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An Overview of Industrial Development in Rajasthan

Easy access to largest consumer markets, Rajasthan touches six major states of the

Northern, Western and Central India. It is a natural corridor between the wealthy Northern

and the prosperous Western states of the country, which makes and important trade and

commerce centre. In terms of employment, the business and economy of Rajasthan is

predominantly pastoral and agricultural. Business and economy of Rajasthan include

agriculture, industries, mining and tourism as well.

Since 1950, Rajasthan has been the lucrative hub of industrialization. Illustrious Business

Communities like the Singhanias, the Birlas and the Shrirams established large scale

business enterprises in the state of Rajasthan. Thus Singhania's JK Synthetics and Shriram's

Company- Shriram Rayons came up in the year 1962 and 1965 respectively. National

Engineering Industries and the Chambal Fertilizers which belong to the Birla group of

Companies was set up in 1950. At present almost all prominent Business masters like the

Modis, Bangurs, Poddars Thapars, Goenkas, and Rankas have established their industrial

units in the gigantic state of Rajasthan. Over the years 212 industrial regions have

developed embracing about 42,000 acres of land. Industrial Parks with the added advantage

of modern infrastructure system like telecommunications, electricity, water, etc have also

come up.

The Major Industrial estates of Rajasthan are Shahajahanpur, Khushkhera, Neemrana,

Behror, Jurhera in Bharatpur. The Bhiwadi Industrial Development Authority, the industrial

township was set up by RIICO recently in Rajasthan. Other industrial sites include Udaipur,

Abu Road, Banswara in South Rajasthan. All these areas are related to mineral based

projects. The industrial regions of Malviya Nagar, Sitapura and Vishwakarma in Jaipur

boast of superior social infrastructure and Sitapura houses the Export Promotion Industrial

Park. Steel and Textile Industries are located in the Jodhpur and Bhilwara regions

respectively. The state capital Jaipur has 19 industrial estates and Kota has 14 industrial

estates. These areas have rich deposits of sandstone and limestone.

RIICO along with the State Government has developed several Growth Centers as Sirohi,

Jhalawar, Sikar (Palsana), Bikaner (Kahara and Karnal), Dholpur, Naguar and Bhilwara.

The main Industrial areas developed are: Bhiwandi, Industrial Area, Neemrana,

Khushkhera, Chopanki, Sarekhurd, Sotanala, Shahjahanpur, Behror. Rajasthan offers 277

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industrial areas that provide a ready to use base with supportive infrastructure facilities. The

Rajasthan State Industrial Development and Investment Corporation Limited (RIICO) has

played a major role in giving an impetus to industrialization in the state as well as

developing industrial infrastructure.

The impressive scorecard of developing about 300 industrial areas, financial

assistance to about 900 projects, development of 35,000 acres land for industrial

purpose, sanction of over Rs. 15,000 million to industrial, commercial, educational and

infrastructure projects, catalyzed investment of around Rs. 50,000 million in

Rajasthan through term lending and employment opportunities for about 90,000

persons, speaks of achievements made.

2.1 Economy of Rajasthan

�Situational Analysis Table-1

Strengths

Abundance of land and natural resources

Huge manpower base

Widespread mineral/oil/gas base

Huge livestock base

Rich heritage and natural beauty

Better law and order situation

World-wide recognition in niche products

Limitations

Arid and semi-arid climate

Mismatch between existing and required

skills

Availability of water

Lack of world class training/education

infrastructure

Huge fiscal deficit and financial liabilities

Opportunities

Global hub for niche products, like gems

and jewellery, textiles

Energy-base for the region

Supply-base of highly-skilled service

professionals, including for manpower

export

Global supplier of medicinal plants, herbs,

spices and dairy products

Global destination for heritage tourism

Challenges

Fiscal management

Water conservation, watershed

development, and mapping production

activities with water requirement and

availability

Skill development and mapping existing

skill base with production activities

Improvement in health and education, so

as to achieve better productivity

Development of infrastructure for

economic activities

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According to Finance Department of Rajasthan Government ‘s published Statement on Six

Monthly Review 2010-11 (period ended on 30th September,2010) The state’s gross

domestic product (GDP) grew at an impressive compound annual growth rate (CAGR) of

14.1 % between 2002-03 and 2008-09 to reach US$ 41.74 billion. Rajasthan’s economy is

primarily agricultural and pastoral representing one-third of Rajasthan’s GDP.

Rajasthan's Gross Domestic Product (GDP) may have shown a dismal growth of 2.5% last

fiscal, but a turnaround is expected 2010, following promises of a healthy growth rate in

most sectors of the state. The surprise in the pack is the primary sector, which has outpaced

all other sectors .The macro-economic trends for the first six months of the financial year

2010 shows that agriculture production is likely to double this year, following a bountiful

rain. However, in real terms, the state's GDP has proved to be laggard. It was Rs. 1,48,200

Crore last year at the constant prices (1999-2000), this financial it grew at just 2.51% this

year to Rs. 1,44,568 Crore. Riding on the generosity of rain gods, the food grain production

in the kharif season is likely to be 71.34 Lac metric ton (MT) while it was only 37.62 Lac

MT in 2009-10, an increase of 90%. This is despite the fact that total sowing area was less

than last year's. This year, the total sowing area was 94.62 Lac hectares in comparison to

96.07 Lac hectares last year. Similarly, the oil seeds production, too, increased by more than

50% to 21.82 Lac MT, while it was only 14.52 Lac MT last year.

In contrast, investment in the industrial sector was up by 15.48% to Rs. 883 Crore against

Rs.764 Crore for the corresponding period last year. However, a better way to judge the

industrial growth will be the registration of new small-scale industries and employment

generation. More than 6,000 units opened up this year, generation additional employment of

43,044 persons compared to 5,682 such units and employment of 36,272 persons. The

mining sector also registered a remarkable growth, generating Rs.727.87 Crore worth

revenue in the first six months, while last year for the same period the revenue collection

was Rs. 532.81 Crore, which is an increase of 35.67%. The State governments have

formulated their budgets for 2009-10 against the background of the knock on effect of

global financial crisis on the Indian economy. To address the overall macroeconomic

slowdown, the Central Government allowed the States to raise additional market

borrowings to the extent of 0.5 % of GSDP during 2008-09 and increase the limit of fiscal

deficit to 3.5 % of GSDP for undertaking capital expenditure, thereby providing them

additional fiscal space. Further in the Union Budget 2009-10, States have been allowed to

raise additional market borrowings of 0.5 % of GSDP, thus increasing the limit of GFD to

4.0 % of GSDP during 2009-10.

