Arunachal Pradesh is the largest state in the North East with a very low land man ratio. It is known for its forest resources. The per capita income of Arunachal Pradesh has been the highest among the North Eastern states in the recent years and it has been above all India average. The main constraint faced by the state is the lack of communication. CMIE index for infrastructure development for Arunachal is 44, the reference point is 100, the national average. It is basically a hilly state that interspersed among deep valleys and narrow gorges. Forest products and industries based on them are the lifeline of the state providing income and employment to a large section of the Arunachalis. The state is rural based with nearly 75% of its total workforce is engaged in agriculture (mainly shifting cultivation). The remaining workforce being basically concentrated in the gradually emerging tertiary sectors. The secondary sector employment is mainly in the forest-based industries and also carpet making. Tertiary sector employment is mainly in the government jobs.

The annual compounded growth rate of NSDP from 1980-81 to 1997-98 has been worked out at 15.78% at current prices and 7.82% at constant prices.

So far as sectoral growth is concerned, it has been observed that between 1980-81 to 1997-98, agriculture demonstrated a growth rate of 13.95% at current prices and 5.70% at constant prices. Similarly, manufacturing sector showed a growth of 10.70% at current prices and 8.8% at constant prices over the same period.

Per capita income of Arunachal Pradesh has been the highest among the North Eastern states in the recent years and it has been above all India average.