-standard species. Thus insufficient exploitation of natural resources in Assam is responsible for this poor economic development of the state.

8. Lack of skilled personnel: Assam is also suffering from an acute shortage of skilled labour. Most of the labours are unskilled. For higher skills, the State has to depend upon other states and foreign countries. Consequently the state has to pay higher wage rates for skilled labour than in many other States. Besides, the State has to import technicians from outside the state on attractive rates of remuneration for installation of capital-goods industries and thus it raises the cost of the development projects besides making the gestation period of these projects lengthy.

9. Lack of Entrepreneurial and Managerial talents : About the availability of entrepreneurial and managerial talents, the picture is very gloomy. There is lack of initiatives and entrepreneurship on the part of local talents to start new industries within the state for which there is sufficient development potential.

10. Poor credit facilities : Credit facility, which is a part of infrastructure requires for development, is very minimum per capita bank credits in Assam stood at Rs. 15.6 in 1970 as against Rs. 83.9 for all India. The credit deposit ratio in Assam stood at 23.5 in 1970 as against 55.9 for all India. In recent years also credit deposit ratios of the commercial banks in Assam stood at a poor level which were 44.3, 49.5, 45.5 and 43.4 in 1975, 1976 1977 and 1978 (June) respectively. Again in December 1994 the deposit ratio in Assam was 55.9 per cent as against 59.4 per cent for all India. Thus the lending policy of the commercial banks is far from generous to this poor State of Assam. Thus in the absence of large scale credit facilities, industries in the private sector cannot grow satisfactorily.

11. Primitive Technology : Technological progress is the root of economic progress. But Assam is suffering from lack of technological development due to poor scientific educational facilities. Assam is still following primitive technologies in Agricultural sector and thus agricultural production remains stagnant whereas other State like Punjab, Haryana, Gujrat, Uttar Pradesh have been able to make sufficient progress in agriculture by applying modern technologies. Small scale and cottage industries in Assam are still following old orthodox technologies  and cannot stand in the competitive market. Thus the economy of the State has remained economically backward due to the absence of advances in technology.

Thus most of the favourable factors, which are responsible for sound economic growth, are missing in Assam. Rather various unfavourable economic factors are standing on the way to retard the pace of economic development of the state.

Non-Economic factors : These include :

1. Sensitive borders : Assam is bounded by sensitive borders in its four sides. Borders Specially with Bangladesh (formerly East Pakistan) on the west and south and with China on the north have remained too sensitive since independence. This adverse factor always goes against the economic interest of the State by obstructing the easy flow of industrial investment both in the public and private sectors. Inspite of possessing huge natural resources, the investment in Assam have remained a risky one due to its sensitive borders. With the change of time public sector investments started to flow within the state’s economy, although very slowly, but the flow of investment in the sector still remains poor.

2. Disturbed law and order conditions: Maintenance of law and order is a critical subject as Assam is a sensitive border State. Assam has to spend a heavy amount on police administration for the maintenance of law and order. Per capita expenditure on police administration on Assam stood at Rs. 8.25 in 1972 which was the second highest figure among all the states. In recent years, the expenditure has increased considerably due to the problem of insurgency in the State. This unduly heavy expenditure on law and order maintenance has put a severe strain on the already slender finances of the State Government and has, to that extent, hampered the Government’s ability to finance the developmental schemes. Further, this disturbed law and order condition will also restrict the flow of private capital into the State’s economy.

3. Lack of efficient administrative machinery : Maintenance of an efficient and clean administration is very essential for achieving sound level of development. But administrative machinery in Assam is neither efficient nor clean. Leakage of funds in various developmental works are quite common, resulting in poor performance or various plan and non-plan projects and wastage of financial resources of the state. Prevalence of red-tapism always delayed the operation of various developmental plan projects and makes the utilisation of plan funds difficult which leads to even surrender of scarce plan funds to the Central Government.

