Agriculture – The backbone of state economy in Assam
Dipankar Choudhury, Asstt. Professor,
Dept. of Mathematics, Commerce, Bhawanipur Anchalik College
Dept. of Mathematics, Commerce, Bhawanipur Anchalik College
Introduction: Assam Agriculture is the primary sector in the state's economy. The socioeconomic
condition of Assam largely depends on its agricultural production. Though India is
becoming one of the rapidly developing countries, some states, especially Assam, are not being
able to escape from taking help of huge sectors like Agriculture. Compared to most other states
in India, Assam is considered a less developed state, which depicts a gloomy picture the
economic condition of the state given that India is considered a less developed country (LDC).
Agriculture plays the chief role of revenue earning in Assam economy. The state of
Assam experiences plenty of rainfall and possesses a fertile land which is extremely
advantageous for cropping. While the socio-political problems afflicting the state since the last
few decades are partly to blame for a lack of conductive environment for economic development
of the state, particularly in industry or service-oriented areas, there are various economic reasons
(e.g., fragmented land) responsible for the lagging agricultural sector in the state. In this topic we
will discuss agriculture sector in Assam’s economy and its major problem.
Importance of Agriculture in the State Economy:
Assam's economy is fundamentally based on agriculture. Over 70 percent of the state's
population relies on agriculture as farmers, as agricultural laborers, or both for their livelihood. A
majority of state's population, almost 90 percent of an estimated 22.4 million in 1991, live in
rural areas where the mainstay of business is production agriculture. In terms of the state
domestic product (SDP), the agriculture sector contributed over 38 percent of the state income in
1990-91.
Assam produces both food and cash crops. The principal food crops produced in the state
are rice (paddy), maize (corn), pulses, potato, wheat, etc., while the principal cash crops are tea,
jute, oilseeds, sugarcane, cotton, and tobacco. Although rice is the most important and staple
crop of Assam, its productivity over the years has not increased so much compare to the other
state in India while other crops have seen a slight rise in both productivity and land acreage. Tea
is the also most important cash crop in Assam and the state is well known world-wide for its tea.
The total land area under tea cultivation (gardens) was estimated at over 229,000 hectares in
1989, employing an average of over half-a-million people per day. In addition, a considerable
number of Assam's population depends on secondary and tertiary sectors-related to the tea
industry.
Information provided by the Directorate of Economics and Statistics on the number, area
and average size of operational holding in Assam in 1995-1996 is:
condition of Assam largely depends on its agricultural production. Though India is
becoming one of the rapidly developing countries, some states, especially Assam, are not being
able to escape from taking help of huge sectors like Agriculture. Compared to most other states
in India, Assam is considered a less developed state, which depicts a gloomy picture the
economic condition of the state given that India is considered a less developed country (LDC).
Agriculture plays the chief role of revenue earning in Assam economy. The state of
Assam experiences plenty of rainfall and possesses a fertile land which is extremely
advantageous for cropping. While the socio-political problems afflicting the state since the last
few decades are partly to blame for a lack of conductive environment for economic development
of the state, particularly in industry or service-oriented areas, there are various economic reasons
(e.g., fragmented land) responsible for the lagging agricultural sector in the state. In this topic we
will discuss agriculture sector in Assam’s economy and its major problem.
Importance of Agriculture in the State Economy:
Assam's economy is fundamentally based on agriculture. Over 70 percent of the state's
population relies on agriculture as farmers, as agricultural laborers, or both for their livelihood. A
majority of state's population, almost 90 percent of an estimated 22.4 million in 1991, live in
rural areas where the mainstay of business is production agriculture. In terms of the state
domestic product (SDP), the agriculture sector contributed over 38 percent of the state income in
1990-91.
Assam produces both food and cash crops. The principal food crops produced in the state
are rice (paddy), maize (corn), pulses, potato, wheat, etc., while the principal cash crops are tea,
jute, oilseeds, sugarcane, cotton, and tobacco. Although rice is the most important and staple
crop of Assam, its productivity over the years has not increased so much compare to the other
state in India while other crops have seen a slight rise in both productivity and land acreage. Tea
is the also most important cash crop in Assam and the state is well known world-wide for its tea.
The total land area under tea cultivation (gardens) was estimated at over 229,000 hectares in
1989, employing an average of over half-a-million people per day. In addition, a considerable
number of Assam's population depends on secondary and tertiary sectors-related to the tea
industry.