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Table-2: Estimates of Gross / Net State Domestic Product (GSDP/NSDP)

and Per Capita Income (PCI) of Rajasthan

Ye a r C urre nt P ric e s C o ns ta nt(19 9 9 -2 0 0 0 )P ric e s

GS D P ( La kh R s . ) V arit io n ( P e rc e nt ) GS D P ( La kh R s . ) V a rit io n ( P e rc e nt )

1999-2000 8 2 7 19 7 1 8 2 7 19 7 1

2000-01 8 2 4 3 4 9 1 -0.34 8 10 5 9 5 9 -2.01

2001-02 9 17 7 0 8 8 11.33 8 9 8 6 8 7 9 10.87

2002-03 8 8 5 5 0 0 5 -3.51 8 0 9 7 3 6 3 -9.9

2003-04 1116 0 6 4 5 2 6 .0 4 10 4 18 8 9 1 28.67

2004-05 117 2 7 4 3 1 5.08 10 2 2 5 8 16 -1.85

2005-06 12 8 6 4 4 0 4 9.69 110 2 9 3 4 1 7 .8 6

2006-07 15 3 3 4 3 5 1 19.2 12 4 3 3 9 2 0 12.73

2007-08 P 17 6 4 2 0 2 1 15.05 13 5 6 5 3 6 4 9.1

2008-09 Q 2 0 16 7 5 3 0 14.32 14 4 5 6 8 3 8 6.57

2009-10 A 2 19 7 6 8 8 0 8.97 14 8 2 0 0 3 7 2.51

Ye a r C urre nt P ric e s C o ns ta nt(19 9 9 -2 0 0 0 )P ric e s

N S D P ( Lakh R s . ) V a rit io n ( P e rc e nt ) N S D P ( La kh R s . ) V a rit io n ( P e rc e nt )

1999-2000 7 4 17 3 8 5 7 4 17 3 8 5

2000-01 7 2 7 6 6 2 4 -1.9 7 17 6 4 0 7 -3.25

2001-02 8 0 8 7 9 6 9 11.15 7 9 9 3 6 0 4 11.39

2002-03 7 6 6 0 4 5 7 -5.29 7 0 3 3 3 18 12.01

2003-04 9 8 2 3 5 9 9 28.24 9 2 7 12 19 31.82

2004-05 10 2 3 7 5 9 6 4.21 9 0 4 4 4 5 9 -2.45

2005-06 1113 2 2 8 5 8.74 9 7 2 7 6 7 2 7.55

2006-07 13 3 4 7 5 6 4 19.9 110 0 3 9 0 9 13.12

2007-08 P 15 3 6 9 7 3 5 15.15 12 0 2 6 7 2 6 9.3

2008-09 Q 17 6 0 4 4 4 3 14.54 12 8 4 9 5 8 5 6.84

2009-10 A 19 15 3 9 0 7 8.8 13 13 3 14 7 2.21

Ye a r C urre nt P ric e s C o ns ta nt(19 9 9 -2 0 0 0 )P ric e s

P C I ( La kh R s . ) V a rit io n ( P e rc e nt ) P C I ( La kh R s . ) V a rit io n ( P e rc e nt )

1999-2000 13 6 19 13 6 19

2000-01 13 0 2 0 -4.4 12 8 4 0 -5.72

2001-02 14 0 9 8 8.28 13 9 3 3 8.51

2002-03 13 12 8 -6.88 12 0 5 4 -13.49

2003-04 16 5 0 7 2 5 .7 3 15 5 7 9 29.24

2004-05 16 8 7 4 2.23 14 9 0 8 -4.31

2005-06 18 0 0 8 6.72 15 7 3 6 5 .5 6

2006-07 2 12 0 3 17.74 17 4 8 0 11.08

2007-08 P 2 3 9 8 6 13.13 18 7 6 9 7.37

2008-09 Q 2 7 0 0 1 12.57 19 7 0 8 5

2009-10 A 2 8 8 8 5 6.98 19 8 0 6 0.5

P: Provisional, Q: Quick, A: Advance

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2.1.1 Rajasthan’s GSDP

According to Indian Brand Equity Foundation (IBEF) Rajasthan, at current prices, the Gross

State Domestic Product (GSDP) of Rajasthan was about US$ 46.4 billion in 2009-2010.

The cumulative average annual GSDP growth rate, from 1999-2000 to 2009-2010 has been

around 10.1 percent.

Rajasthan GSDP(Figure-1)

Source-IBEF

2.1.2 Rajasthan’s NSDP

According to Indian Brand Equity Foundation (IBEF) Rajasthan, at current prices, the Net

State Domestic Product (NSDP) of Rajasthan was about US$ 40.4 billion in 2009-2010.

The cumulative average annual NSDP growth rate between 1999-2000 and 2009-2010 was

about 9.8 %.

Rajasthan NSDP(Figure-2)

Source -IBEF

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2.1.3 Percentage distribution of GSDP

The tertiary sector has an increasing share in Rajasthan’ Economy. In 2009-2010, the tertiary

sector contributed 45.2% to the state’s GSDP at current prices, followed by secondary sector

(30.0%). The share of the secondary sector in GSDP was driven by manufacturing that registered a

growth of 9.7 % between 1999-2000 and 2009-2010. The share of the primary sector in GSDP was

24.7 % in 2009-2010 vis-à-vis 32.0 % in 1999-2000, agriculture contributing

Percentage distribution of GSDP(Figure-3)

42.2

25.8

32.0

45.2

30.0

24.7

CAGAR

11.0 %

11.9 %

7.5 %

1999-2000 2009-2010

Tertiary sector

Secondary sector

Primary sector

2.1.4 Rajasthan’s per capita GSDP

In 2009-2010, Rajasthan’s per capita GSDP at current prices was US$ 699.2. The per capita

GSDP at current prices increased at a CAGR of 7.9 % from 1999-00 to 2009-10

Rajasthan’s Per capita GSDP in US $(Figure-4)

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2.2 Industries in Rajasthan.

The natural resources, policy incentives and infrastructure in

the state are favourably suited for investments in sectors such

as cement, IT and ITeS, ceramics, tourism, automotive and

agro-based industries.

Bureau of Investment Promotion (BIP) and Rajasthan

Industrial Development and Investment Corporation (RIICO)

are responsible for promoting investments and developing

industrial infrastructure in the state.

The Government of Rajasthan is promoting development of

several SEZs across the state for sectors such as gems and

jewellery, handicrafts, IT, electronics and textiles.

2.3 Rajasthan’s exports trends

Rajasthan’s exports increased at a CAGR of about 19.5 % between 2001-02 and 2008-2009.

The state’s major exports include textiles, handloom, handicrafts, gems and jewellery,

minerals and auto components. In order to boost exports from Rajasthan, the State

Government is laying emphasis on developing export promotion industrial parks (EPIP).

“ExpocityJaipur”, which serves as an international habitat and convention centre, has been

developed by JaipurTrade Expo Centre Private Limited. It is spread over an area of 26,400

sq m and houses multi-utility homes, state-of-the-art business centres,(Figure-5)

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Key industries in Rajasthan

•Cement

•Auto and auto-components

•IT and ITeS

•Ceramics

•Mining

•Tourism

•Textile

•Agro-based industry

•Gems and jewellery

•Marble

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2.4 Industrial infrastructure at a Glance

Infrastructure Primary industry Details

Theme parks

Multi-industry

RIICO is developing theme parks with a special set of infrastructure and facilities for establishing industries in line with the designated theme. It has established a satellite earth station in the Sitapura IT park of Jaipur along with the Software Technology Parks of India (STPI).

Export promotion industrial parks (EPIP)

Multi-product

EPIPs have been set up at Sitapura (Jaipur), Neemrana (Alwar) and Boranada (Jodhpur). The EPIP in Jaipur is among the largest export parks in Northern India. The units operating here have export orders accounting for, at least, 33 % of their total turnover.

SEZs

Multi-product

The state is developing SEZs for industrial growth; as of July 2010, formal approval had been given to eight SEZs, in-principle approval had been given to 11 SEZs and there were seven notified SEZs. A multi-product SEZ is being developed by Mahindra World City (Jaipur) Limited, a joint venture of Mahindra Gesco Limited and RIICO Limited. This public private partnership initiative envisages an investment of about US$ 241.1 million

SEZ for IT

IT

A state-of-the-art special economic zone has been developed by Mahindra and Mahindra with an investment of US$ 244 million. It has attracted many domestic investors such as Infosys and Wipro as well as substantial investment from foreign investors.