4. Social Structure : Social structure in Assam is not favourable for economic growth. The joint-family system creates under-employment and makes savings difficult. The caste system restricts the mobility of labour, the laws of inheritance resulted minute sub-division and fragmentation of holdings and religion has advocated austerity and renunciation which always obstructed the people from the way of their material advance. Further, United action by the people of the State on the economic front has been prevented by the diversity of castes and creeds.

Thus, We have seen the various hurdles which the State has to face while attaining economic development. Both the economic and non-economic factors are equally responsible for this poor rate of development attained by the State.

ECONOMIC DEVELOPMENT OF ASSAM IN PRE-INDEPENDENCE ERA

It is difficult to deny that foundation of the modern economic system of Assam was laid during the British regime. In Assam, British rule commenced from 1825. British rules in the early period of their rule undertook two socially beneficial measures having great economic significance. These were the suppression of slavery in 1843 and the poppy cultivation in 1860.

The establishment of a modern economy in Assam based on Capitalist principles was the greatest achievement of British regimes which was possible mainly due to the development of tea plantation. Along with tea industries, a modern industrial sector grew up on Assam with the establishment of different industries like petroleum, saw mills, plywood and Coal mining, etc. Besides, a modern transport and communication system was also built up with the gradual development of river, road, railway, postal and telegraph services. All these developments ultimately led to the growth of Commercial sector in Assam.

But the agricultural sector which engaged three fourth of the total population of the State was more or less unaffected by the activities of the modern sector. Thus there was colonial pattern of development in Assam which created a dual economy a small modern sector and a huge traditional subsistence sector existing at the same time. Thus during the pre-independence period there was secular stagnation in the economy of Assam.

During the British period, the principal agricultural crops of Assam were rice, mustard, pulses, Jute, cotton, sugarcane etc. With the arrival of Muslim immigrant cultivator from East Bengal, Jute cultivation started in Assam at the beginning of this century. During this period, the cropping pattern of Assam was not at all balanced and in respect of its diversification it was very minimum.Thus cultivation of rice covered the maximum area of the total cultivated land. In respect of trend in the sown area, it was very much irregular and fluctuating. In case of other crops, excluding Jute, increase in sown areas is very minimum.

In respect of the production of principal agricultural crops during this period, there was no continuous rise in production rather it was marked by fluctuation. During the period 1923-24 to 1947-48, total growth rate of production of rice was only 13 per cent. Again during the last period of nine years 1938-39 to 1947-48 the growth rate was as poor as 4 per cent. Further, during the 15 year period 1923-24 to 1938-39 rape, mustard and sugarcane had a growth rate of only 3 percent. But it was the production of Jute only which could maintain an increasing trend and its total growth rate was 68 percent during this period.

Although there was fluctuation in the production and area sown in case of rice, but the productivity of rice maintained a continuously raising trend during the period 1933-34 to 1947-48.

During the pre-independence period, Assam exported a good quantity of rice regularly besides meeting her own requirements. On the whole, Assam was a net exporter of food grains even after considering the large quantity of wheat import by the state.

Thus considering all these previous positions it can be concluded that during the pre-independence period, agriculture in the state was more or less stagnant, having all the traditional and orthodox approaches applied into it.

Industrial development in Assam was centered around Tea. Petroleum, Coalmining, Cottage and Village industries during the pre-independence period. In spite of having huge development potential, the industrial sector in the state could not develop at a satisfactory rate due to various constraints faced by it. Let us now look into the condition of these above mentioned industries before independence.

Establishment of Tea Industry was one of the greatest land marks in the economy of Assam during the British period. In 1833, the first tea garden was established in Assam by the Government. Just after this, various private companies and enterprising individuals were induced to take up tea plantations in the state. Initially, a huge amount of Capital, mostly from British, was invested in this tea industry. A sum of Rs. 63.8 million was invested in the plantation sector of the state in the decade ending 181 as against an investment of Rs. 13.8 million in the preceding 12 years. Again a sum of Rs. 110.9 million was invested in tea industry during the next two decades. Further, under the waste and settlement Rules, the Government also encouraged the growth of tea industry by supplying sufficient land for tea plantation under very liberal terms. In Assam proper, the area of waste lands settled with planters increased from around 3 lakh acres in 1871 to 6.4 lakh acres by 1901. Further, with the aim of driving the farmers into the plantation jobs, the Government also raised land revenues. With the same intention, tea garden labourers were also offered comparatively higher wages including other facilities like concessional rice, free fuel and grazing land and a plot of land for private cultivation, etc.

