Assam’s Economic Odyssey: Balancing Growth with Resilience

Himangshu Ranjan Bhuyan

(hrbhuyancolumnist@gmail.com)

Assam stands as a vibrant testament to India’s northeastern promise, where the rush of mighty rivers converges with the quiet toil of tea gardens and the hum of oil rigs. As of October 2025, the state’s economic narrative is one of striking duality: a remarkable ascent marked by a Gross State Domestic Product (GSDP) of Rs 6.43 lakh crore for 2024-25, reflecting a robust 15.2 per cent growth at current prices, juxtaposed against persistent vulnerabilities like devastating floods, a beleaguered tea sector, and an unemployment crisis gripping over 21 lakh educated youth. This interplay of progress and struggle defines Assam’s economic landscape, positioning it as a microcosm of ambition tempered by adversity. The state’s journey from the sluggish 3.3 per cent annual growth of the 1980s and 1990s to outpacing the national average of 9.9 per cent today is a story of strategic reinvention, yet the shadows of structural frailties loom large, demanding a delicate balance between harnessing growth and fortifying resilience.

The roots of Assam’s economic resurgence trace back to a deliberate pivot toward infrastructure and investment since the mid-2010s. Under Chief Minister Himanta Biswa Sarma’s stewardship, the state has orchestrated high-profile initiatives like the Advantage Assam 2.0 Investment and Infrastructure Summit in February 2025, attended by Prime Minister Narendra Modi. This event secured commitments worth billions, including Vedanta’s Rs 50,000 crore pledge for oil and gas exploration, underscoring Assam’s strategic allure as the gateway to Southeast Asia under the Act East Policy. The state’s real GSDP growth for 2024-25 stands at 7.94 per percent at constant prices, elevating its contribution to India’s GDP from 1.65 per percent in 2016-17 to nearly two per cent today. Per capita income has risen from Rs 1.39 lakh in 2023-24 to Rs 1.54 lakh, signalling gains in human development. Yet, these headline figures mask stark disparities. The rural-urban divide persists, with urban incomes significantly outstripping rural ones, where 69 per cent of the workforce remains tethered to agriculture. This uneven growth highlights a critical challenge: ensuring that economic expansion translates into widespread prosperity for Assam’s 31 million people.

At the core of Assam’s economic engine lie its extractive industries, particularly oil and gas, which have redefined the state’s fiscal landscape. Contributing 15 per cent of India’s crude oil and 14 per cent of its natural gas, Assam’s fields in Digboi and Duliajan sustain national energy security while generating royalties exceeding Rs 21,000 crore over the past three years. The Numaligarh Refinery Expansion Project, set to double capacity to six million tonnes per annum by 2026, and the North East Gas Grid, projected to channel 6.3 billion cubic metres of gas annually by 2030, are transformative. Private investments, such as Cairn Oil and Gas’s Rs 50,000 crore commitment, aim to unlock the Arakan Basin’s untapped reserves, potentially doubling crude output and creating one lakh jobs. Oil India Limited’s commissioning of India’s first green hydrogen plant in Jorhat blends fossil fuels with sustainable ambitions, while the Brahmaputra Cracker and Polymer Limited catalyses downstream petrochemical industries. However, this sector’s volatility, tied to global price fluctuations and geopolitical tensions, poses risks. A drop in Brent crude below $70 per barrel could slash royalties by 20 percent, straining state finances already burdened by a debt-to-GSDP ratio of 25 percent. Balancing this hydrocarbon boom with fiscal prudence and diversification is critical to sustaining Assam’s economic momentum.

Agriculture, the bedrock of Assam’s rural economy, embodies both resilience and fragility, employing nearly 70 percent of the population and contributing a third of GSDP. The state’s fertile lands support rice, jute, and the iconic tea estates sprawling across 3.2 lakh hectares. Tea, a cultural and economic cornerstone, produced 649.84 million kilogrammes in 2024, accounting for over 50 per cent of India’s total and generating Rs 3,000 crore in exports. Assam’s Orthodox and CTC varieties command a premium in markets from Russia to the UAE, bolstered by initiatives like the Tea Development and Promotion Scheme 2025-26. Yet, the sector faces an existential crisis. Climate-induced disruptions—erratic monsoons, heatwaves exceeding 35 degrees Celsius for over 130 days in regions like Majuli, and unseasonal floods—have slashed yields by up to 15 percent. Production costs have soared from Rs 80 per kilogram in 2010 to Rs 140 today, while realisations stagnate at Rs 145. Unsold lots at Guwahati auctions surged to 36 percent in 2025-26, up from 23 percent the prior year, forcing over 1.2 lakh small growers to accept Rs 13-15 per kilogram for green leaves against costs of Rs 19-20. The Assam Tea Planters’ Association has called for subsidies on gas and a minimum support price to avert closures. Beyond tea, agriculture faces stagnation, with growth dipping to 1.6 per cent in the 1990s from 2.6 per cent in the 1980s, hampered by low mechanisation and fragmented landholdings averaging 1.2 hectares. Modernising farming techniques, improving irrigation, and diversifying into high-value crops are essential to revitalise this sector.