Inland Container Depot (ICD)

Logistics

For ease of movement of cargo, ICDs have been set up at Jaipur, Jodhpur, Bhiwadi and Bhilwara.

Spices park

Food processing

A spices park is proposed to be set up at Ramganj Mandi for processing, packaging and export of spices (especially coriander) from Rajasthan. The park will be set up in an area of 30 acres at a total cost of around US$ 3 million

Footwear Design & and Development Institute (FDDI)

Footwear

A FDDI is proposed to be set up at Jodhpur at an estimated cost of around US$ 22 million. This

Institute will provide specialised training in footwear

technology and design.

Skill development

centre

ITES

A skill development centre will be set up by the Confederation of Indian Industry (CII) in conjunction with the State Government to provide skills training for the unemployed youth of Rajasthan. The location will be decided by the State Government in conjunction with CII. Alwar and Jaipur are two of the locations being considered.

Industrial infrastructure up- gradation centre

An industrial infrastructure up-gradation centre will be set up, possibly along the Delhi-Mumbai Industrial Corridor (DMIC). A detailed project report and the exact location is being finalised by the State Government.

2.5 SEZs and industrial clusters (Figure-6)

Index

Cement grade limestone

Automotive

Tourism

IT & ITeS

Handicrafts ,gems &

jewellery

Chemicals

Employment in Rajasthan

Small scale industry forms the backbone of industri

in Rajasthan. In fact, the small scale industry gen

medium counterparts Over 70

dominated by small scale industries: Jaipur, Bhilwa

39%, 18%, 9% and 4% of the State’s industrial outpu

driving industrial growth are Ajmer, Alwar, Barmer, Bharatpur, Bhilwara,

Chittorgarh, Jaipur, Jodhpur, Kota and Udaipur.

2.6 Industry Scenario in Rajasthan

To revive industrial growth in Rajasthan, the State

mechanism for attracting investment; the Bureau of

State Industrial Development and Investment Corpora

Corporation (RFC), and Project Development Corporat

Government has also put in place investor friendly

Healthcare Policy, the Hotel Policy, the Power Poli

and the Biotech Scheme.

Also, a three-tier Single Window Clearance mechanism exists to ex

of industrial projects: the Board of Infrastructure

the Chairmanship of the Chief Mini

Empowered Committee (SLEC) under the Chairmanship o

by the District Level Empowered Committee under the

Commissioner.

Small scale industry forms the backbone of industrial activity and employment generation

in Rajasthan. In fact, the small scale industry generates more employment than its large and

medium counterparts Over 70 % of Rajasthan’s industrial output comes from four re

dominated by small scale industries: Jaipur, Bhilwara, Udaipur and Ganganagar account for

39%, 18%, 9% and 4% of the State’s industrial output, respectively. The key districts

wth are Ajmer, Alwar, Barmer, Bharatpur, Bhilwara, Bikaner, Bundi,

Chittorgarh, Jaipur, Jodhpur, Kota and Udaipur.(Figure-7)

Industry Scenario in Rajasthan

To revive industrial growth in Rajasthan, the State Government has created an institutional

mechanism for attracting investment; the Bureau of Investment Promotion (BIP), Rajasthan

State Industrial Development and Investment Corporation (RIICO), Rajasthan

Corporation (RFC), and Project Development Corporation are fully operational. The State

Government has also put in place investor friendly sector specific policies, like the

Healthcare Policy, the Hotel Policy, the Power Policy, the IT Policy, the Tourism Policy,

tier Single Window Clearance mechanism exists to expedite implementation

of industrial projects: the Board of Infrastructure Development and Investment (BIDI) under

the Chairmanship of the Chief Minister of Rajasthan, followed by the State Level

Empowered Committee (SLEC) under the Chairmanship of the Chief Secretary, followed

by the District Level Empowered Committee under the Chairmanship of the Deputy

al activity and employment generation

than its large and

of Rajasthan’s industrial output comes from four regions

ra, Udaipur and Ganganagar account for

t, respectively. The key districts

Bikaner, Bundi,

Government has created an institutional

Investment Promotion (BIP), Rajasthan

tion (RIICO), Rajasthan Financial

ion are fully operational. The State

sector specific policies, like the

e Tourism Policy,

pedite implementation

Development and Investment (BIDI) under

ster of Rajasthan, followed by the State Level

f the Chief Secretary, followed

Chairmanship of the Deputy

The Resurgent Rajasthan initiativ

Rajasthan, and going forward, is expected to drive

well. A sector-wise break-up of the

Rajasthan initiative is presented

Investments through Resurgent Rajasthan (Rs. Crore)

Thus while Rajasthan has factor advantages in a num

policies and support, the Stat

unemployment rate, difficult working conditions, e

entrepreneurship and skewed economic development.

2.6.1 Identification of Growth Engines

With the above understanding of the State and the industrial scenario th

imperatives for identification of sectors for this

1. Sectors (both formal and informal sectors) driving

2. Sectors with high employment potential

3. Sectors with the requirement of skilled human resources

The parameters focused on while studying the indust

presence of the industry in the State, supplier lin

of trained manpower, availability and quality of training centre, time t

employment opportunities. The industries identified on the basis of the above

are: Auto & Engineering, Healthcare, Textiles, Repa

Gas, Food processing, Tourism and Hospitality, Handloom

and IT/ITES.

Cement

SEZ

Infrastructure

Oil & Gas

Power

Engineering

Tourism

Healthcare

Textile

Education

IT

Food processing

Gems & Jewellery

Handicraft etc.

Others

The Resurgent Rajasthan initiative has additionally brought significant investments

Rajasthan, and going forward, is expected to drive the secondary and tertiary sectors as

up of the investment proposed to be made through the Resurgent

Rajasthan initiative is presented below (Figure-8)

Investments through Resurgent Rajasthan (Rs. Crore)

Thus while Rajasthan has factor advantages in a number of sectors backed by favorable

policies and support, the State faces challenges from various dimensions such as

unemployment rate, difficult working conditions, early stage of industrial culture, need for

entrepreneurship and skewed economic development.

Identification of Growth Engines

tanding of the State and the industrial scenario therein, the key

imperatives for identification of sectors for this study were:

Sectors (both formal and informal sectors) driving the Rajasthan economy

Sectors with high employment potential

e requirement of skilled human resources

The parameters focused on while studying the industries were market linkage, historical

presence of the industry in the State, supplier linkage, infrastructure adequacy, availability

availability and quality of training centre, time taken to train, and the

The industries identified on the basis of the above

are: Auto & Engineering, Healthcare, Textiles, Repair servicing, Mines & Minerals, Oil &

Food processing, Tourism and Hospitality, Handloom and Handicraft, Construction,

Cement

SEZ

Infrastructure

Oil & Gas

Power

Engineering

Tourism

Healthcare

Textile

Education

IT

Food processing

Gems & Jewellery

Handicraft etc.