During the period 1884 to 1900 there was an increase of 92 per cent in the area under tea plantation. But since the turn of the present century, i.e., during the fifty years period between 1900 to 1950 the acreage increased by 48 percent only. Total number of tea garden in Assam gradually increased from 906 in 1924 to 1120 in 1938-39. The yield of black tea in Assam increased from 99 thousand tonnes in 1933 to 118 thousand tonnes in 1938. Average number of labour force, daily engaged in these tea gardens in Assam was 497106 in 1942, 486250 in 1938 and 489425 in 1938.

Tea industry, being a leading industry in the state, encouraged the growth of several ancillary industries in Assam like plywood, saw mills, coal mining, general engineering works and also river transport service and railway transport. Further, as good as 12 to 15 percent of the total population of Assam are dependent on this tea industry.

Although the tea industry of Assam was a leading sector during those days but its role in the economy of the state was very limited as the growth stimuli produced by the industry was very small and confined within the modern sector only.

Further, most of the tea gardens were owned and managed by British companies. Percentage of area under Indian owned tea estates was only 16 per cent of the total area under tea in Assam. Again majority of the owners of India owned tea gardens were non-Assamese. Naturally out of the huge earning of these tea industries in Assam. Only a part of it was used for financing the expansion of area sown and the remaining major part of the earning was remitted outside the state as dividends.

The tea industry in Assam also did not lead to the state as the European owners and managers depended mostly on the consumer goods imported from abroad or other parts of India. Moreover, tea industry in Assam helped very little in the growth of managerial quality and entrepreneurship in the state as very few people of the locality were given the superior managerial posts in these tea gardens.

Petroleum Industry : During the pre-independence period petroleum industry was also developed in Assam by the British rulers. In Assam, Oil was discovered in 1825. But the commercial production of petroleum began in 1899 after the formation of Assam Oil Company under the patronage of the Assam Railway and Trading Company. With the taking over of the management of A.O.C. by the Burma Oil Company in 1921, the petroleum production in Assam was increased to a great extent. The production of petroleum thus gradually increased from 11 million gallons in 1918 to 24 million gallons in 1926, 32 million gallons in 1928, 56 million gallons in 1931 and then to 65 million gallons in 1946.

Assam, being a monopoly producer of petroleum during the pre-independence period, earned a good amount of Government revenue from the production of petroleum apart from saving a good amount of foreign exchange for the country.

But as the petroleum industry was highly capital intensive thus its contribution towards the development of the economy of state was very little. This industry provided employment to a limited number of persons of which local people were very few in number

Besides, the petroleum industry was also owned and managed by foreign interests and thus major portion of the profit was repatriated keeping only a little portion of profit for reinvestment in Assam. A group of subsidiary industries like petro-chemical complex which could have been developed in the state side by side the petroleum industry, did not come up due to lack of capital, entrepreneurship and Government patronage.

Coal mining : During the British period coal mining was also undertaken in Assam. Coal was discovered in Assam as early as 1825. But the commercial exploitation of coal started only after the development of railways in Assam. Most of the coal fields in Assam are situated in Makum area which contained 80 to 85 percent of the total known Coal reserves. Coal reserves are also situated in the Khasi and Jantia hills. Although Assam had a huge amount of Coal reserve but only an insignificant portion of the reserve was exploited during the pre-independence period. Out of the total amount of Coal, explored in the state, the maximum portion was utilised by the tea gardens and the railway system of Assam.

Factory industries : During the pre-independence era, the progress of factory industries was very slow, irregular and unbalanced as a very few number of new factories were added in different years. Among the total number of new and old registered factories, tea factories formed the largest number in the state. Those other factories registered in Assam were rice mills, general engineering workshops, Oil mills and Saw mills, etc.

