Over the last two weeks, lower Assam has been in the news for all the wrong reasons: yet, on September 25, Barpeta, a nondescript district in lower Assam, made the headlines in the Times of India as one of the top 10 sources of new stock market investors since March. The district now accounts for 0.8 per cent of total new investors in the country, as per statistics recorded by the National Stock Exchange in August. The figure puts the district alongside cities like Delhi, Mumbai, Pune, Ahmedabad, Surat, Bengaluru, Jaipur and Hyderabad, which have traditionally been prominent centres of economic and business activities in India.

The news titled ‘Bull run reaches Barpeta’ has enthused many natives of the district, more used to the negative image of the district as one of the worst flood-affected districts in the state. The headline has even nudged more optimistic natives from the region to reflect nostalgically on the district’s history as a hub of traders who once travelled long distances, braving rugged terrain. 

The recent bull runs both at the global and national level shows that such trends in the stock market have not reflected adequately on the health of the economy and humans, more so in a year that has witnessed lives and fortunes being ravaged by Covid-19. The New York Times reported that in a year when millions lost jobs and many more their lives, a combination of increasing personal income and falling spending rate pushed aggregate saving rate among the better-off Americans, whose choice of putting their savings in stock has the effect of stock market indices soaring through the roof. The story is not very different in India this year. 

However, even amid growing divergence between bull-run and real economics, the news of an economically backward district in a far corner of the North East region of India has caught serious observers by surprise.   

For those uninitiated about Barpeta, the district figures among 250 most backward districts selected for backward region grant funds during the 11th Five-year plan. Assam Human Development Report (AHDR) reports the annual per capita income of the district for the year 2012 at Rs 21828, which is less than one-third of national per capita income during the same year. The AHDR report further observes a high Gini coefficient of 0.6 for Barpeta, underlining high inequality in income distribution. A high level of inequality at a low average income only shows that a significant segment of the population in the district is living at the subsistence level.

According to the report, more than one-third of the people in Barpeta are identified as poor in the multidimensional poverty index, the most broad-based measure of poverty going beyond income as indicators. 

The subsistence sector cannot generate demand to draw adequate physical investment from private sectors, both retail and institutional. Against this backdrop, one should read the emergence of the district as a hub of stock market investors with scepticism. Further, with the expansion of organized retail in two prominent townships – Barpeta and Barpeta road, national or regional capital took over the leading role in merchandise trading, leaving local capital with few avenues for investment.

The growing number of people from Barpeta turning to retail stock market investors might thus underline the lack of internal dynamism for physical investment within the district, which would have benefitted the locals more.

In fact, the low level of private investment in the entire state has been a bane for Assam for quite a long time. The low credit deposit ratio in the region has long been a hot potato among the political parties. In 2012, major nationalized banks operating in the state report a credit-deposit ratio of 38 per cent, which compares with 143 per cent in Tamil Nadu, 102 per cent in Andhra Pradesh, 113 per cent in Haryana.

The Economic Survey of Assam 2018 reports that things hardly improved over the years, with the CDR ratio dropping to 36.90 per cent in 2015 compared to 77.4 per cent at the national level. A low credit deposit ratio suggests that the state cannot use even limited savings generated within the region. 

Only 38 per cent of total deposits collected within the region are given out as credit to the locals compared to over 77 per cent at the national level and a much higher proportion for the economically more advanced state. The scenario might be even worse for a relatively poorer district like Barpeta.  

While Assam has witnessed digital outreach in recent times, the lack of avenues for physical investment means that digital access facilitates only speculative investment, taking precedence over physical investment in the region. Such speculative investment will only likely serve as another conduit to reinforce the already existing outflow of savings through a low credit deposit ratio.

The economic trajectories that have turned Barpeta into a hub of stock market investors may be reflections of a larger malaise afflicting the state as a whole. It is high time that public authorities, at both centre and state, strive with adequate policy measures to ensure that the region does not get trapped in a low level of economic activities yielding low and unequal income. The leakage of savings outside the region through banks and, more recently, stock markets is a concomitant outcome of such a process.

Growing regional disparity reflects such trends, with state GDP per capita growing only 1.55 times over two decades 1993-2012 compared to states such as Haryana, Gujarat and Maharashtra reporting per capita increasing by 2.55 to 3 times over the same period. To reverse such trends, the governments, at both state and national level, have to kick start investment in the region, whose benefits are more broad-based.  

Rajib Sutradhar teaches Economics at Christ (Deemed to be) University, Bangalore

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