Others

50618

31310

29619

10000

9824

7081

5312

4610

3164

3118

2346

2183

1400

1033

989

e has additionally brought significant investments into

the secondary and tertiary sectors as

to be made through the Resurgent

ber of sectors backed by favorable

e faces challenges from various dimensions such as

arly stage of industrial culture, need for

tanding of the State and the industrial scenario therein, the key

ries were market linkage, historical

kage, infrastructure adequacy, availability

aken to train, and the

The industries identified on the basis of the above parameters

ir servicing, Mines & Minerals, Oil &

and Handicraft, Construction,

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Overview of Industrial Promotion of Rajasthan at A Glance (Chart 1 & Chart 2)

Chart -1

Parameter Rajasthan All-states Source Economy

GSDP as a percentage of all

states GSDP 4.5 100.0 CMIE, as of 2007-08, current prices

Average GSDP growth rate (%)*

11.5 11.8 CMIE, 2000-01 to 2007-08, current

prices Per capita GSDP (US$) 684.9 992.5 CMIE, as of 2007-08, current prices Physical infrastructure

Installed power capacity (MW)

5,050.4 159,398.5 Central Electricity Authority, as of March 2010

GSM cellular subscribers (No)

25,487,398 456,586,162 Cellular Operators Association of India, as of June 2010

Broadband subscribers (No) 145,449 4,981,976 As of October 2008 National highway length (km)

5,585 70,548 Ministry of Road Transport & Highways, Annual Report 2008-09

Airports (No) 6 133 Airport Authority of India Social indicators

Literacy rate (%) 60.4 64.8 Census of India, 2001 Birth rate (per 1,000 population)

27.5 22.8 Ministry of Health and Family Welfare, RHS Bulletin, March 2008

Ease of doing business

FDI inflows (US$ billion)

0.5

120.2

Department of Industrial Policy and Promotion, April 2000 to May 2010

Outstanding investments (US$ billion

53.6

1,972.6

CMIE, as of March 2010

Industrial infrastructure

PPP projects (No)

54

515

www.pppindiadatabase.com

SEZ (No)

7 363 Notified as of July 2010, www.sezindia.nic.i

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Parameter

Rajasthan Government

Policy support

Sectors with specific policies

Healthcare, biotechnology, IT and ITeS, tourism, non-conventional energy

Availability of labour

Adequate skilled labour available

Chart -2

2.7 Overview of Industrial Policy of Rajasthan

Rajasthan has been in the forefront of Economic Reforms. It was the first State in the

country to adopt the International Competitive bidding route for setting up power projects.

It was also the first in the country to announce a State Road Policy, facilitating the entry of

private enterprise in the Roads sector. A new, simplified Sales Tax Act has been introduced

by the State Government. The Mineral, Marble and Granite policies of 1994 have promoted

scientific exploration and exploitation of the State's rich minerals. The Industrial Policy

1994 has brought about a significant change in its investment climate. The Rural Non Farm

Policy of 1995 - the first of its kind in the country - has helped focus efforts on growth and

employment through rural industrialisation.

With a series of policy initiatives taken in the last few years, most roadblocks to the private

sector's entry in Infrastructure have been removed. The State is poised for significant

developments in the Power Sector. The prospects for development of solar energy are

promising. There are indications of a significant oil and natural gas reserve, which could

change the face of Western Rajasthan's economy.

Rajasthan is now among the six fastest growing States of the country. Its Eighth Plan Outlay

constituted an increase of 283% over that of the Seventh Plan. During the past five years the

average growth rate of investment in the large and medium sector has been 33% and in the

SSI sector over 15%. Over the same period, exports from the State have grown at an annual

average rate of 53%.

The experience of implementing the State's 1994 Industrial Policy has also brought to light

certain deficiencies and practical problems, which need to be redressed. There are areas like

Infrastructure and Human Resource Development which require even greater attention than

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has been accorded in the past. The New Industrial Policy of the State is thus an exercise to

reflect these developments and to launch new initiatives to take advantage of the emerging

opportunities.

2.7.1 Objectives

The principal objective of the new Policy is to make Rajasthan the most preferred State for

investment in the identified sectors and to ultimately achieve global competitiveness. While

governed by this basic goal, the Policy will lay special emphasis on accelerating the overall

pace of Industrial growth, increasing employment opportunities, improving productivity,

ensuring sustainable development and strengthening the SSI, Tiny and Cottage Industry

sector.

2.7.2 Strategy

1. The above objectives will be achieved by adopting a strategy which enables focused

growth. Thus, the new strategy envisages development of clusters offering economies of

agglomeration and thrust sectors.

2. The task of improving infrastructure would be given the highest priority. The plans for

infrastructure development will take into account the resource endowment and the

growth potential of each area.

3. Special emphasis will be given to the development of Thrust sectors, which have been

identified keeping in view their infrastructural requirements, growth potential and the

capacity to generate employment.

4. Simplification of rules and procedures, timely and smooth delivery of services will

receive continued attention. Special efforts will be made for developing Government -

Industry partnership in the implementation of the Policy.

5. Greater emphasis will be laid on development of human resources for emerging

requirements of industry.

6. The basic approach of all the initiatives will be to encourage increasingly greater

participation of private enterprise in the State's economic growth.

2.7.3 Infrastucture

The overall approach towards the development and up-gradation of infrastructure will be a

combination of optimum utilization of the State's resources and involvement of the private

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sector. Specific measures will be taken to develop. Sectoral Clusters taking into account the

needs of the targeted industry.

2.7.4 Board of Infrastructure Development and Investment

The Board of Investment has been reconstituted as the Board of Infrastructure

Development and Investment to ensure greater focus on industry-related infrastructure. It

will ensure formulation of perspective plans for different regions, inter-sectoral co-

ordination and effective monitoring for timely provision of facilities in industrial areas.

2.7.5 Project Development Corporation

Based on the Memorandum of Understanding signed with Infrastructure Leasing and

Financial Services Limited (IL&FS) and Housing Development and Finance Corporation

(HDFC) a Project Development Corporation (PDCOR) has been set up in the private sector,

with equity participation by the State Government. The company will offer Investment

Banking Reports on commercially profitable projects tie up finances and offer projects for

implementation to prospective investors.

2.7.6 Establishment of Business Centres

In important industrial areas of the State, establishment of Business Centres in the private

sector will be encouraged. Rajasthan State Industrial Development and Investment

Corporation Ltd. (RIICO) will provide land and/or buildings for these Centres where

facilities like office and conference space, telephone, fax and photo copying facilities etc.

would be available to entrepreneurs.

2.7.7 Special Industrial Complexes

Special Industrial Complexes are being developed in the State by RIICO to meet the

requirements of specific industries, particularly of thrust sectors, at the following locations :

1. Gems & Jewellery EPIP & Gem Park, Jaipur

2. Hosiery Chopanki, Bhiwadi

3. Auto Ancillary Ghatal (Bhiwadi) & Sitapura (Jaipur),

4. Ceramics Khara, (Bikaner)

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5. Software Technology EPIP, (Jaipur)

6. Electronics & Telecomm. Kukas, (Jaipur)

7. Textiles Bhilwara, Sanganer, Sitapura, Pali, Jodhpur, Balotra

8. Agro Industries IGNP Area

9. Leather Manpur - Macheri

10. Wool Industries Beawar, Bikaner

11. Handicrafts Shilpgram, (Jodhpur and Jaisalmer)

12. Dimensional Stone Kishangarh, Udaipur, Chittorgarh

2.7.8 Other Related Aspects

1. Efforts will be made to reduce project implementation time through provision of

essential infrastructure facilities like roads, power, street lights and water supply. An

industrial area will be declared as developed after these specific facilities have been

provided. Service charges will be recovered only with effect from the date of

declaration of the industrial area as developed. Missing links in the existing industrial

areas would be identified and steps taken to provide the required facilities.

2. Efforts would be made to provide social infrastructure facilities like housing, schools,

hospitals/dispensaries, shopping centres etc. in important industrial areas. Some of

the industrial areas would be developed as industrial townships.

