A recent study by Dr VT Vasagan reveals that while the state’s per capita income (PCI) has increased significantly (from Rs 53,010 in 2011 to Rs 1,30,221 in 2021-22) the rate of growth has been declining over the past decade. This raises concerns about the sustainability of Nagaland’s economic progress and the distribution of wealth within the state.
To put things into perspective, India’s per capita net national income for 2022-23 stands at Rs 1,72,000, significantly higher than Nagaland’s PCI. Within the state, district-wise disparities exist as well, with Mokokchung’s per capita income reported at Rs 1,07,603 by the Department of Economics & Statistics, Nagaland, which is much lower than the state PCI. However, the bigger issue lies in how PCI figures can often be misleading. A high per capita income does not necessarily indicate economic well-being for all; rather, it represents an average that may not account for income inequality. If a small percentage of the population earns substantially more than the rest, the PCI may appear favorable while large sections of the society in reality continue to struggle with low wages and poor quality of life.
The study also notes that while Nagaland’s Gross State Domestic Product (GSDP) has shown positive growth (from 5.68% in 2012-13 to 6.86% in 2021-22), the trend curve indicates fluctuations and a decline in the overall growth rate. This suggests that despite the numerical increase, the economy is not expanding at a stable pace.
Sectoral analysis further suggests an important shift: the service sector has emerged as the largest and fastest-growing contributor to the state’s GSDP, while agriculture remains stagnant and the industrial sector continues to lag with an average growth rate of just 1.64%.
The transition from an agrarian-based economy to a service sector-driven one is significant, but it warrants closer scrutiny. Given that government jobs fall under the service sector, a large portion of the income classified under this category could be attributed to public sector employment rather than private enterprises or business-driven services. If this is the case, the service sector’s growth may not necessarily indicate a thriving private economy but rather an increased reliance on government employment. It is essential to differentiate between government-driven service sector growth and private-sector-driven growth, as the former often relies on state funding rather than market-driven expansion.
Dr Vasagan rightly stresses that policy formulation alone is not sufficient; execution is key. The Government of Nagaland must take concrete steps to bolster the agricultural and industrial sectors, ensuring a more balanced economic structure. Sustainable development requires targeted interventions, such as promoting entrepreneurship, investing in infrastructure, and improving agricultural productivity. Only through such measures can Nagaland ensure equitable growth and long-term economic stability.