Cottage and Village industries : During the pre-independence period, a good number of Cottage and Village industries were existing in a precarious condition due to lack of finance, market and government patronage. Moreover, these cottage and village industries has to close down their business due to unequal competition from the cheap manufactured good both from abroad and other parts of India.

Later on, the Government realise the importance of their industries as they provide scope for employment to a huge number of population both seasonally and throughout the year. Thus a separate Department of Industries was created in 1981 for the promotion and growth of  indigenous industries in Assam. This department took many important measures for building up an infrastructure for the development of these village and cottage industries. These include establishment of Gauhati weaving school, shillong weaving school for imparting industrial training, Titabar Muga Silk-worm Station for experimentation and a Government emporium for promoting the sale of cottage products at Gauhati.

All these efforts on the part of the Government created a congenial atmosphere which resulted in the growth of many handloom weaving and sericulture industries in Assam. In 1945, it was observed that "handloom weaving and sericulture which are the most important cottage industries of the province, have developed considerably during the last 20 years. This development is particularly due to the grant of subsidies by the Government of India since 1935-36. During this period, the number of fly-shuttle looms introduced by the Department through demonstration staff has more than doubled, the production of handloom fabrics has largely increased and the weavers have been enabled to earn larger income".

But the condition of other traditional cottage industries deteriorated during the pre-independence period due to lack of attention paid by the Government towards these industries.

Development of infrastructure, viz,. ; transport and communication, generation of electricity etc. was in a very poor shape before the British rule in Assam. With the interest of developing tea industry, petroleum and the coal mining, the British Government did a lot in providing a modern transport system in Assam. Although inadequate, the progress made in the case of different types of transport-river, road and railway during the British regime was pioneering in nature. Let us now look into the development of various types of infrastructural facilities in Assam during the pre-independence period.

River transport : From the very early part of their rule the British authorities started to develop river transport in Assam considering the constraints in the development of roads and railways. The East India Company started a steamer service in 1847. Later, two more private companies were formed to provide regular commercial services to Assam in 1864 these were--- the Indian General Navigation Company and the Rivers Steam Navigation company. Afterwards, these two companies were joined together to form the Joint Steamer Companies which ultimately maintained steamer services in the state throughout the British period. The steamer services helped the state in exporting bulky products like tea, Jute, timber etc. and also in importing other consumer goods at a very low transit cost.

Railways : In the pre-British period, there was no railway system in Assam. With the growth of tea gardens in the interior places of the state, the need for a well developed railway system was felt for providing cheaper means of transport to these tea gardens. In 1881, the Assam Railways and Trading company was formed by the British and the first railway line from Dibrugarh steamer ghat to Jaipur road was inaugurated in the next year. Two more companies--- Jorhat provincial Railway and Tezpur-Balipara Railway were also set up in 1885 to cater the need of transport for the tea gardens of Jorhat and Tezpur area.

In 1892, the Assam Bengal Railway was formed to provide railway connection to Assam with the rest of India. In 1902, Dhubri was connected with Calcutta by the extension of the Eastern Bengal Railway line. Again in 1909-10, Amingaon was connected with Calcutta through Dhubri. During the period 1896 and 1933 there was rapid expansion of railway lines in Assam.

Roadways : Rivers in Assam helped the state to develop the cheapest means of transport, i.e., the river transport. Thus the British rulers, in the very initial stage of their rule neglected the development of road. So the Public Works Department (P.W.D.) of the Government was established in 1868 for the construction of road in Assam. Again in 1880 Local Boards were formed for the improvement of roads in rural areas of the state.

After the First World War, Government realised the need for better roads and thus a Road Board was constituted at the provincial level in 1926-27. Again in 1927, a new fund-Tea Rates Road Fund was created by imposing additional local rates on the tea lands for improving roads in the state.

In 1929-30, two more funds were created at the national level for the developments of Roads in British India. These were-- a Special Reserve Fund and a General Road Development Fund. During the period 1929-30 to 1937-38, financial assistance to the extent of Rs. 21.8 lakh from the General Fund and Rs. 36.9 lakh from the Reserve Fund were sanctioned in Assam.

