Basic characteristics of the economy of Assam

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.

Main problems of Economic Development in Assam and Factors responsible for these problems

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.

Agriculture in Assam during pre-independence period

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 during pre-independence period

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.

Tea Industry

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.

Infrastructural development in Assam during pre-independence period

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.

Table No. 11.1

Progress of Commercial banking in Assam and India

Important Indicators,	June,1970		June, 1995		Dec., 1981		June, 1989		March, 1995
	Assam	India	Assam	India	Assam	India	Assam	India	Assam	India
1	2	3	4	5	6	7	8	9	10	11
1. Number of commercial Bank Office	95	10,131	214	18,730	507	35,707	1094	57,698	1,228	62,346
2. Population per bank Office ( in thousand)	153	53	68	32	31	19	18	12	18.2	13.5
3. Total deposits of scheduled commercial banks (Rs. In crores)	38	5,275	105	12,545	445	44,059	1,769	147160	3,929	36,0008
4. Total credit of scheduled	15	4,213	50	8,955	209	30,153	1,004	89,370	1,495	1,93,386
5. Deposits of scheduled commercial banks per office (Rs. In lakhs)	42	52	50	67	87	123	161	255	320	577
6. Credits of scheduled commercial banks per office Rs. In lakhs.	16	42	24	48	41	84	92	155	121	310
7. Per capita deposit of scheduled commercial banks (Rs.)	26	98	62	210	224	644	790	1,739	1,754	4,255
8 . Per capita credits of scheduled commercial banks (Rs.)	10	78	30	150	105	441	448	1,056	667	2,285
9. Credit-deposit ratio	39.2	79.2	27.4	46.9	68.4	55.4	60.7	60.7	38.0	53.7

Source 1. The progress of Banking in Assam, 1990,P-1.

2. Economic Survey, 1989-90, P-57

3. Statistical Hand Book, Assam 1995, p. 228

4. Economic Survey, India 1995-96 p. S-59.

* Based on estimated, mid-financial year population.

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.

Growth of deposit, employment of Credit and Credit-deposit ratio of commercial bank in Assam

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.

Sectoral deployment of credit : An analysis of sectoral deployment of credit in Assam, as available upto December 1980, reveals the dominance of industry sector in sharing bank credit. Out of the total outstanding bank credit of Rs. 225 crores in December, 1980 the industry sector alone shared about Rs. 105 crores (or 46.5 per cent). Agricultural sector with an outstanding credit of Rs. 50 crores (or 22.4 per cent) occupied the next position. The share of other sector were as follows : Trade (17.3 per cent), personal loans, including consumer durables (2.4 per cent) and all other (4.3.per cent).

In recent years, the data related to occupation wise percentage distribution of outstanding credit of scheduled commercial banks reveals that in Assam., industrial sector occupies the top most position with 38.1 per cent share in the total outstanding credit as at the end of June, 1989 followed by agricultural sector (25.1 percent) and trade (16.3 per cent). The share of tea processing and small scale industry sector were 10.7 per cent and 13.2 per cent respectively of the total deployment of credit. Deployment of credit to other sectors were as follows transport operations 7.3 per cent, personal loan and professional services 7..1 per cent and other activities 6.1 per cent.

Lead bank-scheme and its implementation in Assam

The Reserve Bank of India introduced the "Lead Bank Scheme" in December 1969 which was a Co-ordinated programme for setting up of adequate banking facilities in the underbanked districts of the country. Under this scheme districts were allotted to the State Bank group (State Bank and its 7 subsidiaries), the 14 nationalized banks and to other India banks. A lead bank would be responsible for taking, a leading role in surveying the credit needs, development of branch banking and extension of credit facilities in the districts allotted to the three major banks, viz, the State Bank of India, the united Commercial Bank (UCO Bank) and the United Bank of India, the districts of Nagaon, Sibsagar, lakhimpur and Cachar were allotted to United Bank of India while all the hill districts were allotted to the State Bank of India. With the introduction of lead bank scheme in Assam the expansion of banking facilities through the opening of new offices as well as through functioning of existing offices in a more intensive manner was greatly facilitate.

 Regional Rural Banks (RRBs)

In recent years, regional rural banks have been se up all over the country with the objective of meeting the credit needs of the under-privileged sections of the society, residing in rural areas. These Regional rural Banks (RRBs) have been receiving a high degree of importance and attention in the rural credit system.

Considering the gross absence of banking facilities in the rural areas of the country, the Reserves Bank of Bank of India in consultation with the Central Government, State Governments and some major nationalized sponsored banks, had set up some Regional Rural Banks in the late seventies with a view to elevate the economical status of the rural poor as well as to inculcate a habit of saving among the rural masses.

As per the recommendations of the Working Group on Rural Banks, the regional rural banks were established for supplementing the commercial banks and co-operatives in supplying rural credit. The main objective of regional rural banks in India is to advance credit and other facilities, especially to small and marginal farmers, agricultural laborers, artisans and small entrepreneurs in order to develop agriculture, trade, commerce, industry and other usual productive activities in different rural areas of the country.

The share capital of RRB is subscribed in the following manner as the Central government-50 per cent, the State Government concerned � 15 per cent, the sponsoring commercial bank-35 per cent. The regional rural banks are maintaining its special character as their area, of operation is very much limited to a definite region, grant direct loan to rural people at a concessional rates and receive subsidies and concessions from the Reserve Bank and the sponsoring bank.

The concession granted by the Reserve Bank of India are : (a) allowing RRBs to maintain cash reserves ratio at 3 per cent and statutory liquidity ratio at 25 per cent ; (b) providing refinance facilities to RRBs through NABARD.

In the mean time, the regional rural banks have extended this network throughout the country to a considerable extent. At present (in 1995-96), there are 196 regional rural banks operating in 23 states with nearly 14,516 branches. Till June, 1988, these RRBs have been lending annually nearly Rs. 600 crores to the rural people and more than 90 per cent of the loan has been advanced to the weaker sections.

In the late seventies some regional rural banks, were established in Assam under the sponsorship of major nationalized commercial banks. Again during the eighties another two RRBs were set up in Assam. In Assam number of such banks opened upto June, 1982 was only 3, namely, the Pragjyotish Gaonlia Bank, the Lakhimi Gaonlia Bank, and the Cachar Gramin Bank which had altogether 63 branches spread over 6 districts. During January 1982 another regional rural bank namely, "Longpi Dehangi Rural Bank" was opened with headquarters at Diphu which would cater to the credit needs of rural areas of the two hill districts of Assam.

Thereafter, another rural bank, namely, Subansiri Gaonlia Bank was established in the State. Under this Subansiri Gaonlia Bank, the responsibility to create rural banking facilities in Dhemaji, Dibrugarh and Tinsukia districts was assigned.

Out of these five regional rural banks (RRBs) established in the state, the four RRBs, viz., Pragjyotish Gaonlia Bank, Lakhimi Gaonlia Bank, Cachar Gramin Bank and Subansiri Gaonlia Bank were set up under the sponsorship of United Bank of India under public sector and only Longpi-Dehangi rural Bank was set up under the sponsorship of State Bank of India. As per the 6 (1) section of Regional Rural Banks Act, 1996, the share capital of the RRBs in Assam is subscribed in the following manner-Central Government-50 per cent, Sponsor Bank (UBI and SBI)-35 per cent and the Government of Assam-15 per cent. Initially, the Reserve Bank of India in Consultation with the Central Government, the State Government and the Sponsor banks (UBI and SBI) set up these five RRBs in Assam. Accordingly, this five RRBs covered all the 23 districts of the State. The main objectives of these RRBs were to improve the economic conditions of poor people living in rural areas and to inculcate the saving habit among the general masses living in rural areas.

