General scenario of Manipur

Now from exciting and convincing Chinese experience let us move on to Manipur. The spirit of competitive development is by and large derived from the prevailing socio-economic scenario. To-day either by accident or by design or by ignorance, we are facing 13 problems in the major sectors as shown in Table I:



Now the small economy of Manipur looks sieged. The State suffers visible flight of capital including human capital— a kind of ‘brain-drain’. The net result is, perhaps, the terrible end of socio-economic stagnation vitiated relentlessly by the spiralling process of "easy money" under coercive atmosphere and open threat and defiance. "A failed State mired in conflict will be outstretched in resources and institutional capacity - and able to manage only certain interventions" (WDR, 2004, p-12).

The ‘soft State’ like Manipur is plagued with grim issues associated with crimes, corruption and non-compliance leading to a new burden of rising unjustified costs imposed on micro-entrepreneurs. In fact, the additional costs associated with crimes and corruption is another fixed cost. The economic relation has been made so costly and social relation destroyed.

Personal relation has been made the only basis of activities undertaken and to be undertaken. To-day young and promising entrepreneurs start facing a new sense of insecurity and uncertainty.

The unjustified "time costs" incurred in the process of meeting the formalities of compliance with regulatory mechanism are examples of corruption which infect the highest level of Government, distort policy making and undermine the credibility of Government. Even a small matter of registration takes more than six months in Manipur while it takes only two days in Australia.

Very unfortunately corruption is subject to increasing returns - an increase in rent seeking activities makes the corrupt devices more attractive. One becomes rich only with "unearned income". In a predatory state like Manipur, corruption consumes the surplus of the economy.

Today the Govt offices have now been treated as Income-Generating Personal Property — not for public services. Everyday is a new day with new income. To-day very few people would like to go to public offices, public hospitals and public secretariat.

People feel they will be "stranger" in their own homeland. The growing alienation, the growing gulf and the growing gap between the two entities (Govt and people) owe their origin to the colonial heritage of personality-cult and corruption. Growing social alienation weakens the tax base and tax compliance.

We have unduly personalized the official relation so much that it has acquired a new character of "Patron-Clientelism". A third factor has been created and without the help of these "link-men" (third factor), possibly one cannot look forward to the ready and positive response from the so-called "Income-Generating Personal Properties".

To-day people can get many things done without any labour. Just pay money; prepare Akash Bills, get fake certificates; fake appointments, fake patta, fake ex-gratia payment and fake registration. Really we notice a new parallel black economy and administration. Paper works of contracts and supply in the remote inaccessible hill areas are an attractive part of the zero-game.

As regards the unjustified risks, let us remind ourself of the advantages of secure property right. Secure property right links "efforts" with "‘rewards" assuring all firms and economic players that they will be able to reap the fruits of their investments.

"The better these rights, the stronger the link between effort and reward; and the greater the incentive to open new businesses, to invest more in existing ones and simply to work harder" (WDR, 2005, P-79). Secure and clear property rights establishing proper link between effort and reward in Poland, Romania, Slovakia, Russia and Ukraine could increase the reinvestment of profit by 14 - 40 percent.

Now the question is how to protect this right? This calls for a capable administration to proper investment climate and enforce necessary rules and regulations without fear and favour. Because investment is forward-looking. Firms invest to make profit. The decision is affected by the assessment of opportunities, incentives and risks in particular location.

Investment is not merely an act undertaken at a point off time only. It is a continuous process. Based upon the changing perceptiorns and economic considerations the decision also acquires a character of continuity with change.

Failure to raise productivity and adequate resources to meet rising investment requirements and revenue-expenditure implies failure to run the economy. This is the reason why "Resource-Plan" and "Reform-Plan" go together hand in hand in harmony.

— to be continued

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