State-O-Nomics: Poll-bound Mizoram’s economy is hinged on infra-growth

Land of the hill people: Mizos started trading with the world much before the colonial rule in India. History states, that the Mizos, even before the British arrived used to collect rubber and trade for salt. Today Mizoram’s economy is counted among the fastest ones among Indian states. Mizoram is one of the seven states in northeast India. It shares borders with Manipur, Tripura, and Assam as well as with neighbouring countries of Bangladesh and Myanmar.

Mizoram was a part of Assam until 1972 when it was carved out as a Union Territory. In 1987, the state of Mizoram was constituted under the 53rd Amendment of the Indian Constitution. Mizoram has come a long way since then. The landlocked state is today the second highest literate state in India. On the economic front, agriculture, public administration, and construction work are the biggest contributors to the state's GSDP.

The state of Mizoram will go to elections on November 17, 2023, and the results will be announced on December 3, 2023, to elect all 40 members of the state's Legislative Assembly

Snapshot of the Mizo economy

More than 70 per cent of the working population in Mizoram is engaged in agricultural activities. The Gross State Domestic Product (GSDP) of Mizoram for 2023-24 (at current prices) is projected to be Rs 35,904 crore, amounting to a growth of over 19 per cent in 2022-23, according to PRS India.

The state has a per capita income of Rs 1,75,896, in 2021-22 as per Invest India. In 2023-24, the government's expenditure excluding is estimated to be Rs 12,767 crore, a decrease of 12 per cent from the revised estimates for 2022-23.

Fiscal deficit for 2023-24 is estimated at 3.5 per cent of GSDP (Rs 1,247 crore).  In 2022-23, as per the revised estimates, fiscal deficit is expected to be 7 per cent of GSDP, almost twice the budget estimate of 3.1 per cent.

Under the State Budget 2023-24, the government has allocated Rs 187,213.68 lakh to the education, sports and art and culture sectors, Rs 63,456.54 lakh for health and family welfare, Rs 7,214.66 lakh to the industry and minerals sectors, Rs 79,301.33 lakh for agriculture and allied activities, and Rs 1,134.16 lakh to the tourism sector.

Challenges of an agri-based economy

Despite being heavily dependent on agriculture, Mizoram's economy faces challenges due to limited arable land, affecting the overall productivity of the sector. The state relies heavily on rain-fed agriculture, making the economy vulnerable to climatic variations and affecting crop yields.

Infrastructure gaps

Mizoram faces infrastructural challenges, including limited road connectivity and inadequate power supply, hindering industrial development and economic growth. The state has a relatively low level of industrialisation, which limits job opportunities and diversification of the economy beyond agriculture. Mizoram is dependent on central government grants which directly impact its infrastructure projects. 

Geographical isolation

Mizoram's geographical isolation poses multiple challenges for trade and commerce, impacting the state's ability to tap into markets and attract investments.

Limited resource base

The state has limited natural resources, which constrains its ability to generate revenue from sectors like mining and minerals.

Educational challenges

Educational challenges, including a high dropout rate and limited access to quality education, can hinder the development of a skilled workforce needed for economic diversification.

Untapped potential of tourism

Despite its scenic beauty, Mizoram's tourism sector is underdeveloped. Insufficient infrastructure and promotion affect the potential economic benefits of tourism.

Demographic factors

Mizoram faces demographic challenges such as a growing population and high dependency ratio, impacting the labour market and posing challenges to sustained economic growth.
While considered among the fastest growing states of India, the economic growth of Mizoram is chained to its infrastructure development and the future of the state is hinged on the amount of road, power, and transport development.