Assam has at present 5 regional rural banks covering all the 23 districts of the State. Till March, 1982 the regional rural banks had a total of 89 branches located in the rural and semi-urban areas of the State as against 63 branches in June, 1981. Total volume of deposits and credit by these banks stood at Rs. 7.21 crores and Rs. 4,000 crores respectively in March, 1982 as against Rs. 2.18 crores and Rs. 1.45 crores respectively in December 1980.

Total number of branches of RRBs in Assam has gradually increased to 137 in January, 1983 and then to 321 at 4 the end of June, 1986. Total volume of deposits and credits of these regional rural banks at end if June, 1986 were Rs. 38.4 crores and Rs. 27.5 crores respectively. The following table shows the detail information about the RRBs of Assam at the end of the June, 1986.

Table No. 11.2

Number of districts Covered, total Number of Branches and Credit-

Deposit Ratio of RRBs in Assam

Regional rural Banks	Number of Districts Covered	Number of Branches	Credit-deposit Ratio
1. Pragjyotish Gaonlia Bank	7	134	63
2. Lakhimi Gaonlia Bank	3	80	85
3. Cachar Gramin Bank	2	40	100
4. Longpi-Dehangi Rural Bank	2	35	82
5. Subansiri Gaonlia Bank	2	32	60
All RRBs	16	321	71.5

Source : State Level Banker�s Committee, SBI, Guwahati.

The above table reveals that as on June, 1986 Pragjyotish Gaonlia Bank with its head office at Nalbari had 134 branches covering 7 districts of the State. Lakhimi Gaonlia Bank with its head office at Golaghat had 80 branches covering 3 districts of the State. Cachar Gramin Bank after establishing its head office at Silchar opened 40 branches covering 2 districts of the state. Longpi-Dehangi Rural Bank with its head office at Diphu had 35 branches covering 2 districts of the State. Lastly, the Subansiri Gaonlia Bank after establishing its head office at North Lakhimpur had 32 branches covering 2 districts of the State. Moreover the table further shows that the credit- deposit ratio varied between 60 to 100 per cent. Moreover, the average credit-deposit ratio of all the five RRBs of Assam was 71.5 per cent at the end of June, 1986.

In recent years, these RRBs have established more branches in their area of operation and the deposit and credit structure have also been changed. The following table shows the recent position of these regional rural banks in Assam.

Table No. 11.3

Number of Branches, Deposits, Credit and Credit-deposit Ratio of

Regional Rural Banks in Assam

Year	Number of Branches	Amount of Deposits (Rs. Crores)	Amount of Credit (Rs. Crores)	Credit-deposit ratio(%)
1	2	3	4	5
1986. (June)	321	38.40	27.50	71.5
1988 (Dec.)	352	74.46	63.73	85.5
1989 (Dec.)	382	96.12	78.56	81.7
1991 (Dec.)	405	126.31	96.61	76.5
1992 (Dec.)	405	146.58	110.69	75.5
1995 (March)	405	272.11	151.35	55.6

Source : 1. Economic Survey, Assam, 1989-90, P-59.

2. Statistical Hand Book, Assam, 1995, P-382.

The above table reveals the development of regional rural banks in Assam. Total number of branches of these five regional rural banks in Assam has increased from 321 in June 1986 to 382 in December in 1989 and then to 405 in March, 1993. The volume of aggregate deposits with these banks was Rs. 38.40 crore in June, 1986. Then this aggregate deposit rose from Rs.55.91 crores in December, 1987 to Rs. 74.46 crores in December 1988 and then to Rs. 96.12 crores in December, 1989. The rate of rise in December 1988 and then to Rs. 96.12 over December 1988 and about 71.9 per cent over December 1987. Again, the aggregate deposit of this RRBs in Assam rose from Rs. 121.31 crores in December, 1991 to Rs. 146.58 crores in December, 10992 and then marginally to Rs. 272.11 crores in March, 1995 showing a growth rate of 70.4 per cent in December, 1994 over December 1993 and only 6.9 per cent in March, 1995 over December, 1994.

Likewise, the gross bank credit by these RRBs also increased from Rs. 27.50 crores in 1986 to Rs. 63.73 crores in December, 1988 and then to Rs. 78.56 crores in December, 1989, registering a growth rate 23.2 per cent in December 1989 over December 1988 as against 35.4 per cent growth recorded in December, 1988 over the previous year. Again the gross bank credit advanced by these RRBs has also increased from Rs. 96.61 crores in December, 1991 to Rs. 110.69 crores in December, 1992 and then to Rs. 151.35 crores in March 1995 recording a growth rate of 19.6 per cent in December, 1994 over December 1993 and only 6.2 per cent in March, 1995 over December, 1994.

Moreover, the credit-deposit ratio of these regional rural banks in Assam increased from 71.5 per cent in 1986 to 85.5 per cent in 1988 and then declined to 56.6 per cent in March, 1995.

Thus it is observed that in recent years, the activities of the regional rural banks in Assam has been progressing at a satisfactory rate. Thus, these RRBs are setting up branches in under banked regions and providing facilities for collection of deposits and advancing credit among the rural people of Assam and thereby providing adequate incentives to the various sectors of the economy of the State. Therefore, with the development these regional rural banks in Assam the rural banking system of the State has advanced considerably in recent years.

 Life Insurance Corporation of India

The Guwahati divisional Office of the Life Insurance Corporation of India (LIC) extends its area of operation to all the seven State of the North Eastern Region. This Corporation is not only introducing business by accepting new life insurance proposals but also investing a good amount of its fund on various investment projects in the State and also offering loans to various organisations in the State.

In 1992-93 the Guwahati, Silchar, Jorhat and Bongaigaon Divisions of LICI introduced 2,28,335 policies with the assured sum of Rs. 915.98 crores.

The LICI is also playing a praiseworthy role in respect of investment and credit in the State. Every year a sizable amount is invested by the Corporation in the State Government securities, Electricity Board Bonds, Financial Corporation�s share/bonds etc. besides issuing loans to State Electricity Board, Government housing schemes, State Road Transport Corporation etc. The following table shows the volume of investment and credit of the LIC in Assam under different heads in 1992-93.

Table No. 11.4

Investment of the Life Insurance Corporation in Assam

Upto 31^st March, 1995

(1994-95)

Head	Amount (in lakhs of Rs)
1	2
Investment 1 State Government Securities 2. Land Dev. Bank Debentures 3. Electricity Board Bonds 4. State Financial Corporation Industrial. Dev. Corporation/ICICI/Bonds and shares	9092 43 1941 110
Loans to : 1. State Electricity Board 2. State Government for housing Schemes & Co-Housing 3 Municipal Committees for water supply schemes 4. State ,Road Transport Corporation 5. Joint Stock Companies : Debentures and share of Joint Stock Companies                                        Total	1952 1230   193 10 9933   24510

Source : Divisional Manager, LIC, Divisional office, Guwahati

The table given above reveals that total amount of investment of LICI in Assam in 1994-95 was to the extent ,of Rs. 24510 lakh.

Industrial Finance Corporation of India

The Industrial Finance Corporation of India is an important Financial institution offering industrial credit to various industrial projects in the country. This Corporation (I.F.C.I) is having a branch office at Guwahati and also offering loans to various industrial projects in the State. The following table shows the amount of financial assistance sanctioned by (I.F.C.I) to industrial projects in Assam During different plan periods.