The spectre of unemployment looms large over Assam’s economic framework. Despite official claims of a dip to 6.1 per cent in 2023-24, the Periodic Labour Force Survey pegs the rate at 1.7 per cent for those aged 15 and above, masking deeper fissures. Over 21.31 lakh educated youth are registered at employment exchanges as of February 2025, a sevenfold surge since 2022. Rural unemployment lingers at 1.5 per percent, but urban figures climb to 6.1 per percent, driven by a mismatch between skills and opportunities. Women’s labour force participation, at a dismal 20.3 percent, lags the national average, with many confined to informal, low-wage roles in tea gardens earning below Rs 200 daily. The state’s youth bulge, with 27 percent under 25, risks becoming a demographic liability without targeted skilling. The 2025-26 budget allocates Rs 2,500 monthly under the Chief Minister’s Jibon Prerana scheme to fresh graduates for a year, aiming to bridge this gap through exam preparation and entrepreneurial support. However, critics argue this covers only government college alumni, leaving 70 per cent of private institution graduates underserved. Scaling skill development, fostering industry-academia collaborations, and promoting entrepreneurship are vital to curbing the brain drain of skilled youth migrating to other states.

No analysis of Assam’s economy is complete without addressing the annual scourge of floods, which in 2025 inflicted damage exceeding Rs 5,000 crore and affected 6.5 lakh people across 21 districts by early June. The Brahmaputra and its tributaries, swollen by glacial melt from the Tibetan plateau and intensified monsoons delivering 85 per cent of annual rainfall in erratic bursts, submerge 39.58 per cent of the state’s land, far above the national flood-prone average of 10.2 per cent. This year’s deluge claimed 17 lives, destroyed 10,477 homes, and inundated 12,610 hectares of cropland, wiping out paddy harvests and livestock worth millions. Economic losses compound annually, with infrastructure breaches like breached embankments in Lakhimpur costing crores. The Assam State Disaster Management Authority reports an average inundation of 9.31 lakh hectares yearly, yet only 22 of 35 districts have comprehensive early warning systems. Climate change, coupled with upstream deforestation in Arunachal and Bhutan, accelerates siltation, raising riverbeds by two metres per decade. The human toll—3.6 lakh people in 223 relief camps—fosters cycles of debt and migration that hollow out rural economies. Long-term flood mitigation, integrating wetland restoration and smart embankments, requires Rs 10,000 crore over five years, alongside GIS and satellite-based predictive modelling.

The tourism sector, with Assam’s rich cultural heritage, wildlife sanctuaries like Kaziranga National Park, and scenic landscapes like Majuli, holds immense promise but remains underdeveloped. Inadequate infrastructure, limited promotion, and concerns over political instability in certain regions hinder growth. Investments in sustainable tourism, ecotourism, and improved connectivity could unlock this potential, generating employment and boosting local economies. Similarly, the industrial landscape is evolving, with petrochemicals, IT, and manufacturing gaining traction. The ‘Atmanirbhar Assam’ initiative aims to reduce external dependency and boost local production, but bureaucratic delays and inconsistent policy implementation challenge progress. Strengthening industrial policies and supporting micro, small, and medium enterprises are crucial for sustained growth.

Environmental sustainability is a pressing concern amid rapid industrialization and urbanization. Deforestation and habitat loss threaten Assam’s biodiversity, including endangered species like the one-horned rhinoceros and hoolock gibbon. Green initiatives, such as afforestation and renewable energy projects like Karbi Anglong’s clean energy hub, are steps forward, but balancing development with conservation remains a challenge. The 2025-26 budget, a Rs 2.63 lakh crore blueprint with a Rs 620 crore deficit, reflects pragmatism. It projects 15 per cent GSDP growth to Rs 7.42 lakh crore, allocating Rs 342 crore for tea workers’ aid, Rs 370 crore for youth nutrition, and Rs 550 crore for a proton therapy centre. Infrastructure investments, like the Bhutan-Bodoland-Bay of Bengal Corridor and ASSAMSAT, enhance trade and data-driven governance. Renewable energy subsidies align with net-zero goals by 2040, while own tax revenues, projected at Rs 34,823 crore, reflect a 13 per cent hike.

Looking ahead, Assam’s path demands diversifying beyond oil and tea into IT and agro-processing, potentially absorbing 5 lakh jobs by 2030. Fiscal sustainability hinges on curbing debt, projected to hit a 30 per cent debt-to-GSDP ratio by 2028 without reforms. Collaborative federalism, evident in PM Modi’s Rs 645 crore Sagarmala waterways pledge, offers leverage, but local ownership is paramount. With a sustained 15.2 per cent growth trajectory, Assam’s GSDP could reach $143 billion by 2030, rivalling mid-sized global economies. Yet, without addressing floods’ Rs 5,000 crore annual toll and unemployment’s youth drain, this promise risks fading. Policymakers must weave resilience into ambition, ensuring that Assam’s plenty translates into prosperity for all its people, balancing heritage with a horizon of inclusive growth.