3. The Industrial Complexes being developed in the National Capital Region of the

State would be further strengthened in terms of infrastructure facilities.

4. The entire belt around N.H.8 from Jaipur to Bhiwadi would be taken up for

integrated industrial development. A blue print for development of industrial

townships in this belt would be prepared keeping in view the increased flow of

investments in this region.

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2.7.9 Development of Integrated Industrial Parks (IIPs) and Industrial Model Towns

( IMTs)

1. Development of Integrated Industrial Parks (IIPs) as joint venture projects with

RIICO, or in the private sector will be actively encouraged by undertaking the

following measures:

(a) Formulation of schemes for development of IIPs in the private sector on BOT

(Build-Operate-Transfer) or BOOM (Build-Own-Operate-Maintain) basis, while

dovetailing them with the overall development plans of the region.

(b) Encouraging promotion of IIPs through equity participation by RIICO and

assistance from other agencies of the Government.

(c) Devising a policy for allotment of land to private sector on the basis of a

transparent mechanism.

(d) Concessions available to industrial units set up in RIICO's industrial areas would

also be available to units located in the IIPs and Industrial Parks in the Private

Sector

2. Development of industrial areas in the private sector was earlier prohibited within 10

Kms radius of RIICO's industrial areas; this distance has now been reduced to 5 Kms.

Rajasthan Industrial Areas Allotment Rules, 1959 have been amended to facilitate the

development of industrial areas / estates in the private sector.

2.7.10 Land Conversion

Despite efforts made in the past, entrepreneurs have been facing difficulties in securing

conversion of land from agricultural to industrial. To resolve this problem, provision has

been made for automatic conversion of land upto 5 hectares. On expiry of 30 days from the

date of application for conversion to the appropriate Revenue authority the conversion shall

be deemed to have taken place and the concerned Revenue Authority/GM, DIC will issue a

certificate of deemed conversion. The concerned Tehsildar/Gram Panchayat shall make

necessary entries in the land records within 7 days.

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2.7.11 Maintenance of Industrial Areas

1. Proper upkeep and maintenance of the existing industrial areas will be ensured by RIICO.

Wherever possible, Local Bodies, Industries Associations and other organisations will be

associated with this activity and on their request areas can be handed over to them for this

purpose.

2. Advisory Committees comprising, inter alia, industry representatives, will be set up in

respect of industrial areas to advice on:-

a) Maintenance and improvement of the existing areas; and

b) Redressal of grievances.

2.7.12 Settlement Committees

RIICO and RFC have constituted three tier Settlement Committees for resolving disputes

pertaining to entrepreneurs. These Committees are fully empowered to decide matters

falling within their jurisdiction. This would reduce future litigation and pending Court cases

can also be settled by these Committees.

2.7.13 Power

1. Rajasthan has been recognised as one of the two leading states, which have vigorously

pursued Power Sector Reforms. According to the assessment carried out by the Ministry

of Power during the year 1996-97, the difference between the Peak Demand and Peak

Demand met in Rajasthan was only 5.6% - the lowest among the twenty major States of

the country. In addition, in terms of Plant Load Factor the State with a PLF of 75.6%

was ranked the second in the country. Substantial private sector investment in power

generation is being encouraged.

2. Two units of 250 MW each are expected to be commissioned at Suratgarh Stage-I

Project during 1998 and 1999, respectively. In addition, the following major power

plants are scheduled to be commissioned in the IX Five Year Plan and early years of

X Five Year Plan:-.

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S.No Projects in Pipeline Capacity

1 Dholpur Power Project based on Liquid Fuel 700 MW

2 Barsingsar Power Project based on Lignite 500 MW

3 Suratgarh Stage-II Power Project based on Coal 500 MW

4 Kapurdi & Jalipa Projects based on Lignite 1200 MW

TOTAL 2900 MW

3. Captive power plants will be freely permitted. No permission from RSEB would be

required.

4. State Government has recently announced a Captive Power Plant Policy. The details of

the policy shall be issued by the Energy Department shortly.

5. As far as possible RSEB shall make arrangements to ensure uninterrupted supply of

power to continuous process industry, export oriented units and units set up in EPIP.

6. All industrial areas on rural feeders will be connected to urban/industrial feeders in a

phased manner for better quality of power and the cost to be incurred thereon shall be

borne by RSEB and RIICO equally.

7. As far as possible, land for power plants to be set up in private sector will be allotted by

RIICO close to the grid station of RSEB, at rates applicable for industrial land on

priority basis.

8. Provisional fuel surcharge will henceforth be revised on a quarterly basis to avoid an

undue burden on industrial units at a later stage.

9. Reduction in contract demand to units supplying surplus power to RSEB will be freely

permitted. Where the contract demand is reduced to zero, i.e., the industrial consumer

runs his plant entirely with his own power; no minimum charge shall be levied.

10. New large industrial consumers will be required to pay for the first six months on the

basis of actual consumption and for the next six months, on the basis of actual

consumption or 50% of the minimum charges, whichever is higher.

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11. A system of deemed sanction has been started by RSEB for extension of power contract

demand. Similarly, a system of deemed sanction for reduction in load has also been

introduced.

2.7.14 Telecommunication

1. Special efforts will be made to provide efficient and reliable Telecommunication

Facilities in Industrial areas.

2. In case of new industrial areas, RIICO will take recourse to Bulk booking in advance so

that entrepreneurs are able to secure telephone connections without delay.

3. Cellular phones facility is already available in the following towns of the State :

1. Jaipur

2. Ajmer

3. Udaipur

4. Jodhpur

5. Kota . This facility is proposed to be introduced in other industrially important

locations like Alwar, Bhiwadi, Pali, Beawar etc.

In the emerging scenario, other than energy, communication will be a key factor for

economic development. This includes road, rail, telecommunications, postal services and

the state government will need to work in tandem with the centre and other states. Adopt a

futuristic approach and take innovative measures. For example, while laying roads, get the

telecom department as a partner to lay cables for providing high-speed Internet and other

communication services to villages. Similar approach can be taken with the railway

department. Concentrate more on oil- and gas-based energy production than coal-based

production. Also invest on wind and solar energy to the fullest extent

2.7.15 Railways

1. Under the unigauge scheme of the Railways, the State has taken a major leap

forward with the ongoing and proposed programs of conversion of metre guage lines

into broad guage. Most of the metre guage lines have already been converted and all

the major cities of the state except Udaipur and Bhilwara have been linked with

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broad guage. Jaipur has been linked to major industrial cities like Mumbai, Calcutta,

Chennai, Hyderabad, Delhi, Indore and many other towns.

2. Vigorous efforts will be made to ensure that Bhilwara and Udaipur are also

connected with broad gauge expeditiously.

3. The proposal to provide Rail link to Bhiwadi on priority will be pursued with the

Railways.

2.7.16 Road Network

1. The State Government has promulgated a Road Policy in 1995 to facilitate private

sector participation in construction of toll roads, bridges and by passes. Private

sector participation in Road sector is being actively encouraged. Under this policy

three works of roads/ bridges have already been awarded to private sector on B.O.T.

basis and several other works are being taken up.

2. The State's road network extends to 0.75 Lac kms. on 31st March 1997 comprising

National Highways, State Highways, District Roads and other roads of the existing

State Highway network, a length of 1500 kms. will be improved with World Bank

assistance during the 9th Five Year Plan.

