Ongoing ethnic violence takes a heavy toll on economy of Manipur

The ongoing ethnic conflict in Manipur, now in its seventh month, has taken a heavy toll on its economy with goods and services tax (GST) collections during the April-October period contracting 19 per cent at a time the country’s overall GST mop-up rose in double digits.

The violence in Manipur bordering Myanmar first erupted on May 3 when the Kuki tribal group who inhabit the hills clashed with the non-tribal ethnic majority Meitei living on the plains over sharing economic benefits and quotas given to the tribes. In September, the Manipur Police said 175 people have died with at least 5,172 cases of arson reported. 

“The 19 per cent reduction in GST collections is only the tip of the iceberg because there is a huge informal economy in Manipur which has been severely impacted. Many micro industries not captured in GST data are on the verge of closure and many would have closed down already. People are procuring even day-to-day necessities from outside the state through family and friends because items have become very expensive in Imphal,” an official of a trade body residing in north-east India said, requesting anonymity.  

The retail inflation in Manipur remained one of the highest in the country at 9.7 per cent in September. Ruling Bharatiya Janata Party’s Manipur unit had written to the party president J P Nadda in September demanding immediate restoration of free flow of traffic along the two national highways connecting Dimapur with Imphal (NH2) and Manipur with Assam (NH37).

Asked whether things are getting better or worse, the official said: “They are not getting worse as such but it is not getting better also. It is a tense status quo. Information coming out of Manipur is also a problem because we are not able to travel.”

The Manipur government on Thursday extended the mobile internet ban across most parts of the state by five more days till November 13. The state government said the decision was taken “as there is apprehension that anti-social elements might use social media extensively for transmission of images, hate speeches and video messages inciting the passions of the public which might have serious repercussions for the law and order situation in the state”.

Primarily an agriculture-based economy with 77 per cent of Manipur under forecast cover, sectors like handloom, handicraft, and sericulture-based industries contribute significantly to the state’s income.

“In Manipur, there are a few big health care units and hotels. Health care units are not impacted that much but they used to get patients from Myanmar earlier which has stopped now. Hotel industry is impacted badly. There was a growing startup ecosystem in Manipur which has also been impacted,” the official said.

A second industry official also requesting anonymity said the ethnic conflict was going to have a long-term impact on the region. “Manipur is the entry point for all the connectivity to South-East Asia we are talking about such as the Trilateral Highway and the Trans Asian Railway. Already these projects are delayed and we were hoping they will be operational in a year’s time. But even if they become operational, the impact in terms of perception that this situation has created will last for a long time.”