The eastern region is often described as one of the paradoxes of India, as it is perceived as the land of the poor with rich resources. Therefore, there is a need for this part of India to receive government incentives – not only at central level but also at state level – for businesses to thrive in order to remove or significantly reduce the barrier of poverty. .
While the central government has introduced several poverty alleviation measures including the Integrated Rural Development Program, Jawahar Rozgar Yojana/Jawahar Gram Samriddhi Yojana (JGSY), Employment Insurance Program, Food for Work Program , Sampoorna Gramin Rozgar Yojana and Pradhan Mantri Gramin Awaas Yojana (PMGAY), among others, the history of economic development and poverty varies in each state. This is where state governments are supposed to intensify and complement central government efforts to eradicate poverty throughout the country.
Economists have often emphasized the role of state governments in helping to correct the market in their region. They are expected to adopt a two-pronged strategy – one, which increases the capacity of the region through policies, education, health, infrastructure, protection of vulnerable segments of society as well as ‘environment ; and second, to strengthen its institutional capacity by providing incentives to public officials to motivate them to perform better. The performance of the state government is also judged on factors such as good governance, sustainable development and equitable development in the current context.
According to a KPMG report, West Bengal, Bihar, Odisha, Jharkhand and Assam (in the northeast) are expected to contribute at least 25% of the country’s GDP by 2035. Given these results, it is not only important to encourage industries, but necessary for state governments to identify extremely poor people and help them lift them out of poverty through sustainable measures.
This will ensure that the benefits of economic growth in the region reach the disadvantaged through more employment opportunities, greater productivity and higher wages that will help economically disadvantaged people rise above the poverty line. The state government should also focus on education, health and skills which are primarily within its purview. These factors, together with digital literacy and education, will empower the marginalized part of society, especially women.
What the Eastern Region has to offer
The eastern region covers the states of Bihar, Chhattisgarh, Jharkhand, Orissa and West Bengal. Naturally, an increasing level of industrialization in these states can lead to lower rates of unemployment and impoverishment. Key industries that have the potential to boost its economy are jute, leather, tea, locomotives, steel and mining to name a few. However, according to Niti Aayog’s Multidimensional Poverty Index (MPI), 51.91% of the population of Bihar and 42.16% of Jharkhand are poor.
Nevertheless, Bihar’s economic growth can boost poverty reduction if the state government removes constraints to agricultural growth. This will have an impact on food processing and agro-industry in Bihar, which is expected to be a major engine of growth for the local economy, creating large-scale jobs in rural areas and high returns for farmers.
Similarly, agriculture and service sectors are the high growth areas of Chhattisgarh. It is also a major producer of minerals such as coal, iron ore and dolomite.
In industrial policy, the state government has created a land reserve for mega-industries, special packages for disadvantaged sections of society, revival of ailing and closed industries, among other initiatives. The focus is on encouraging job creation through industrial growth with significant private investment, as well as incentives for MSMEs, which are among the biggest job generators.
Next, Odisha also enjoys the lion’s share of the country’s mineral reserves. Notably, the government encourages SMEs through incentives, which is the best way to earn extra income and develop the quality of entrepreneurship of the educated poor.
Although a poor state, Jharkhand is one of the richest mineral areas in the world. Nearly 75% of its population depends on agriculture or agriculture-related professions. A strong emphasis is therefore placed here on MSMEs. The government intends to provide the best incentives, exemptions and concessions for the upcoming industrial units in the state.
In West Bengal, MSMEs are seen as the engine of industrial growth in the state and have been strongly incentivized by the government. The state has had successful examples of infrastructure development leading to poverty reduction. The construction of a national highway (NH2) would have led to a reduction in the proportion of the population living below the poverty line in the surrounding areas and would also have had a positive effect on the wage rates available to people residing in the villages close to the highway.
Tourism can become a growth driving sector for the eastern states of India as it is basically rich in natural beauties and heritage destinations. Given the booming service sector, it can increase the per capita income of the region, thereby improving the quality of life.
Incentives that can help the Eastern region
It should be remembered that India is more geared towards a labour-intensive economic growth path. Therefore, fiscal and monetary measures that provide incentives for the use of labour-intensive techniques are best suited to reduce poverty.
According to the reports of the commission Montek Ahluwalia (former member of the Planning Commission), agricultural growth and poverty are inversely linked; higher agricultural growth leads to a lower poverty rate. Thus, PLI programs and export incentives for agribusinesses will make economic growth more pro-poor.
In addition, there is a need to better understand the rural non-farm sector. These areas are of particular importance for the reduction of poverty and the growth of off-farm employment opportunities created in the areas of sales, marketing, transport, handicrafts, dairy farming, forestry, food processing and other agricultural products, repair shops, etc.
Incentives can include tax abatements, tax revenue sharing, grants, infrastructure assistance, interest-free or low-interest financing, free land, tax credits, and other financial resources. The government must focus on businesses that will create large-scale jobs.
State governments in the region have already started to focus on improving waterway connectivity, especially in the northeastern states, which has provided access to the ports of Mongla and Chittagong. However, they must continue to develop it as it will not only improve connectivity in the region but open up more opportunities to generate income as well as employment.
The road to follow
In particular, poverty eradication is an integral part of India’s economic development strategy. High levels of poverty are synonymous with poor quality of life, deprivation, malnutrition, illiteracy and low human resource development.
Significantly, the first of the 17 United Nations Sustainable Development Goals (SDGs) calls for ending poverty by 2030. As part of the Sustainable Development Goals, India aims to reduce, at least by half , the proportion of people of all ages living in poverty. . This includes not only monetary poverty, but also multidimensional poverty such as education, infrastructure, etc.