Table No. 11.5

Net Financial assistance sanctioned by I.F.C.I. to industrial project in

Assam

Plans	Net financial assistance for Assam	Annual average assistance during plans
1	2	3
The First Plan 1956	45.00	9.0
The Second Plan 1959 1961 Total	15.00 150.00 165.00	33.85
The Third Plan 1962 1965 Total	350.00 13.00 363.00	72.6
The Annual Plan 1969	78.50	26.00
The Fourth Plan 1972 1974 Total	100.00 103.00 203.00	40.6
The Fifth Plan 1975 1976 1977 Total Grand Total	30.00 216.00 2.50 249.00 1103.79

Thus, it is clear that during the First Plan, I.F.C.I sanctioned financial assistance of Rs.45 lakhs to industrial projects in Assam. The assistance increased to Rs. 165.29 lakhs during the Second Plan and to Rs. 363.00 lakhs during the Third Plan in Assam. During the annual Plans assistance was Rs.78.50 lakhs only. During the Fourth Plan the net financial assistance from I.F.C.I to Assam came down to Rs. 203.00 lakhs and to Rs.249.00 lakhs in the Fifth Plan. Thus the aggregate assistance from the I.F.C.I. to Assam was Rs. 1103.79 lakhs.

Further, annual average assistance from I.F.C.I. during the First Plan was only Rs. 9 lakhs, then it increased to Rs. 33.85 lakh and Rs. 72.6 lakh during the Second Plan and Third Plan respectively and then it falls to Rs. 26 lakhs, Rs. 40.8 lakhs and Rs. 49.8 lakhs during Ad-hoc Plan, Fourth Plan and Fifth Plan respectively.

Role of Bank in Assam�s Economy

The commercial bank in Assam are playing an important role for the economic rejuvenation of the State�s economy. In the early period, commercial banks in Assam played a little role in the development of the economy of the State. After the nationalisation of commercial banks and particularly after the expansion of branches, commercial banks have been playing a very responsible role in the upliftment of the economy of the State. The following are the main role of commercial banks in Assam�s economy:

i. Commercial banks in Assam are mobilising a good amount of savings from the people of the State through its various saving schemes.

ii.  Banks in Assam are also advancing a good amount of loan to the various sectors of the of the State leading to the growth of the State�s economy.

iii. Commercial banking facilities in Assam are also helping in the growth of business and trade in the economy of the State.

iv. Commercial banks in the State are providing liberal finance to farmers leading to the development of the agricultural sector in Assam. But the amount of loan advanced by banks to this sector is not yet sufficient.

v. Banks in Assam are promoting large, medium and small industries in the State providing them with sufficient financial assistance. About 38.1 per cent of the total outstanding credit in Assam is advanced to the industry sector alone.

vi. Commercial banks are also offering financial aid to the export sector of the State leading to the growth of export of various goods.

vii. Banks in the State are also helping the small businessman and the retailer by advancing loans leading to the self employment of huge number of people in the State.

viii. Commercial banks in the State are also helping financially new entrepreneurs, men with ability but having no resources of their own.

ix. Commercial banks in Assam are playing an important role in rectifying regional imbalance of the State by opening branches in backward areas although these branches are not remunerative for some years. This is no doubt an important step towards developing the backward areas of the State both agriculturally and industrially.

In conclusion, we can say that the commercial banks in Assam are playing a very important role for the upliftment of the economy of the State. But what has been done is not sufficient for the State. Thus the Commercial banks will have to undertake more responsibility for the economic upliftment of the State�s economy in future.

 

PRICES IN ASSAM

 

      Introduction

             In a developing economy, the study of price trends is very important as the prices influence the allocation of economic resources and affect the level as the prices influence the allocation of economic resources and affect the level of income, cost of production and all other economic variables in an economy.

            The price situation in Assam is essentially a manifestation of the all-India phenomenon of rising prices. But the upswing of the price level in the State has been more pronounced due to certain factors like rapid growth of population, transpor5t bottlenecks and a virtual dependence on outside supply for the essential consumer goods.

     Price Trends in Assam vis-a-vis all India

             In Assam the trend of price recorded a continuous rising trend since the commencement of plan. Thus the price situation in Assam in the context of all India phenomenon of rising prices continued to cause anxiety.

                                             Table No. 13.1

Index number of wholesale prices in Assam and all India

(Base 1953= 0)

Year	Price index in Assam	Price index in all India
1953 1955 1960 1963 1965 1969 1971 1981 1985 1989 1990 1991 1992 1993 1994	100.0 103.8 131.2 149.1 176.1 242.5 253.6 559.0 875.0 1108.0 1229.0 1405.0 1560.0 1625.0 1779.0	100.0 92.5 124.9 135.3 165.1     100.0* 120.1* 154.3* 165.7* 182.&* 207.8* 228.7* 249.8*

Source : Directorate of Economics and Statistics Assam

            * Base 1981-1982= 100

             The table given above reveals that the index number of wholesale prices in the State (Base 1953=100) increased from 103.8 in 1955 to 131.2 in 1960 and then to 176.5 in 1965. But the index number of wholesale prices for all-India increased from 92.5 in 1955 to 124.9 in 1960 and then to 176.5 in 1965. But the index number of wholesale prices for all-India increased from 92.5 in 1955 to 124.9 in 1960 and then to 165.1 in 1965. During the period 1953-65, the general price level rose by 76 per cent in Assam as against the increase of 65 per cent in all India. The wholesale price index then jumped to 242.5 in 1969, to 355 in 1976, in 1990, 1405.0 in 1991 and then to 1779 in 1994. During the period 1965-82, the general price level in Assam is increasing at a very high rate since the Third Plan onwards.

             One of the encouraging features of the State�s economy in 1982 was that the price rise was contained to reasonable extent during the year. The upsurge in prices, which experienced considerable deceleration during 1981, exhibited further deceleration during 1982 as evident from the movement of wholesale price indices. The annual average wholesale price index displayed a rise of about 5.7 per cent in 1982 over 1981 as compared with a rise of about 6.7 per cent in 1981 over 1980 and about 17 per cent in 1980 over 1979. Item wise, wholesale price index for food items increased by 2.9 per cent in 1982 over 1981. The main contribution to the increase in general index in 1982 thus, resulted from 13 per cent increased in the index of non-food items. In the previous year, the contribution to the total increase was shared equally by both the groups (food and non-food).

             In recent years, the wholesale price index in Assam (base 1953=100) has been increasing at a rapid rate. Accordingly the wholesale price index in Assam rose from 875.0 in 1985 to 1229.0 in 1990 showing an increase the price level by 40.4 per cent during 1985-90. Again the wholesale price index in Assam (Base 1953=100) has further rose to 1625.0 in 1993 and then to 1779 in 1994 showing an annual rate of inflation to the extent of 4.2 per cent in 1993 and 9.47 per cent in 1994 over the previous year.

            Itemwise, wholesale price index for food items increased by 10.9 per cent in 1991 over 1990. The main contribution to the general index in 1991 haw resulted from 19.7 per cent increase in the prices of non-fo0d items. Thus due to increase in the prices of non-food articles, the general price level in Assam has increased considerably in recent years.

             In general, the price situation in Assam reflects more or less faithfully the all India phenomenon. However, the price situation sometimes happen to be more sensitive and uncertain in Assam due to a variety of factors like bottleneck in the transport sector, fast expansion of demand, diverging trend in agricultural production, heavy dependence on outside sources of supply of most of the essential consumer goods etc. Price situation in Assam therefore, requires constant vigilance in the shape of maintenance of uninterrupted supply of essential commodities, effective check on malpractices like hoarding and gearing up of the public distribution system throughout the State. 