Information provided by the Directorate of Economics and Statistics on the number, area
and average size of operational holding in Assam in 1995-1996 is:
§ TOTAL AREA AND CLASSIFICATION OF AREA OF ASSAM, 1995-1996 :
a. Total geographical area 78,43,800Hect.
b. Forest 20,12,319Hect.
c. Area not available for cultivation 24,55,613Hect.
d. Net area sown 25,45,000Hect.
e. Total cropped area 36,94,000Hect.
f. Area sown more than once 12,15,195 Hect.
g. Cultivable waste land 88,043 Hect.
a. Total geographical area 78,43,800Hect.
b. Forest 20,12,319Hect.
c. Area not available for cultivation 24,55,613Hect.
d. Net area sown 25,45,000Hect.
e. Total cropped area 36,94,000Hect.
f. Area sown more than once 12,15,195 Hect.
g. Cultivable waste land 88,043 Hect.
Out of the above net area sown, 3 to 5 lakh hectares are affected by flood to various degrees
annually.
Flaw in the agriculture progress in Assam
Agricultural development problems and economic development problems go hand-in-hand in
Assam. Thus, while most of the development problems discussed below are agriculture-related,
some of these are also related to the economic development problems in Assam.
(1)Natural calamities:Floods and dry spells are the principal natural disasters faced by
farmers in Assam every year. The principal source of floods is the Brahmaputra river
and its tributaries.Flood is highly ruinous for crop production. During 1991-92, the
state of Assam witnessed three floods in one year which has caused a heavy loss to the
cultivation sector damaging a cropping area of around 3.5 lakh hectares. Therefore,
flood control is very important and should be given foremost priority to save the crops
in Assam. In spite of such a terrible loss in crops during 1991-92, the state received
31.85 tonnes of rice and it covered around 70 percent of the total cultivated land.
The oilseed production of the agricultural sector in Assam has been looming large on
the other hand with a production of 1.9 lakh tonnes during 1990-91. The pulses covered
an area of 1.2 lakh in the same year with a production rate of 53,000 MT. The increase
in the usage of fertilizers has been a real boost up for the crop production in Assam.
Besides, multiple cropping system has been adopted by the farming community and
this has augmented the crop production up to 145 percent during 1991-92 as compared
to the 140 percent in the previous year. This multiple cropping system has also enabled
the agricultural sector of Assam to take up various modernization schemes since 1992-
93.
Assam agriculture is now focusing on horticulture segment of the state. Horticultural
crops of Assam agriculture such as coconut, citrus, banana, black pepper, and papaya
have been placed on the priority list and a range of plantation materials have been
ordered for these crops to increase its productivity. Sugarcane is claimed to be one of
the main cash crops in the Kharif season in Assam. Also various pesticides and other
protection measures are being taken up by the agricultural department of Assam to
assure safety to the plantation in the state. All these have contributed to the state's
marked productivity in agriculture to a great extent and with the advent to newer
schemes; the agriculture of Assam will soon reach the peak of fecundity.
(2)Capital deficiency:Commercial capital, i.e., loans from banks or other credit agencies,
is not generally accessible to farmers in Assam. As a result, borrowing from
unscrupulous lenders, who are not regulated by the state, at an extremely high interest
rate is common in the state. Tragically, In many instances some borrowers lose their
livelihood, i.e., their cultivable land, to these unscrupulous lenders. Although the
amount of commercial loan for agricultural purposes was over Rs. 77 billion in 1990-
91, most of these loans went to tea gardens. In 1989-90, commercial banks spent only
40 percent of their agricultural-loan budget. Their main reasons for refusing
agricultural loans was a lack of necessary collateral, mostly in the form of land. A lack
of proper land inheritance documentation and a lack of adequate amount of land (due to
land fragmentation) were two of the main reason for lack of collateral among many
farmers in Assam. To fill the void left by commercial banks, the Integrated Rural
Development Program (IRDP was designed to assist rural farming families with loans
to expand and improve their agricultural production as well as to explore alternative
avenues to increase income) used over Rs. 626 million in loans in 1990-91. However,
the need for agricultural loan remains largely unfulfilled in Assam.
(3)Marketing problems: Agricultural markets in Assam are under-developed. Farmers sell
to the nearest dealer/buyers, mostly immediately after harvesting when the price is at
the lowest, instead of trying to find the best market for their products. Geographical
isolation, weak transportation and communication systems, poor marketing facilities,
poor or non-existent market intelligence (e.g., information on price and place to sell)
are some of the principal marketing-related problems. While most of the brokers/buyers
have access to modern communication facilities such as telephone and regular and
timely market reports, farmers in Assam are many years away from having such
facilities to gauge the market and sell accordingly. In terms of the role of government, earlier studies have shown that government efforts are more focused on collecting
revenue (in the form of tax in the daily or weekly markets or through check-gates) than
facilitating the marketing of agricultural.