Thus, the British rulers spent only a small amount for the construction of roads which was the main reason behind the backwardness of road transport in the state.

Development of Power : From the very beginning, Assam had a huge potentiality for the development of power. But the utilisation of these potentialities both by the Government and the private sector was very minimum during the pre-independence period.

Generation and supply of electricity in those days was managed by private companies under the license issued by the Government. The first electrical undertaking in the state was installed at Tezpur in the year 1913 for supplying electricity to the people. Similarly, more electrical installation were established in different towns of Assam for the same purpose. Later on, some of these companies were closed down.

Installed capacity of electricity was very low in Assam in comparison to other states both in absolute and relative terms. In 1939, Assam generated only 0.1 per cent of total electricity generated in British India. In Assam, the per capita generation of electricity was as poor as 0.26 Kwh as against 7.27 Kwh in British India

BANK AND OTHER FINANCIAL INSTITUTION IN ASSAM

Growth of Banks in Assam

Banking and other institutional financing facilities are an important part of economic infrastructure of a region. Rapid economic development calls for rapid expansion of banking facilities. The growth of banking and institutional credit system in Assam has been tardy. The availability of banking facilities in Assam was quite inadequate few years back. Over the past few years, there had been a rapid expansion in the number of bank offices in Assam as in other parts of the country. Thus it was only during the recent past that the position of Assam in this respect showed some improvement.

As on June, 1969, Assam had only 74 offices of scheduled commercial banks. Thus there was one bank office for every 188 thousand persons in Assam as again the national coverage of 65 thousand persons per bank office in the same year. The following table shows the growth of bank offices and other progress of commercial banking in Assam and the country as a whole over the period 1970 to 1995. (See Table No 11.1)

The table no. 11.1 reveals that the number of commercial bank offices in Assam increased from 95 in June, 1970 to 214 in 1975. This number again increased to 466 in 1980 and then to 507 in 1982. During 1980-81 (July, 1980 to June, 1981) a total of 41 new bank offices were opened in the State of which 33 were established at Unbanked Centre. Total number of bank offices located in the rural areas of the State stood at 283 at the end of June, 1981.

In 1970, a bank office, on an average covered about 153 thousand persons in Assam as against only 53 thousand persons in all-India. But in 1977, one bank office covered nearly 51 thousand persons in Assam as against only 25 thousand persons in all-India. Again with the expansion of new branches of commercial banks in the State the population covered per bank offices in Assam declined to 41 thousand persons in 1980 as against only 17 thousand persons for all India . Thus, at the end of 1982, a bank office, on an average, covered about 35 thousand persons of the State as against only 17 thousand persons in all India. Thus, the State was lagging much behind in this respect compared with position of the country as a whole.

During 1981-82 (July, 1981 to June, 1982) a total of 55 new bank offices were opened in the state, of which 39 offices were opened at under banked Centres. The total number of new offices opened during the corresponding period of the previous year was 41. At the end of March, 1982 the rural areas of Assam had as many as 306 bank offices which constituted nearly 54 per cent of the total.

The new Branch Licensing policy announced by the R.B.I. for the three-year period April 1982 to March 1985 aimed to achieve by the end of March, 1985 one bank office on an average for a population of 17 thousand in the rural and semi-Urban areas of the country on the basis of the 1981 Census. This new policy created much impact in Assam as the State was relatively under-banked state.

During the eighties, the banking infrastructure in Assam has expanded considerably. total number of branches of commercial banks in Assam has increased from 507 in December, 1981 to 1094 in June, 1989 and then to 1227 in march, 1992 and finally to 1228 in March, 1995. Thus, during the eighties, the state saw an impressive 148 per cent growth in the number bank branches as against 82 per cent growth witnessed at all India level during the same period.