  Price level Difference between Assam and all India

            Behaviour of prices has no uniformity over time and space. Price of same commodity differs at different points of time at any particular place and from place to place at any particular point time due to various reasons. Variations in demand and supply cost of production and marketing taxation, trade practices, marketing and transportation facilities of different commodities at different times. Some times it is quite difficult to compare prices of even the same commodity in different places due to difference in quality and variety. Finding out the inter-state differences in costliness in much more difficult. The usual consumer price index numbers denote only the movement of consumer price at any particular place or state at different points of time and not between different place or States.

             Cost structure in Assam is very high. This is due to existence of higher price level in the State in comparison to other States.

             Shri K.K. Bhatia, Director of Labour Bureau Government of India in an article on �Comparative Costlines-a New Dimension to consumer Price Index Number� (Published in the Labour Bureau�s Silver Jubilee Souvenir 1940-71� issue) has discussed comparative cost of living and presented two tables worked out on two different methods, viz; (1) Common Commodity Method, and (2) Standard Basket Method, showing preliminary estimate of comparative costliness of selected Centres of different State of India with Delhi as the Base. One of thee two tables, which is basing on standard Basket Method is given below.

Table No. 13.2

Preliminary Estimates of Indices Comparative Costliness of elected

Centres on Delhi base.

States and Centres	Standard Basket                               Method
	1964	1965	1966	1967	1968	Average for 5 years
1	2	3	4	5	6	7
1  Andhra Pradesh (Hyderabad) 2  Assam (Digboi) 3 Bihar (Jamshedpur) 4 Gujrat (Ahmedabad) 5 Haryana (Yamunanagar) 6 Jammu & Kashmir (Srinagar) 7 Kerala (Alwaye) 8 Madhya Pradesh (Bhopal) 9 Maharashtra (Bombay)   10 Mysore (Bangalore)   11 Orissa (Sambalpur)   12 Punjab (Amritsar)   13  Rajasthan (Jaipur)   14 Tamil Nadu (Madras)   15 Uttar Pradesh (Kanpur)   16 West Bengal (Calcutta)	86 109 99 117 83   65 102 91 126 92 64 96 85 100 94 100	89 106 99 117 84   70 106 90 128 97 65 96 84 101 95 97	93 120 111 118 89   77 108 93  130 102 73 100 89 103 89 101	86 127 114 121 93   61 107 95  123 96 69 102 92 95 90 98	83 119 105 114 90   59  111 88  122 93 69 103 85 89 89 99	87  118 107 117 88   66 107 91  126 96 68 99 87 98 91 99

Source: Labour Bureau's Silver Jubilee Souvenir

From the table given above (NO. 13.2), it is seen that the index according to Standard Basket Method for Digboi (Assam) is higher by 18 per cent 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 per cent higher. It may be noted that those indices are meant for working class population only.

             Further, for some minimum consumption standard the percapita annual consumption expenditure of rural population in Assam is Rs. 233 as against Rs. 170 for India as a whole. In Assam (Guwahati) the prices of most essential commodities are generally higher than those in other centres of other centres of other Indian States.

            Taking all these into consideration, broadly speaking it is felt that the consumer prices 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.

  Causes of Price Rise in Assam

            Price situation in Assam happens to be very much sensitive and uncertain. The State is experiencing an upsurge in price since the introduction of planned development process. The basic causes responsible for this increasing trend in prices are the steadily accelerating tempo of investment programme from year to year, insufficient production in relation to demand, deficit financing in the Government sector, expansion of bank credit in the private sector, fast expansion of demand, diverging trend in agricultural production, heavy dependence on outside sources of supply of most of the essential consumer goods, bottlenecks in the transport sector and substantial hoarding etc.

   Thus the price rose in Assam as a result of either rise in demand or fall in supply or both.

   Following are the main causes of rise in Assam.

             1. Increase in Money Supply: Increase in money supply within the state is a very important reason behind the continuous rise in price in the State. Central assistance and overdrafts from Reserve Bank of India, which were the two major inflationary sources for collecting resources for financing plans in Assam, created some impact on the price level of the State. The growing amount of central assistance in the form of loans and grant from the Planning Commission and over-drafts from Reserve Bank raised the inflow of money supply within the State. But as all this amount were not productively utilised and as Assam had to spend much on the preparation of basic economic infrastructure within the State, production could not be raised significantly. Thus, increase in production lagged behind the increased in money supply, which tended towards serious inflationary spiral of price level in Assam.

            2. Heavy Investment Expenditure: Investment expenditure in the public sector is increasing day by day in Assam with the growth of plan expenditures resulting in excessive demand for market goods and services which ultimately created an excessive rise in prices in the State.

            3. Higher income elasticity of demand: Income elasticity of aggregate demand was more in the case of Assam at the initial stages of development. This was quite natural in a poor state like Assam where the marginal propensity to consume of the people of the State is quite high. Thus any increase in money income is always putting a heavy pressure on the demand side of the market aggravating the already increased price level in the State.

            4. Budget Deficits: The State Government is maintaining deficit in its budget every year. Although in certain years revenue budgets were balanced but the maintenance of deficits in its capital budget had experienced inflationary effect. Thus the budgetary deficits have had a pronounced inflationary effect.

            5. Growth of Population:  Population pressure in Assam is very heavy. Census data show that Assam has one of the highest demographic growth rates in the country, the growth in the decade 1961-71 and 1971-81 being 34.95 per cent as against 24.80 per cent for all India. This increase in the size of population brought about rise in prices particularly in the prices of food articles.

            6.  Decline in Production:  In Assam there has been from time to time setbacks to agricultural and industrial production, which are making the matters still worse. Assam is unfortunately one of these few states, which are every now and then visited by natural calamities such as floods and droughts. Thus the agricultural and industrial production of the State are facing setback every year due to the occurrence of natural calamities which is creating an abnormal increase in the prices of essential goods in the State.

            7.  Hoarding and Black Marketing:  In Assam, there is large scale hoarding and black marketing of essential goods by the speculative traders and black marketers, which resulted increase in the prices of these goods. In this respect, black money is playing an important role in speculation and hoarding.

            8.  Dependence on outside sources:  Assam is depending heavily on outside sources of supply of the essential consumer goods. Thus any disruption of supply of these goods from outside sources raises their prices.

            9.  Transport Bottleneck:  Bottlenecks in the transport sector are also responsible for the increased price level in Assam. During the summer season, transport sector in Assam faced setbacks frequently due to floods leading to increase in the price level in the State.

            10.  Changing policy regarding control:   The changing policy of the Government of Assam in connection with controls on prices and goods has been aggravating the problem of soaring prices. Partial controls over the prices and supply of essential goods create black markets and thus raise effective prices of the consumer goods in the State.

 Remedial Measures

            Price rise in Assam is to be checked by applying a package of measures directed towards increasing supplies of goods and restraining excess demand. The following measures adopted by the Government to control the level of price in Assam are worth mentioning.

            Firstly, steps were taken by the State Government to increase the supply of foodgrains through larger imports from other States, internal procurement, increased number of fair price shop, greater releases of stocks in order to secure a better balance between aggregate monetary demand and overall supplies of essential consumer goods especially foodgrains. Other measures adopted were the ban of forward trading in foodgrains, restriction on the inter-state movement of food gains, fixation of minimum support prices for increasing availability of foodgrains.

             Secondly, effort was made for increasing agricultural production in the State, which included creation of additional capacity, minimisation of the impact of foreign exchange shortage, incentives to secure larger output and decontrol of certain commodities.