(4)) Non-economic Factors: Lack of education, ignorance about the changing economic
conditions, out-dated thinking, prejudiced cultural values, disturbed law and order
situation, and lack of scrupulous legislative and administrative machinery are some of
the principal non-economic factors that hinder agricultural development in Assam.
While the first four factors are mostly socio-cultural, which may take time to change
for the better, the latter two factors are mostly political. All these factors adversely
affect agricultural as well as economic development of the state. Political and
administrative instabilities not only create an unstable economic environment which
scare away entrepreneurial skills, capital necessary for growth, and induce brain-drain,
they also adversely affect socio-economic infrastructure, such as education, intellectual
thinking, social and family structure. Obviously, the on-going political unrest in Assam
since the last 1970s is not helping the agricultural sector or the economy of Assam.
(5)Research and development (R&D): The Assam government started allocating funds
specifically for research and development only since the sixth five-year plan (1980-85),
with an amount equal to 0.06 percent of the total outlay of Rs. 11.2 billion. It is
encouraging to note that such outlays were increased to 0.2 percent in the seventh plan,
and to 0.5 percent in the eighth plan. However, it is not known how much of this R&D
outlay is spent to improve agricultural productivity in the state, or how much of the
total R&D output has reached farmers. An assessment of the impact of past and current
R&D in the state would provide answers to such questions.
annually.
Flaw in the agriculture progress in Assam
Agricultural development problems and economic development problems go hand-in-hand in
Assam. Thus, while most of the development problems discussed below are agriculture-related,
some of these are also related to the economic development problems in Assam.
(1)Natural calamities:Floods and dry spells are the principal natural disasters faced by
farmers in Assam every year. The principal source of floods is the Brahmaputra river
and its tributaries.Flood is highly ruinous for crop production. During 1991-92, the
state of Assam witnessed three floods in one year which has caused a heavy loss to the
cultivation sector damaging a cropping area of around 3.5 lakh hectares. Therefore,
flood control is very important and should be given foremost priority to save the crops
in Assam. In spite of such a terrible loss in crops during 1991-92, the state received
31.85 tonnes of rice and it covered around 70 percent of the total cultivated land.
The oilseed production of the agricultural sector in Assam has been looming large on
the other hand with a production of 1.9 lakh tonnes during 1990-91. The pulses covered
an area of 1.2 lakh in the same year with a production rate of 53,000 MT. The increase
in the usage of fertilizers has been a real boost up for the crop production in Assam.
Besides, multiple cropping system has been adopted by the farming community and
this has augmented the crop production up to 145 percent during 1991-92 as compared
to the 140 percent in the previous year. This multiple cropping system has also enabled
the agricultural sector of Assam to take up various modernization schemes since 1992-
93.
Assam agriculture is now focusing on horticulture segment of the state. Horticultural
crops of Assam agriculture such as coconut, citrus, banana, black pepper, and papaya
have been placed on the priority list and a range of plantation materials have been
ordered for these crops to increase its productivity. Sugarcane is claimed to be one of
the main cash crops in the Kharif season in Assam. Also various pesticides and other
protection measures are being taken up by the agricultural department of Assam to
assure safety to the plantation in the state. All these have contributed to the state's
marked productivity in agriculture to a great extent and with the advent to newer
schemes; the agriculture of Assam will soon reach the peak of fecundity.
(2)Capital deficiency:Commercial capital, i.e., loans from banks or other credit agencies,
is not generally accessible to farmers in Assam. As a result, borrowing from
unscrupulous lenders, who are not regulated by the state, at an extremely high interest
rate is common in the state. Tragically, In many instances some borrowers lose their
livelihood, i.e., their cultivable land, to these unscrupulous lenders. Although the
amount of commercial loan for agricultural purposes was over Rs. 77 billion in 1990-
91, most of these loans went to tea gardens. In 1989-90, commercial banks spent only
40 percent of their agricultural-loan budget. Their main reasons for refusing
agricultural loans was a lack of necessary collateral, mostly in the form of land. A lack
of proper land inheritance documentation and a lack of adequate amount of land (due to
land fragmentation) were two of the main reason for lack of collateral among many
farmers in Assam. To fill the void left by commercial banks, the Integrated Rural
Development Program (IRDP was designed to assist rural farming families with loans
to expand and improve their agricultural production as well as to explore alternative
avenues to increase income) used over Rs. 626 million in loans in 1990-91. However,
the need for agricultural loan remains largely unfulfilled in Assam.