3. The National Highway No.8, from Delhi to Bombay via Jaipur-Ajmer-Udaipur-

Ahmadabad is being converted into a four-lane highway. The stretch between Jaipur

and Kotputli has already been completed and the remaining portion between

Kotputli and Delhi is expected to be completed shortly. Jaipur-Ajmer section is

being taken up in the second phase.

4. In order to improve access to important industrial areas, the State Government and

RIICO will take up works for improvement of vital link roads to important industrial

areas like Bhiwadi, Khushkhera, Matsya (Alwar), Hirawala, Bindayaka, Kaladera

(Jaipur), Growth Centres at Dholpur, Brij (Bharatpur), Gudli (Udaipur) etc. The total

length of these road links will be about 100 kms.

2.7.17 Port Access

With a view to ensuring expeditious dispatch of export cargo, the State Government is

exploring the feasibility of securing a direct access to Marine Port in Gujarat. A feasibility

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study for the purpose has been completed and a dialogue has been initiated with

Governments of neighboring states for joining hands to develop a berth facility at Kandla.

2.7.18 Air Transport

1. Important cities of the state like Jaipur, Udaipur and Jodhpur are well connected by

Air. Facilities at Jaipur airport have been upgraded and it has now started receiving

Chartered International flights.

2. Air Taxi Operators (ATO's), will be encouraged to expand their services in the state.

The use of State Government's existing air strips numbering 19 and some other

facilities has already been offered to ATOs so as to facilitate their operations.

Government of Rajasthan is creating an enabling environment for a balanced (between

different regions of the state) economic and social development of the state by involving

people through regular dialogues and feedback. Such dialogues should include presentation

on good (to take proactive measures) and bad (to learn lessons) practices vis-à-vis

development, collating examples from different regions of the world. Introduce necessary

administrative reforms at different level and such measures will have to be designed,

adopted, implemented and monitored through people’s participation.

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Table-3: According to the Eleventh Five Year Plan (2007-12) & Annual Plan 2007-08

Planning Commission, Government of India has approved the Eleventh Five Year Plan of

Rajasthan of Rs. 71,731 Crore. Against this, Rs. 13794.69 Crore was spent during the

Annual Plan 2007-08. The major head wise approved outlay for the 11th Five Year Plan and

expenditure incurred during the Annual Plan 2007-08 are as under:

(Rs. in Crore)

Head of Development /

Sector

Approved

Outlay

(2007-12)

% to

total

Actual

Expenditure

2007-08

% to

total

1 2 3 4 5

1. Agriculture & Allied

Services

2269.07

3.16

519.40

3.77

2.Rural Development

4295.14

5.99

986.69

7.15

3. Special Area Program

1759.43

2.45

86.64

0.63

4. Irrigation and Flood

Control

7302.06

10.18

877.07

6.36

5. Power

25606.75

35.70

5692.38

41.26

6. Industry & Minerals

958.65

1.34

170.17

1.23

7. Transport

4683.06

6.53

678.22

4.92

8. Scientific Services

29.70

29.70

2.81

0.02

9. Social & Community

Services

19719.83

27.49

693.87

5.03

10. Economic Services

731.04

1.02

3929.03

28.48

11. General Services

4377.25

6.10

158.41

1.15

Total

71731.98

100.00

13794.69

100.00

State Government has already spent 19.23 % funds during the year 2007-08 of the approved

plan size for the 11th Five Year Plan. The researcher has taken only last two annual plan to

analysis the actual utilization of financial assistance.

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Table-4: The Annual Plan for 2008-09

The Planning Commission has approved State's plan size of Rs.14020 c Crore, including Rs.

20 Crore as Additional Central Assistance for Goverdhan Drain (KNP), for the Annual Plan

2008-09. The major head wise approved outlay is as under:

(Rs. in Crore)

Head of Development /

Sector

Approved

Outlay

Likely Expenditure

Of which Budgetary Support

1 2 3 4

1. Agriculture & Allied

Services

361.65 952.28 771.66

2.Rural Development

1278.93 1130.83 1130.83

3. Special Area Program

89.24 99.49 99.49

4. Irrigation and Flood

Control

1082.94 857.36 857.36

5. Power

6199.49 6209.00 1736.00

6. Industry & Minerals

157.78 150.01 32.01

7. Transport

678.27 754.17 585.02

8. Scientific Services

3.48 5.94 5.94

9. Social & Community

Services

3888.37 4351.97 3726.97

10. Economic Services

242.64 280.71 280.71

11. General Services

37.21 124.01 124.01

Total

14020.00 14915.77 9350.00

The State Government has also accorded highest priority to Social &Community Services

and Power Sectors in the revised estimates. Revised Budgetary Support for the Social &

Community Services is 39.86% and for the Power Sector it is 18.57%. An expenditure of

Rs. 10445.28 Crore has already been incurred up to December, 2008.

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Table-5: The Annual Plan for 2009-10

The Annual Plan for 2009-10 was proposed at Rs. 17321 Crore of which budgetary support

is Rs. 9636.31 Crore. Highest priority has been accorded to provide sufficient state

matching share for Flagship Programs, Centrally Sponsored Schemes and completion of

ongoing projects / schemes.

The major head wise proposed outlay is as under:-

(Rs. in Crore)

The State Government has accorded highest priority to Social & Community Services and

Power Sectors. Budgetary Support for Social & Community Services is 40.35% and for

Power Sector it is 20.14%.

2.8 Special Category Status to Rajasthan

Special Category States have been given special treatment in the allocation of Central

Assistance as well as in the terms on which Central Assistance is extended to them. At

present, as per the Gadgil formula, after setting apart, funds for externally aided projects and

a reasonable amount for Special Area Programs, 30 % of the balance of central assistance

for State Plans is provided to Special Category States. The remaining amount of central

assistance for State Plans is distributed among non-special category states.

Head of Development /

Sector

Proposed

Outlay

% to

total

Of which

Budgetary

Support

% to

total

1 2 3 4 5

1. Agriculture & Allied Services 885.55 5.11 714.55 7.42

2.Rural Development 1365.76 7.88 1365.76 14.17

3. Special Area Program 92.25 0.53 92.25 0.96

4. Irrigation and Flood Control 942.01 5.44 942.01 9.78

5. Power 7483.97 43.21 1940.97 20.14

6. Industry & Minerals 139.62 0.81 19.62 0.20

7. Transport 615.99 3.56 503.49 5.23

8. Scientific Services 2.20 0.01 2.20 0.02

9. Social & Community 5626.86 32.49 3888.67 40.35

10. Economic Services 100.38 0.58 100.38 1.04

11. General Services 66.41 0.38 66.41 0.69

Total 17321.00 100.00 9636.31 100.00

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While ‘Special Category States’ are entitled to receive Central Assistance on the basis of 90

percent grant and 10 percent loan in place of 70 percent loan and 30 percent grant

admissible to ‘Non-Special Category States’. For placing any State on the list of ‘Special

Category States’ it should satisfy following conditions:

1. Hilly and difficult terrain,

2. Low population density and/or sizeable share of tribal population,

3. Strategic location along borders with neighboring countries,

4. Economic and infrastructural backwardness, and

5. Non-viable nature of state finances.

Besides above, States under this category have a low resource base and are not in a position

to mobilize resources for their developmental needs even though the per capita income of

some of these states is relatively high.

In 1969, when the Gadgil formula for the distribution of central assistance for State Plans

was evolved, there were only 3 Special Category States i.e. Assam, Nagaland and Jammu &

Kashmir. Presently, 11 States are on the list of ‘Special Category States’. These are Assam,

Jammu & Kashmir, Nagaland, Himachal Pradesh (1970- 71), Manipur (1971-72),

Meghalaya (1971-72), Tripura (1971-72), Sikkim (1975-76), Arunachal Pradesh (1986-87),

Mizoram (1986-87) and Uttaranchal (2001-02).

