Economy of Sikkim

The economy of Sikkim is mainly based on agricultural and animal husbandry. Approx. 11% of the total geographical area is under agriculture. Agriculture is of the mixed type and still at the subsistence level rather than commercial level. The work force participation rate as per 1991 census is 40.44%. The female participation rate in Sikkim is also much higher than the national average. This is an important aspect if the hill economy, as productivity is low and hence all the able-bodied people are employed in agriculture and other activities. Cultivators account for the greater majority of the people in the state, their percentage is 57.84%. Agricultural labourers as a whole constitute only 7.81% of the workers in the state, house holds and other industries are negligible, but other worker (Tertiary Sector) at the state level represent a good percentage of population. The decreasing ratio of worker at the state level indicates the low level of economic diversification. The importance of agriculture can be judged by the high percentage of population approx. 65% engaged in it. Animal husbandry is an integral part of the house hold economy of the region. There are certain house hold industries also which substantially adds to house hold incomes. The past one and half decade has witnessed a tremendous upward swing in various development programs giving a new thrust to the Sikkim economy. This process has increased wage employment opportunities. Though most of the inhabitants are basically agriculture, they have diversified into tertiary jobs such as Government services.

Twenty eight years back, when Sikkim became the 22nd State of India the state had very limited development space both in economic and political sense. The onset of democracy and building of economic structures changed the entire economic profile of Sikkim. From a traditional economy with a feudal slant, Sikkim has chosen for itself an accelerated path of eco-friendly sustainable development. The key objectives of the development strategy was to alleviate poverty, create income generation opportunities by empowering the people through education and employable skills and building the requisite infrastructure: The aim was to build on state’s strength, benefit from the post-liberalisation spurt in growth in the rest of the country and, with judicious use of modern technology. As a result, Sikkim has emerged as a modern and robust state of today. The state’s total population is only around 5.5 lakh and nominal income has been growing at an impressive annual rate of around 14.5 per cent since 1989-90; however, Sikkim has the fifth highest incidence of poverty among the states, with 41.4 per cent of the population below the poverty line (1993–94). Furthermore, with 38 per cent of the population below the age of 15, the number of young people entering the workforce and looking for jobs in industry and services will increase in the near future. A stagnant agricultural sector combined with steadily declining industrial activity has severely limited employment opportunities outside the government. Public administration has, by default, become the propelling force behind income growth. Further, growth that has taken place has been regionally imbalanced, with the North District still remaining relatively backward in comparison with the other three districts. The cornerstone of the development strategy pursued so far has been a super-active government in all areas of economic activity. This has put the government under severe fiscal stress. Expenditure on wages and salaries (including pensions) and interest payments pre-empt almost half of total government expenditure.

Macro-economic trend: This is a chart of trend of gross state domestic product of Sikkim at market prices estimated by the Ministry of Statistics and Programme Implementation with figures in millions of Indian Rupees.

Sikkim's gross state domestic product for 2004 is estimated at $478 million in current prices. Sikkim's economy is largely agrarian, based on traditional farming methods, on terraced slopes. The rural populace grows crops such as cardamom, ginger, oranges, apples, tea and orchids.[3] Rice is grown on terraced hillsides in the southern reaches. Sikkim has the highest production and largest cultivated area of cardamom in India. Because of the hilly terrain, and lack of reliable transportation infrastructure, there are no large-scale industries. Breweries, distilleries, tanning and watchmaking are the main industries. These are located in the southern reaches of the state, primarily in the towns of Melli and Jorethang. The state has an impressive growth rate of 8.3%, which is the second highest in the country after Delhi.

Elaichi or Cardamom is the chief cash crop of Sikkim. In recent years, the government of Sikkim has promoted tourism. Sikkim has a vast tourism potential and by tapping into this the state has grossed an earnings windfall. With the general improvement in infrastructure, tourism is slated to be the mainstay of Sikkim's economy. A fledgling industry the state has recently invested in is online gambling. The "Playwin" lottery, which is played on custom-built terminals connected to the Internet, has been a commercial success, with operations all over the country. Among the minerals mined in Sikkim are copper, dolomite, limestone, graphite, mica, iron and coal. The opening of the Nathula Pass on July 6, 2006 connecting Lhasa, Tibet to India is expected to give a boost to the local economy, though the financial benefits will be slow to arrive. The Pass, closed since the 1962 Sino-Indian War, was an offshoot of the ancient Silk Road, which was essential to the wool, fur and spice trade.