(3)Marketing problems: Agricultural markets in Assam are under-developed. Farmers sell
to the nearest dealer/buyers, mostly immediately after harvesting when the price is at
the lowest, instead of trying to find the best market for their products. Geographical
isolation, weak transportation and communication systems, poor marketing facilities,
poor or non-existent market intelligence (e.g., information on price and place to sell)
are some of the principal marketing-related problems. While most of the brokers/buyers
have access to modern communication facilities such as telephone and regular and
timely market reports, farmers in Assam are many years away from having such
facilities to gauge the market and sell accordingly. In terms of the role of government, earlier studies have shown that government efforts are more focused on collecting
revenue (in the form of tax in the daily or weekly markets or through check-gates) than
facilitating the marketing of agricultural.
(4)) Non-economic Factors: Lack of education, ignorance about the changing economic
conditions, out-dated thinking, prejudiced cultural values, disturbed law and order
situation, and lack of scrupulous legislative and administrative machinery are some of
the principal non-economic factors that hinder agricultural development in Assam.
While the first four factors are mostly socio-cultural, which may take time to change
for the better, the latter two factors are mostly political. All these factors adversely
affect agricultural as well as economic development of the state. Political and
administrative instabilities not only create an unstable economic environment which
scare away entrepreneurial skills, capital necessary for growth, and induce brain-drain,
they also adversely affect socio-economic infrastructure, such as education, intellectual
thinking, social and family structure. Obviously, the on-going political unrest in Assam
since the last 1970s is not helping the agricultural sector or the economy of Assam.
(5)Research and development (R&D): The Assam government started allocating funds
specifically for research and development only since the sixth five-year plan (1980-85),
with an amount equal to 0.06 percent of the total outlay of Rs. 11.2 billion. It is
encouraging to note that such outlays were increased to 0.2 percent in the seventh plan,
and to 0.5 percent in the eighth plan. However, it is not known how much of this R&D
outlay is spent to improve agricultural productivity in the state, or how much of the
total R&D output has reached farmers. An assessment of the impact of past and current
R&D in the state would provide answers to such questions.
Concluding Remarks
To sum up, Assam is a state which is totally dependent on Agriculture and no one can deny this
fact. Various economic as well as socio-political factors are responsible for the continued lack of
growth and development of this sector. In addition, ineffective or inefficient government
programs also contribute to this sector's lack of growth. In the middle of continued problems,
there is hope for the future. There is potential for agri-food industries that use primary
agricultural products as their raw materials, e.g., fruits and vegetable processing industry,
sugarcane refining, tea industry, and jute industry. Such growth in the secondary and related
tertiary sectors (e.g., packaging, shipping, transportation, etc.) will not only benefit the primary
agriculture tremendously, but also reduce growing unemployment and provide the much needed
revenue to the state government. In a market economy, private entrepreneurs generally would
take the initiative to establish such secondary (and tertiary) industries, supported by commercial
credit sources. However, a lack of entrepreneurial and managerial talent, a lack of sufficient
capital, poor economic infrastructures, government bureaucracy, and continued politicaladministrative
unrest would discourage any would-be investor. It can be argued that the state
should step in to fill the gap which is left unfulfilled by the private sector. However, given the
poor performance of state-owned enterprises, the strategy of government involvement in
business must be changed. For instance, instead of ownership and management of businesses
using state-run corporations, joint ventures with private, including foreign, investors may be
economically beneficial.
References:
1) Directorate of Economics and Statistics
2) Bagchi, S. AAxomorsahsilpa.@ in Phukan (1997), pp. 64-85.
3) Bhuyan, S. AState intervention in agricultural marketing: Is it necessary?
@Agricultural Marketing, 33, 1 (April 1990):2-13.
4) Bhuyan, S., H. Demaine, and K. E. Weber. "Market regulation or regulated market?
The case of Assam, India," HSD Monograph no. 19, Asian Institute of Technology,
Bangkok, Thailand, 1990.
5) Bhuyan, S., S. D. Urs, and K. E. Weber. "Marketing farm produce: An efficiency test
of traditional and regulated markets based on evidence from Assam, India."
Economic Bulletin for Asia and the Pacific, 39, 2 (1988):46-55.
6) Dhar, P. K. Axomorarthanitirruprekha(The Economy of Assam). Kalyani Publishers:
Ludhiana, 1994.
7) Knutson, R. D., J.B. Penn, and Barry L. Flinchbaugh. Agricultural and Food Policy.
4th ed., Prentice Hall: Upper Saddle River, NJ, 1998.
8) Phukan, A. K. (ed.). Axomorarthaniti, 1997 (The Economy of Assam, 1997).
Buniyad: Guwahati, 1997.
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