The last State placed on the list of ‘Special Category’ is Uttaranchal, which was declared by

NDC in its 49th meeting held on 1.9.2001. In this meeting, some suggestions have been

made for looking into the criteria for granting special category status to other States. It was

decided by the NDC that these should be examined. But no progress has been made so far.

Rajasthan has been continuously demanding to declare it as a ‘Special Category State’ at

various forums. The grounds on which the State deserves 'Special Category Status' are:

1. Rajasthan is severely deficient in the most important resource, that is, water. With

10.4 percent of the country’s area and 5.6 percent of its population, Rajasthan has

only about 1 % of the country’s water resources.

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2. Agriculture continues to be susceptible to the vagaries of the monsoon; 43 out of last

50 years have been drought years. There has been a continuous decline in the

availability and quality of drinking water.

3. Rajasthan is the largest State in the country in terms of area. Over 60 percent of the

State’s total area covering 12 districts and habituating 40 % of its population is

Great Indian Desert, the “Thar” with sparsely distributed population. This special

feature directly affects the relative cost of delivery of infrastructure and basic social

facilities.

4. 1040 Km. long international border with Pakistan.

5. Population density is very low; 165 people per sq. km. in 2001 against the national

average of 324 people. There are large variations in density of population from

district to district. It varies from 471 people (Jaipur) to 13 people (Jaisalmer).

6. More than 12% of the population of the State is tribal.

Proposals for one-time Additional Central Assistance

Planning Commission, Government of India is requested to approve one-time Additional

Central Assistance of Rs. 150 Crore for following projects for the year 2009-10:

S.No Project Amount ( in Crore)

1 Goverdhan Drain Project for Keoladeo National Park (balance amount)

35.00

2 Project to check rising ground water in Jodhpur 30.00

3 Support to Rajasthan Mission on Livelihood (RMoL) 30.00

4 IT enabled Grievances and Redressal System in Districts

5.00

5 Preparation of Medical Profile of Students "Health Cards" in selected Districts

5.00

6 Support to NGOS for the protection of Girl Child in Jaisalmer / Jalore Distrcits with low sex -ratio

5.00

7 Providing production subsidy for Khadi

5.00

8 Supporting activities of the new Minority Department incl. Education etc.

20.00

9 Additional Housing for ST BPL families with a focus on Kathodi Tribes in TSP area over and above IAY scheme

10.00

10 Welfare of Physically Challenged Persons 5.00

Total 150.00

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Reserve Bank of India (RBI) today released “State Finances: A Study of Budgets of

2009-10”, a publication that provides data, analysis and assessment of finances of State

governments.

The major findings of the Study are as follows:

The consolidated fiscal position of the Rajasthan State Governments indicates that the

process of fiscal correction and consolidation experienced a slippage in 2008-09 (Revised

Estimates) on account of overall macroeconomic slowdown following the global financial

crisis. The key deficit indicators are as follows:

The Gross Fiscal Deficit (GFD) is budgeted to increase to 3.2 % of GDP in 2009-10

(Budget estimates) as compared with 2.6 % of GDP in 2008-09 (RE).

Revenue account turned from a surplus of 0.2 % in 2008-09 (RE) to a deficit of 0.5 % of

GDP in 2009-10 (BE).

Disaggregated level fiscal indicators reveal that most of the States are faced with

deterioration in revenue balance and increase in the level of GFD. State-wise, revenue

account of four States, viz., West Bengal, Punjab, Kerala, and Rajasthan recorded revenue

deficit during 2008-09 (RE). Jharkhand turned from revenue deficit to revenue surplus

State. In 2009-10 (BE), 10 States are expected to show revenue deficit from surplus in the

previous year. Overall, revenue account is expected to be adversely impacted in case of 23

States during 2009-10 (BE).

Number of States with GFD-GSDP ratio of less than 3.0 % decreased from 18 in 2007-08

(Accounts) to 9 in 2008-09 (RE) and 6 in 2009-10 (BE). GFD is estimated to exceed 3.0 %

of GSDP during 2009-10 (BE) in States like Maharashtra, Madhya Pradesh, Andhra

Pradesh, Rajasthan, Haryana, Orissa, Jharkhand, Uttar Pradesh, Punjab, West Bengal and

Goa. However, despite the slowing down of revenue and the need for increased expenditure

on account of economic slowdown, States like Kerala, Bihar, Karnataka, Chhattisgarh,

Gujarat and Tamil Nadu have been successful in limiting their fiscal deficit within the

TwFC target of 3.0 % of their GSDP during 2009-10.

The debt-GDP ratio of Rajasthan State governments came down to 26.2 % in 2008-09 (RE)

from the peak level of 32.8 % as at end-March 2004. However, outstanding debt is budgeted

to increase marginally to 26.5 % of GDP at end-March 2010. The TwFC had recommended

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for a debt-GDP ratio of 30.8 % to be achieved by the States as at end-March 2010. As

against the TwFC target of interest payment to revenue receipts (IP-RR) ratio of 15 % to be

achieved by 2009-10, the combined IP-RR ratio of the States declined from 26.0 % in 2003-

04 to 14.4% in 2008-09 (RE). IP-RR ratio is budgeted to rise marginally to 14.5 % in 2009-

10.

On reform side, few State governments that have announced fiscal stimulus packages

envisages higher spending and lower tax rates for certain sectors in order to boost aggregate

demand. An additional factor that is likely to influence the State finances during 2009-10

but having positive implications for aggregate demand is the implementation of Sixth

Central/States’ Own Pay Commission. The Rajasthan State governments account for around

60 % of the combined expenditure of Centre and States reflecting the vital role of States in

growth and development of the economy. Compression in consolidated expenditure of State

governments can be observed during 2005-10 period mainly on account of some

rationalisation of revenue expenditure during the FRL period. This is evident from the

decline in Revenue Expenditure-GDP ratio from 13.3 % in 2000-05 to 12.4 % during 2005-

10. Empirical exercise indicated convergence of the major components of the development

expenditure across the States.

Report suggested that, Rajasthan may consider strengthening the rule based formula by

incorporating elements which inter alia may include counter-cyclical fiscal policy

framework, setting up of fiscal stabilisation fund, a target for debt-GSDP and interest

payments-revenue receipts with a view to attaining debt sustainability. In addition, a rule

may be prescribed for primary revenue balance (PRB), i.e., PRB should be in surplus and

adequate enough to meet interest payments of the States. Furthermore, numerical targets in

respect of certain categories of expenditure such as, non-interest revenue expenditure with

sub-targets for revenue expenditure on social services and on economic services;

institutional reforms such as common budgetary practices, transparency rules, accounting

system, public expenditure management and outcome budgeting; and independent audit

mechanism and transparent oversight and monitoring have been suggested. States may also

attempt to avoid build-up of cash surplus by adopting advanced forecasting and monitoring

mechanism keeping in view the best practices across advanced economies.

The Study highlights that, the fiscal correction and consolidation witnessed in State finances

in the recent past is likely to have a setback in 2008-09 (RE) due to the economic slowdown

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and the accompanying moderation in the pace of revenue growth. The Study emphasises

that the States need to successfully manage the transition with regard to the implementation

of award of the Sixth Central/States' Pay Own Commission. In addition, there are certain

structural issues that continue to remain important for State finance, such as quality of

expenditure and surplus in cash balances of the State governments. With experience

gathered through their FRLs, States need to plan the next round of reforms and resume the

process of fiscal correction and consolidation at the earliest. Rajasthan has been investing in

capacity building through development of a strong institutional network at all levels. The

state has 1,050 colleges including 80 engineering colleges, 58 polytechnic institutes and 846

industrial training institutes (ITIs).