            Thirdly, the State Government adopted some taxation measures to curb spending and to provide incentives for saving.

            Fourthly, monetary measures were introduced for reducing pressure of excess demand in the State by restricting supply of credit through controls of credit.

          The measures adopted for checking rise in price in Assam have not been successful. Price level in the State continued to increase persistently due to disequilibrium between demand and supply. Productions of agricultural and industrial goods are lagging behind the money incomes originating from large Government outlays on development programmes. The state Government also failed to check deficit in its budgets. Activities of hoarders, profiteers and black marketeer are still rampant in the State.

             Thus, in the coming years the State Government should try to boost up both agricultural and industrial production through efficient utilization of available resources within the State and should adopt strong measures for curbing antisocial activities of the traders. The State Government should also adopt all the fiscal and monetary tools efficiently for maintaining a balance between the demand and supply of essential goods and services in the State.

STATE FINANCE

Introduction

             The Government budget is one of the most important instruments of economic growth of a State or a Country. The budget of the State, which reflects in general the totality of efforts on the part of the Government to discharge both social and economic responsibilities, has recorded manifold increase with the changes in time. Between 1950-51 and 1978-79, the size of budget of the Government of Assam has increase from Rs. 9.3 crores to Rs. 412 crores and then it increased to Rs.905 crores 1980-86 to Rs. 6143 crores in 1993-94 and finally to Rs.6364 crores in 1994-95.

 Sources of Revenue

            The major two sources of revenue of the Government of Assam include tax and non-tax revenue. Tax is the major source of revenue. Tax is of two types-Direct tax and Indirect tax. Taxes imposed by the Government of Assam may be of three types-(a) Taxes on Land and Income, (b) Taxes on Property, (c) Taxes on Commodities and services. Taxes on land and income includes agricultural income tax, land revenue, business tax. Taxes on property tax include stamp and registration fees, urban property tax etc. Taxes on commodities and services include general sales tax, tax on motor spirit, tax on motor vehicles, tax on passengers and goods carried, taxes on jute and leathers, amusement tax, state excise duty, taxes on trade and business, taxes on electricity etc.

            Moreover, the Government of Assam is also getting a share of taxes imposed by the Central Government. These shares include share of Central excise duty, share of income tax, share of wealth tax and share of additional excise duties. Moreover, the state government is also getting royalty on mineral resources from the Central.

            Assam Government is also getting revenue from non-tax sources. These include-interest, dividend, income from social and community services, income from general services, income from economic services, income from forest, income from irrigation and movement of boats, profits of state public sector enterprises, viz., ASTC, ASEB and other enterprises. Moreover, the government of Assam is also getting various grants from the central government.

Heads of Expenditures

             Head of expenditures of the Government of Assam can be divided into two parts-      (a) Revenue expenditures, (b) Capital Expenditure. The revenue expenditures of the government of Assam is four types: (1) General services (2) social and community services (3) economic services and (4) grants and contribution.

            General services include administrative expenditure, departmental expenditure, pension, interest payment etc. Head of expenditure on social and community services include expenditure on education, arty, culture, health and family welfare, public health etc. The heads of expenditure on economic services include expenditures on agriculture and allied activities, industry, mines, water resources and power development, transport and communication etc. Grants and contribution include different the different types of recurring and non-recurring grants and contributions to various institutions and organisations.

             The capital expenditure of the state government is broadly divided under general services, social and community services, economic services etc.

    Growth of Receipt and Expenditures in the Budget of the Government of         Assam

            With the growth in the size of the State Government budgets the total expenditure and receipts of the State increased significantly.

            On the receipt side, the revenue receipts have increased from Rs. 10.3 crores in 1950-51 to Rs. 37.9 crores in 1960-61 and to Rs. 111.1 crores in 1969-70. Tax receipts have increased from Rs 6.5 crores in 1950-51 to Rs. 47.9 crores in 1969-70. Non-tax receipts increased from Rs. 3.4 crores in 1950-51 to Rs. 63.2 crores in 1969-70. Thus the gross receipts under the consolidated Fund on the State Budget of Assam had increased from Rs. 19.6 crores in 1950-51 to Rs. 54.17 crores in 1960-61 and then to Rs 295 crores in 1970-71.

            On the expenditure side, the total gross expenditure (both revenue and Capital) rose from Rs.1890 crores in 1950-51 to Rs.65 crores in 1960-61 and then to Rs. 293 crores in 1970-71. The table given below shows the receipt and expenditure under the consolidated fund of the State Budget during the period 1950-51 to 1994-95.

  Table No. 14.1

Receipts and Expenditures from the consolidated Fund of Assam Government Budget (Rs. Lakhs)

Year	Receipts                                      Expenditure						Surplus(+) Or Deficit(-)
	Revenue	Capital	Total	Revenue	Capital	Total
1	2	3	4	5	6	7	8
1950-51 1960-61 1970-71 1975-76 1978-79 1980-81 1985-86 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98	10.29 37.99 1,02.82 20201 30605 43616 93752 150067 177664 255364 284229 331746 331500 337574 429187 444293	9.29 16.18 1,92.05 5106 11322 14450 88214 116554 220057 96452 102956 80233 145241 331667 134420 136204	19.55 54.17 2,94.87 25307 41927 78066 244996 266621 397722 350797 387185 411979 476741 669241 566218 580497	9.65 42.49 1,22.56 17936 27149 34400 94310 177918 192040 231330 253887 290118 324188 357576 457046 482837	9.25 22.62 1,70.58 5500 14037 56070 69073 111857 204384 142232 132997 145325 148119 310049 161644 153311	18.90 65.11 2,93.14 23436 41231 90470 241069 289775 396424 373562 386884 435443 472307 667625 618692 616148	(+) 65 (-) 1092 (+) 173 (+) 1871 (+) 696 (-) 12404 (+) 3936 (-) 23154 (+) 1298 (-) 22765 (+) 301 (-) 23464 (+) 4434 (+) 1616 (-) 52474 (-) 35651

Source :1.  Economic Survey, Assam, 1973-74, 1982-83, 1989-90

12.  Budget at a Glance, Assam, 1950-51 to 1995-96, 1997-98

The table (no. 14.1) reveals further that although the total revenue receipts in the State budget increased from Rs.102.82 crores in 1970-71 to Rs.202 crores in 1975-76 but the total capital receipt of the State declined from Rs.192 crores to Rs108 crores during the same period leading to the fall of total receipt from Rs.294 crores to Rs.253 crore during the above mentioned period. Similarly, the total gross expenditure of the state budget declined from Rs 293 crores in 1970-71 to Rs. 234 crores in 1975-76. The main reason behind these declines in gross receipt and expenditures was the separation of Meghalaya and Mizoram areas from Assam.

             The gross receipts from the consolidated fund then gradually started increasing from Rs. 253 crores in 1975-76 to Rs. 392 crores in 1979-80 and then jumped to Rs. 780 crores in 1980-81, which is just doubled within 5 years. The gross receipts then further increased from Rs. 2450 crores in 1985-86 to Rs. 3974 crores in 1990-91 and to Rs. 5662 crores in 1996-97. In the State budget of 1997-98 the gross receipts is fixed at Rs. 5805 crores. This sudden rise in receipt in recent years is attributable to the rise in receipt under revenue, capital and public account.

