It could be a case of misquoting by the reporter, unless the official quoted is a bureacrat who is not a scientist and thus could make such misleading comments (usually senior DST officials are scientists themselves). It is not possible that "population growth and encroachment" can "make areas susceptible to earthquakes", as you said, and what my limited knowledge as a qualified geologist says. I think the actual comment could have been something to do with how the damage could be more extensive in times of earthquakes because of population growth and encroachment - something that is waiting to happen in Guwahati when the next Big Quake happens.
Utpal Borpujari Re: http://groups.yahoo.com/group/assamonline/message/4065