Again the total number of rural branches of commercial bank in Assam was 283 in 1981 and then it increase to 826 in March, 1990 which accounted about 71 per cent of the total branches of commercial banks in the state. Again the number of bank branches located in urban and semi-urban areas were of the order of 112 and 216 respectively accounting for 10 per cent and 19 per cent respectively of the state total.

As a result of such rapid expansion of bank branches, the average population covered per bank office in the state has gone down from 31 thousand in December, 1981 to 18 thousand in June, 1989 and then to 17 thousand at the end of March 1990 and then slightly rose to 18.2 thousand at the end of March, 1995. However, despite improvement of the position over the years, Assam continued to lag behind the all India average which worked out to be 12 thousand population per bank office as at the end of March, 1990 and then slightly rose to 13.5 thousand population per bank office at the end of march, 1995.

Again the total number of public sector bank branches in Assam has also increased from 67 in June, 1969 to 823 in September, 1996 which accounted nearly 67.0 per cent of the total bank branches of the State as compared to that of 70.15 per cent for all India.

The volume of deposits and deployment of credit (advance) by scheduled commercial banks in Assam started to show an increasing trend due to gradual expansion of banking facilities in the state. It can be seen from the table (no. 11.1.) that the deposits with the scheduled commercial banks which was only Rs crores in 1970 increased to Rs. 405 crores in June 1973, to Rs. 180 crores in 1977, to Rs. 445 crores in 1981 and then to Rs. 3929 crores in March1995. Likewise, deployment of credit by these banks also grew from just Rs. 15 crores in June 1970 to Rs. 50 crores in June, 1975, to Rs 81 crores in June 1977, to Rs. 209 crores in December, 1981 and then to Rs. 1495 crores in March, 1995. It is also observed that between March 1992 and March 1982, the volume of deposits with the banks displayed an increase of 62.1 per cent while the rise in the deployment of credit over the same period was only 25.6 per cent.

Although nearly 58 per cent of the state’s bank offices were located in rural areas, the share of these offices in the aggregate deposits and gross bank credit have been found to be very poor being only Rs 86 crores (19.3 p.c.) and Rs.41 crores (or 19.6 p.c.) respectively as on March 1982.

Credit-deposit ratio : The credit-deposit ratio of commercial bank in Assam was satisfactory during the period of first and Second five Year Plan. Then there was decline 1966, the credit-deposit ratio of Commercial banks increased to 45.8 but again fell to 34.6 during 1968. But after the nationalisation of commercial banks in 1969, the credit-deposit ratio in Assam started to increase. It can be seen from the table (no. 11.1) that the credit-deposit ratio of commercial banks in Assam which was only 39.2 in June, 1970 as against 79.2 for all-India, gradually increased to 46.9 in June 1981, to 55.4 in December, 1989 as against all-India ratio of 60.7. This credit-deposit ratio of commercial banks in Assam again fell down to only 38.0 in March 1995 as compared to all India ratio of 53.7. this shows that the credit-deposit ratio of commercial banks in Assam was all along poor in comparison to that of all-India ratio.

The table (no. 11.1.) further shows that the deposit of scheduled commercial bank per office increased from Rs. 42 lakhs in June 1970 to Rs. 87 lakhs in December 1991 and then to Rs.320 lakhs in March 1995. The credit of scheduled commercials banks per office which was only Rs. 16 lakhs in June 1970 gradually increased to Rs.41lakhs in December 1981 and then increased to Rs. 121 lakhs in March 1995.

The table (no 11.1) further reveals that the per capita deposits of scheduled commercial banks in Assam, which was only Rs.26 in June 1970 as against Rs.98 for all-India, gradually increased to Rs.224 in June 1987, as against Rs. 644 for all-India and finally increased to Rs. 1754 in March 1995. Again the per capita credits of scheduled commercial bank which was only Rs. 10 in June 1970 as against Rs 78 for all-India, gradually increased to Rs. 105 in June 1981 as against Rs. 441 for all-India and then to Rs.667 in March 1995.

Thus, the difference between the per capita deposit and per capita credit in Assam was quite higher than that of all-India resulting in poor credit-deposit ratio of commercial banks in Assam.