 The total expenditure under the consolidated fund of the state budget also declined from Rs.293 crores in 1970-71 to Rs.234 crores in 1975-76 due to the separation of Meghalaya and Mizoram from the State. Since then the total expenditure rose from Rs. 2410 crores in 1985-86 to Rs. 3964 crores in 1990-91 and then to Rs. 4723 crores in 1994-95. It is seen that the expenditure has significantly increased by Rs. 456 crores in 1993-94 over the previous year. This sudden rise in the expenditure is attributable to the rise in expenditure under revenue account to the tune of Rs. 363.0 crores over the year the year 1992-93. The expenditure under revenue account had gone up gradually from Rs. 1920 crores in 1990-91 to Rs. 4828 crores in 1997-98 (B) showing a rise of 151 per cent during the period of eight years.

             The total gross expenditure in Assam then jumped to Rs. 4354 crores in 1993-94 and to Rs.4723 crores in 1994-95 (R.E). In the State budget of 1997-98, the total expenditure is estimated to be Rs.6161 crores. This sudden increase in the gross receipts in recent years is mainly attributable to the significant increase in revenue expenditure, capital expenditure, and outgoings from public account.

Table No. 14.2

Revenue Receipts of the Government of Assam: Tax and Non Tax Revenue

 

Revenue from different Sources	1950-51	1960-61	1970-71	1980-81	1990-91	1995-96 (B.E.)
1.   State     Sources : 1.1  StateTax        Revenue 1.2  Non-Tax       Revenue   2.    Central         Sources : 2.1   Share ofCentral         Taxes   2.2    Non-tax          Revenue   3.     Total        Revenue	507 (51.1) 227 (22.8)         142 (14.3)     116   (11.8)   992	1225 (32.8) 738 (19.7)         446 (11.8)     1325   (35.9)   3734	2813 (27.8) 794 (7.85)         1789 (17.6)     4723   (46.6)   10119	7991 (18.3) 26244 (60.2)         5198 (11.9)     4182   (9.6)   43615	40223 (22.6) 27752 (15.6)         50555 (28.4)     59134   (33.3)   177664	79679 (21.3) 44008 (11.7)         98646 (26.3)     152081   (40.7)   374414

 

Sources :   (1)  Statistical Hand Book, Assam, 1995.

                  (2)  State Taxation in Assam, p-5

                  (3)  Economic Survey, Assam 1970-80, 1982-83, 1989-90

Note  :  Figures in brackets are the percentage shares of total revenues.

              The table (no. 14.2) given above shows that in 1950-51 the revenue of the Government of Assam from State Taxes was only Rs.5.07 crores. Then it rapidly increased to Rs.79.91 crores in 1980-81 and then to Rs.796.8 crores in 1995-96.This was made possible due to levy of new taxes and duties as well as extension of the coverage and enhancement of rates of the existing taxes and duties. Besides, tax base in Assam had also widened due to economic planning.

              Although in terms of absolute size taxation increased, in terms of percentage of State�s total receipts it showed a declining trend. In 1950-51, the share was 51.1 per cent of the State�s total revenue but it slid down to 32.8 per cent in 1960-61 and then to 27.8 per cent in 1970.71, 18.3 per cent in 1980-81. But in 1995-96, the share or State taxes declined to 21.3 per cent. This decline in the share of state taxes happened due to heavy increase in the State�s non-tax revenue both from the State and central sources as also of central taxes.

              The non-tax revenue of the State rose from Rs. 2.27 crores in 1950-51 to Rs. 7.94 crores in 1970-71 and to Rs. 262.44 crores in 1980-81 but then again rose to Rs. 440.08 crores in 1995-96. Although in terms of absolute size, non-tax revenue increased but in terms of percentage of States total receipts, it declined from 22.8 per cent in 1950-51 to 7.85 percent in 1970-71 but then the share of non-tax revenue suddenly increased to 60.2 per cent in 1980-81 and then it again declined to 11.7 per cent in 1995-96.

              The share of Central taxes in absolute size although increased by mainfold amount i.e. from Rs. 1.42 crores in 1950-51 to Rs. 41.56 crores in 1970-71 and then to Rs. 986.46 crores in 1995-96 but in terms of percentage of Stage�s total revenue, it increased marginally from 14.3 per cent in 1950-51 to 17.6 per cent in 1970-71 and then to 26.3 per cent in 1995-96.

              The non-tax revenue from Central sources, which was only Rs. 1.16 crores in 1950-51 gradually, increased to Rs. 47.23 crores in 1970-71 and then to Rs. 1520.81 crores in 1995-96. In terms of percentage of State�s total revenue receipts also the non-tax revenue from central sources showed an increasing trend. In 1950-51, the share was 11.8 per cent State�s total revenue receipt but it gradually increased to 46.6 per cent in 1970-71 but it declined abruptly to 9.6 per cent in 1980-81 and then it again increased to 40.7 per cent in 1995-96.

              Thus, total revenue receipts of the Government of Assam rose from Rs.9.92 crores in 1950-51 to Rs.101.19 crores in 1970-71 showing a rise of 920 per cent. The State revenue receipts then gradually increased to Rs. 436.15 crores in 1980-81 showing a rise of 331 per cent over 1970-71. In 1990-91 the total revenue receipt of the State stood at Rs. 1776.64 crores but then it increased to Rs.2553.0 crores in 1991-92 and then to Rs. 3944.14 crores in 1995-96 showing a rise of 110.7 per cent overt 1990-91. In the budget estimates of 1997-98, the total revenue receipt of Assam is estimated at Rs. 4442.93 crores.

  Assam Government Budget, 1987-88

              The Assam budget for 1987-88 was presented in the Assam Assembly on February 10, 1987 showed an overall deficit of Rs. 69.58 crores despite proposal to levy fresh sale tax on tea and enhancement in the rate of taxation in certain other commodities. The following table gives bird�s eye view of the Assam budget, 1987-88.

Table No. 14.3

Government of Assam Budget, 1987-88-A Summary

(In Lakh of Rs.)

Heads	Budget Estimates
Opening Balance A.      Receipts Revenue Receipts Capital Receipts Receipts under contingency Fund Receipts under Public Account Total Receipts Grand Total	(-) 49,66,92   1256,42.36 1021,99.28 200.00   690,20.00   2970,61.64 2920,94.72
B.      Expenditure Expenditure  on Revenue Account Capital Expenditure Expenditure under contingency Fund Outgoings From Public Account Total Expenditure Closing Balance Grand Total	1259,59.08   1052,84.62 -   678,09.00   2990,52.70 (-)69,57.98 2920,94.72
C.     Net Result Revenue Account Outside the revenue Account Net Surplus (+) or Deficit (-)	(-)3,16.72 (-)16,74.34   (-)19,91.06

Source : Budget at a Glance, Government of Assam.

              The Table (no. 14.3) showing the budget estimates, 1987-88 of the Government of Assam, reveals that total receipts during the year 1987-88 is estimated at 297.61 crores against the total estimated expenditure of 2,99.52 crores thus leaving a net deficit of Rs. 19.91 crores. Taking into account the opening deficit of Rs. 19.91 crores. Taking into account the opening deficit of Rs. 49.67 crores, the budget for 1987-88 shows an overall deficit of Rs. 69.58 crores. However, the net accrual of about Rs. 4.15 crores from the proposed taxation measures will ultimately reduce the deficit to the extent leaving an uncovered gap of Rs. 65.4 crores.

              It is proposed to enhance the rates of sales tax from the existing 10 per cent to 15 per cent in case of aviation fuel, from 12 per cent to 13 per cent in respect of arms and ammunition, clock and watches, iron safe and almirahs, refrigerators, air conditioners, carpets, plastic and rubber products, cosmetics and some toilet requisites and from the existing 3 per cent to 6 per cent on manufactured tea. It is also proposed in the budget to enhance the rates of entertainment tax from the existing 25 per cent to 30 per cent and to levy sale tax at the rate of 1 per cent on tea sold in auction at Guwahati hitherto exempted from sales tax.

              The State budget proposed to reduce the rates of sales tax applicable to bicycle and most kinds of medicines from the existing level of 7 per cent to 4 per cent. The reduction in sales tax on the said items will result in loss of revenue to the tune of Rs. 80 Lakhs while the new tax proposals at enhanced rates are expected to yield a net additional revenue to the extent of  Rs.415 crores

  Assam Government Budget, 1993-94, 1994-95 and 1995-96

                        In recent years, the budgets of the Government of Assam have been experiencing considerable changes. In March 22, 1993, 1994 and 1995, the Government of Assam presented its budgets for the year 1993-94, 1994-95 and 1995-96. The following table gives a birds eye view of three budgets of Assam.

  Table No. 14.4

Budget at a Glance of Government of Assam

1993-94, 1994-95 and 1995-96

(In lakhs of Rupees)

	Actual 1993-94	Budget Estimates 1994-95	Revised Estimates 1994-95	Budget Estimates 1995-96
A.     RECEIPTS: I.        Consolidated Fund Revenue Account Capital Account                           Total II.   Contingency Fund Account III.  Public Account          Total(I+II+III)	33,17,46 8,02,33 41,19,79   1.48 19,23,65 60,44,92	35,83,07 11,50,97 47,34,04     16,91,50 64,25,54	33,15,00 14,52,41 47,67,41     16,91,50 64,58,91	37,44,14 12,81,92 50,26,06     19,36,00 69,62,06
B.     EXPENDITURE : I.   Consolidated Fund Revenue Account Capital Account            Total II.    Contingency Fund Account III.     Public Account             Total(I+II+III)	29,01,18 14,53,25 43,54,43   0,04 17,88,59 61,43,06	31,41,78 14,67,97 46,09,75     16,40,61 62,50,36	32,41,88 14,81,19 47,23,07     16,40,61 63,63,68	37,17,16 14,82,76 51,99,92     18,84,60 70,84,52
C.     TRANSACTIONS   DURING THE YEAR : Surplus(+) Deficit (-)	98,14	1,75,18	95,23	1,22,46
D.   OPENING BALANCE: Surplus(+) Deficit (-)	1,60,15	3,52,12	2,58,29	1,63,06
E.   CLOSING BALANCE Surplus(+) Deficit (-)	2,58,29	1,76,94	1,63,06	2,85,52

Source : Budget at a glance, 1995-96, Government of Assam

Actuals of Budgetary Position of 1993-94 :

              The table (no. 14.4) reveals the actuals of the budget of 1993-94 of the Government of Assam. The actual figures show that the actual revenue receipts and capital receipts of the Government of Assam were Rs. 3317.46 crores and Rs. 802.33 crores respectively. Including the other sources of receipts total receipts of the Government of Assam in 1993-94 was Rs. 6044.92 crores. In this year, total revenue expenditure and capital expenditure of the Government of Assam stood at Rs.2901.18 crores and Rs.1453.25 crores respectively. Covering the other expenditure, total expenditure of 1993-94 stood at Rs. 6143.06 crores. Thus the actual transaction during the year shows a net deficit of Rs.94.14 crores and including the opening balance of deficit worth Rs. 160.15 crores, the net closing deficit balance in 1993-94 stood at ,Rs. 258.29 crores.

Revised estimates of the Assam Budget, 1994-95 :

              Again the revised estimates of the receipts and expenditures of Assam budget, 1994-95 shows that the total revenue receipts and capital receipts during the year were Rs. 3315.00 crores and Rs. 1452.41 crores respectively. Including the other sources of receipts, total receipts of the Government of Assam in 1994-95 was Rs.6458.91 crores in 1994-95. During this year, total revenue expenditure and capital expenditure of the Government of Assam stood at Rs. 3241.88 crores and Rs. 1481.19 crores respectively. Covering the other heads .88 crores and Rs. 1481.19 crores respectively. Covering the other heads of expenditure, total expenditure in 1994-95 stood at Rs. 95.23 crores and including the opening deficit balance of  Rs. 258.29 crores, the net closing deficit balance stood at Rs. 163.06 crores in 1994-95 thereby improving the progressive and up-to-date position of the situation at the end of 1994-95 by Rs. 95.23 crores.

Budget Estimates of Assam Budget, 1995-96 :

              The budget estimates of the Assam Budget for the year 1995-96 was presented in Assam Assembly on 22nd March 1995. The Budget estimate shows that the total revenue receipts and capitals and capital receipts of the Government of Assam is estimated at Rs. 3444.14 crores and Rs. 1281.92 crores respectively. Including the other source of receipts, total receipts of the Government of Assam is estimated at Rs. 6962.62 crores in 1995-96. Thus the budget for 1995-96 envisaged improvement in receipts to the extent of Rs. 543.15 crores over that of the revised estimates for 1994-95.

              Again, in this year, the total revenue expenditure and capital expenditure of the Government of Assam in 1995-96 are estimated at Rs. 3717.16 crores and Rs. 1482.76 crores respectively. Covering the other heads of expenditures, total expenditure of 1995-96 is estimated at Rs. 7084.52 crores. Thus on the expenditure side, however, there would be an estimated increase of Rs. 720.84 crores over that of revised estimates for 1994-95.

              Thus the actual transaction during the year shows an estimated deficit of Rs. 122.46 crores with an anticipated opening deficit balance of Rs. 163.06 crores, the year 1995-96 was anticipated to close with a deficit of Rs 282.52 crores. This huge amount of closing deficit balance is not a welcome trend. However, the Government assured the House that this deficit would be bridged by better mobilisation of tax and non-tax revenue, economization in expenditures and overall better financial management.

              The current budget did not makes any fresh attempt to impose any fresh taxes rather announced exemption of sales taxes on wax candles, polythenelined jute bags, sindoor, kumkum, low cost foot wear costing Rs. 20 or less, educational accessories like charts, maps, globes, dusters etc. and UNICEF cards and mangal sutras costing not more than Rs. 1000. The budget also mentioned that at the end of 1994-95, the estimated public debt amount stood at Rs.4798.41 crores out of which the main debt obligation would be towards the Centre.

Appraisal :

              The Assam Budget for 1995-96 can be termed as a moral exercise on fiscal fronts where drastic attempts have been made for the betterment of the State�s economy.

              The Assam budget does not propose any fresh tax and what is more, it has reduced the existing rates of taxes on some commodities and exempted some non-essential items from sales tax, which as a whole may be guided by populist move. Moreover, the chances of additional resource moblisation during the year are also remote.

            While the State�s annual plan expenditure has been fixed at Rs. 1418 crores, the annual budget proposes to spend Rs. 7048.52 crores during 1995-96. Whatever may be the proportion of plan and non-Plan expenditure of the State the Finance Minister of the State honestly admitted that a �big chunk of our non-Plan expenditure� is eaten up by the head such as establishment expenditures, including pensionary liabilities. Moreover, expenditures on law and order, relief and rehabilitation and annual debt servicing by way of payment of installment of principal and interest on loan from central Government and institutional loans also swallow a considerable amount of non-Plan budget. Due to this high non-Plan budget, the developmental works of the State is being starved to paucity of funds. While more emphasis should have been laid on certain fronts viz., flood control, irrigation, security measures in border areas and their development and industrialization of the State, but the Budget (1995-96) has only made pathetically low provisions for these heads.

              But this budget has included certain popular measures such as - (a) monthly pension to age-old farmers, (b) monthly pension to old widows, (c) widening the scope of unemployment allowance to educated unemployed, (d) Extension of the coverage of scheme of Rs. 2 per Kg. Rice to 15.33 lakh families from the present 4 lakh families, (e0 provision of dwelling houses for poor families, (f) creation of job potentials for more than 23 lakh unemployed youths etc. Which is expected to benefit the socially and economically backward classes. But the success of these schemes depends how far these schemes can reach the target groups.

              Another welcome feature of the current budget is the introduction of the 8-year period Rs. 480 crore would Bank Project of Rural Infrastructure and Agricultural service, which in scheduled to commence from 1995-96 with the present budget provision of Rs.44.64 crores. If properly implemented, this type of schemes can certainly develop rural infrastructures such as roads, irrigation etc.

              One of the important snags in the current budget is the closing deficit balance of Rs. 285.52 crores including the last years closing deficit of Rs. 163.06 crores. In the absence of any initiative for additional resource mobilisation, this deficit even might increase.

              Finally, the budget does not reflect a better growth either in the agricultural or industrial sector in future and put least stress on the industrial infrastructure, power supply and also removing regional imbalance within the States.

Assam Government Budget, 1996-97 and 1997-98

            In recent years, the budgets of the Government of Assam have been experiencing considerable changes. On 14^th December 1996 and on 14^th March 1997, the Government of Assam presented its budgets for the year 1996-97 and 1997-98. The following table gives a bird�s eye-view of two budgets.

Table 14.5

Budget at a Glance of Government of Assam

(Rupees in Crores)

Actuals	Budget Estimates 1995-96	Revised Estimates 1996-97	Budget Estimates 1996-97	Budget Estimates 1997-98
A.  RECEIPTS : I.  Consolidated  Fund Revenue Account Capital Account TOTAL   I.        Contingency Fund Account   III.  Public Account       [TOTAL (I+II+III)]	3375.74 3316.67 6692.41   0.91   2299.09 8992.41	4291.87 1370.31 5662.18   -   1821.03 7483.21	4273.50 1344.20 5617.70   -   1821.03 7438.73	442.93 1362.04 5004.97   -    1509.28 7314.25
B.   EXPENDITURE : I. Consolidated Fund  Revenue Account Capital Account        TOTAL   II Contingency Fund Account   III.  Public Account     TOTAL (I+II+III)	3575.76 3100.49 6676.25   -     1938.72 861.97	4570.48 1616.44 6186.92   -     1767.06 7953.98	4325.84 1569.42 5895.26   -   1916.96 7812.22	4628.37 1533.11 6161.48   -   1434.92 7596.40
C.TRANSACTIONS DURING THE YEAR : Surplus(+) Deficit (-)	(+)377.44	- (-)470.77	- (-)373.49	- (-)282.15
D.OPENING BALANCE: Surplus(+)   Deficit (-)	(-)358.38	- (-)295.52	(+)19.06 -	- (-)354.43
E. CLOSING BALANCE Surplus(+) Deficit (-)	(+)19.06	- (-)766.29	- (-)354.43	- (-)636.58

Source : Budget at a glance, 1997-98, Government of Assam

Revised Estimates Assam Budget 1996-97 :

            The Revised estimates of the receipts and expenditures of Assam budget, 1996-97 shows that the total revenue receipts and capital receipts during the year were Rs. 1370.31 crores and Rs. 5662.18 crores respectively. Including the other sources of receipts, total receipts of the Government of Assam in 1996-97 was Rs. 5662.18 crore. During the Years, total revenue expenditure and capital expenditure of the Government of Assam stood at Rs. 4570.48 crore and Rs. 1616.44 crore respectively. Covering the other heads of expenditure, the total expenditure in 1996-97 was Rs 7953.96 crore. Thus the transaction during the year shows a deficit of Rs. 470.77 crore, including opening deficit balance of Rs. 295.52 crore and closing deficit balance of Rs. 766.29 crore.

Budget Estimate of Assam Budget, 1997-98

              The budget estimates of the Assam Budget for the year 1997-98 was presented in Assam Assembly on 14th March 1997. This budget estimate shows that the total revenue receipts and capital receipts of the Government of Assam is estimated at Rs. 4442.93 crore and Rs. 1362.04 crore respectively. Including the other sources of receipts, total receipts of the Government of Assam are estimated at Rs. 5804.97 crore in 1997-98. Thus the budget for 1997-98 envisaged improvement in receipts to the extent of Rs. 142.79 crore over that of the revised estimates for 1996-97.

              Again, in this budget, total revenue expenditure and capital expenditure of the Government of Assam in 1997-98 are estimated at Rs. 4628.37 crore and Rs. 1538.11 crore respectively covering the other heads of expenditures, total expenditure of 1997-98 is estimated at Rs. 6161.48 crore. Thus on the expenditure side, however, these would be an estimated decrease of Rs. 25.44 crore over that of revised estimate for 1996-97

              Thus the actual transaction during the year shows an estimated deficit of Rs. 282.15 crore with an anticipated opening deficit balance of Rs. 354.43 crore. The year 1997-98 is estimated to close with a deficit of Rs. 636.58 crore. This huge amount of closing deficit balance is not healthy trend. However, the Government assured the House that this deficit would be bridges by better mobilisation of tax and non-tax revenue, additional revenue mobilisation from the hike of sales tax, increased rate of tax on specified tea growing land, better tax compliance and economization of  expenditure and overall better financial management.

              The current budget imposed a 10 per cent luxury tax on cigarettes, scented tobacco, including zarda, expensive mill made textiles and two to four per cent increase in taxes on food items like confectionaries, tinned food, hair dye materials, pressure cookers, music systems, shaving sets, mineral water, sanitary fitting, vegetables sold in sealed containers to augment more revenue.

Appraisal :

              The Assam Budget for 1997-98 can be termed as a moral exercise fiscal fronts where some vital measures have been taken to augment additional resources worth Rs. 79 crores by imposing fresh taxes of luxury items, increase in sales tax in varying rates from two per cent of four per cent on 22 items and a 12 paisa increase on tax on specified land where tea is grown.

              The budget also offers the biggest concession in the tea industry in the form of reduction of agricultural income tax from 60 to 45 per cent which the tea industry has been crying for long to bring the tax rate on par with the corporate tax. The budget expects that as a result of this measure, responsive tea market and higher growth in production would lead to increase in tax revenues. This is no doubt an good step to encourage the tea industry and also to attain a better tax compliance from this industry.

              The total expenditure of the Government has been estimated at Rs. 6161.48 crore which is Rs. 25.44 crore less than the revised estimates of expenditure in 196-97. This is a welcome trend.

              The large budgetary deficit of Rs. 636.58 crore, which is the highest so far, is really a cause of concern, which must be bridged at any cost. Attaining financial discipline should be the first agenda in this direction. However, the State Government expects that the fresh tax proposals and additional likely receipts to accrue from �enhanced oil royalty, reimbursement of security related expenditure, increase in the divisible pool of shared central taxes and duties and relief in debt payment� would help the Government to bridge its budgetary deficit.

              It is quite important to note that such high scale of budgetary deficit must be contained at any cost otherwise the poor financial management of the Government would eventually bring the State in a whirlpool of financial bankruptcy.

              However, the Budget has taken some important steps to mobilise additional resources and also allocated additional funds to some poverty alleviation schemes, which is no doubt welcome step.

              Finally, the budget failed to reflect a better growth either in agriculture or industrial sector in future and put least stress on the industrial infrastructure, power supply and also to remove regional imbalance prevailing within the state.