Rajasthan s rugged forts, beautiful palaces, picturesque Thar Desert, bird sanctuaries and

national parks, lively fairs and festivals, lakes and mountains, fascinating handicrafts and

colourful culture make the state an attractive destination for domestic and foreign tourists.

At current prices, the Gross State Domestic Product (GSDP) of Rajasthan was about US$

46.4 billion in 2009-2010. The average annual GSDP growth rate, from 1999-2000 to 2009-

2010 was about 10.1%.

The natural resources, policy incentives and infrastructure in the state are favourably suited

for investments in sectors such as cement, IT and ITeS, ceramics, tourism, automotive and

agro-based industries. Bureau of Investment Promotion (BIP) and Rajasthan Industrial

Development and Investment Corporation (RIICO) are responsible for promoting

investments and developing industrial infrastructure in the state. The Government of

Rajasthan is promoting development of several SEZs across the state for sectors such as

gems and jewellery, handicrafts, IT, electronics and textiles.

According to the Reserve Bank of India, FDI inflows from April 2000 to May 2010

amounted to US$ 470 million.

2.8.1 Advantage Rajasthan:

• Leading producer of cement in the country

• Second largest mineral producing state in the country, large reserves of metallic and

non-metallic reserves

• Among the largest producers of cotton and wool in the country

• A well known tourist destination

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• One of the most progressive states in electricity sector reforms

• Recent discovery of oil and gas reserves

Economic Snapshots of Rajasthan

Capital Jaipur

Area (sq km) 342,239

Population (Census 2001, million) 56.51

Literacy Rate (%) 61.03

Human Development Index 0.424 (All India rank 9th)

NSDP (US$ billion) 11.5

NSDP growth (10 years) (%) 6

Per Capita Income (US$) 327

Exports (US$ million) 965

National Highways length (km) 4,081

International Airport Jaipur

Domestic Airport Jodhpur, Udaipur

Key Industries

Mineral based industries

Textiles

Tourism

Gem and jewellery

Dimensional stones (marble and granite)

Agro-processing

Potential Industries Oil and gas

IT and ITES

Electricity generation and distribution

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2.8.2 Emerging destination for IT and ITES industries

Rajasthan has a vast pool of trained professionals. Moreover, low cost of operations in well

developed cities of the state makes them attractive locations for IT and ITeS units. IT parks

with special infrastructure have been set up at Jaipur, Jodhpur, Kota and Alwar.

2.8.3 IT and ITES – Main company profiles in Rajasthan

Infosys

Infosys was set up in 1981; it is engaged in IT consulting, modular global sourcing, process

re-engineering, and BPO services; the company has operations in Australia, China and US.

It also has marketing and technological alliances with FileNet, IBM, Intel, Microsoft,

Oracle, etc. The company recorded a turnover of US$ 4.8 billion in 2009-2010.

Infosys BPO, the BPO-services division of Infosys, has opened BPO campuses at the

Mahindra Worldcity, Jaipur, Rajasthan. The company has also launched various industry-

specific programs in Rajasthan where it collaborates with universities in the state to improve

the BPO-specific skill sets.

Tech Mahindra

Tech Mahindra is a global systems integrator and business transformation consulting firm,

focused on the communications industry.

Tech Mahindra provides a wide variety of services ranging from IT strategy and consulting

to system integration, design, application development, implementation, maintenance and

product engineering. Tech Mahindra has accreditations such as ISO 9001:2000 certification,

SEI-CMM level 5 assessments and is also CMMI level 5 certified for software development

processes. The company has set up two software development centres in Jaipur, Rajasthan.

Genpact

Formerly known as GE Capital International Services, Genpact was set up in India in 1997.

The company provides a wide range of business process, technology and knowledge

services in finance and accounting, collections and customer relations, insurance,

procurement and supply chain, analytics, software, IT-infrastructure.

It recorded a turnover of US$ 1.5 billion in 2010. The company employs about 43,300

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professionals in total and over 3,000 people in the Jaipur facility.

Wipro Technologies

Wipro Technologies was established in 1945; it is engaged in IT services, product

engineering, technology infrastructure services, BPO and other consulting solutions. It also

provides services such as application development, deployment and maintenance, business

intelligence and customer relationship management. Based in Bengaluru, the company has

54 development centres and 30 offices spread across India, North America, Middle East and

Europe.

It recorded a turnover of US$ 6.0 billion in 2009-2010.Wipro Technologies has set up a

campus at the Mahindra World City in Jaipur. The company is developing its campus in two

phases; the first phase – spread across 25 acres, with a seating capacity of 1,000 employees

– is operational.

Nagarro

Nagarro provides outsourced software development services to companies ranging from

early stage start-ups to the global 50 market leaders, helping them achieve their strategic

goals.

The company has signed an MoU with the Mahindra World City for developing a five-acre

site in the Mahindra World City SEZ.

HCL

The 35 year old enterprise, founded in 1976, is one of India's original IT garage start ups. Its

range of offerings span R&D and Technology Services, Enterprise and Applications

Consulting, Remote Infrastructure Management, BPO services, IT Hardware, Systems

Integration and Distribution of Technology and Telecom products in India. The HCL team

comprises 90,000 professionals of diverse nationalities, operating across 31 countries

including 505 points of presence in India. HCL has global partnerships with several leading

Fortune 1000 firms, including several IT and Technology majors.

HCL Infosystems Ltd at Jaipur. Spread over an area of 4,175 Sq. meters, the ‘HCL Centre

of Excellence for BFSI software’ is the first software development centre to be opened by

any of the major ICT companies, in the state of Rajasthan. This centre will be developing

software with bi-lingual capabilities which is very critical for facilitating banking in smaller

towns and rural operations of private/nationalized banks and as well as cooperative banks.

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HCL is an established player in the BFSI System Integration space and offers solution like

core banking solutions cheque truncation, cash management, treasury solutions, document

management solutions, risk management solutions, MIS & BI, data centre design & branch

rollout solutions.

2.9 Vision-2020

Land, minerals, energy, and manpower are key resources available in abundance, while

there is water shortage. Focus on dry land farming, marketing of exotic minerals, utilisation

of wind and solar energy (other than oil and gas), and skill development for people to avail

right to opportunities in the emerging economic environment. Tourism and infrastructural

services are key areas. Other than conventional means, utilise non-resident Rajasthanis for

information dissemination regarding heritage tourism. Provide education facilities (through

development of centres of excellence with investment from tourism companies) to tour

operators and guides. Introduce new curriculum at the graduate level and build training

institutes (e.g. for para-medical personnel) for service-oriented jobs. Develop a facilitation

centre (for information dissemination and other related services for temporary mobility of

labour) as export of manpower (e.g. for construction services) is a key opportunity. After

the review of literature, reports, journals, papers, available researcher found whether is

poverty reduction, creation of wealth, improvement in health and education or attaining a

better macro socio-economic environment, raising income of common citizens is inevitable.

Therefore, if Rajasthan can leverage its core competence to drive the state on an accelerated

growth path, it is likely that a higher growth rate which would help people to achieve better

standards of living. This will, in turn, help Rajasthan to contribute more towards India

becoming a ‘developed’ nation (in terms of per capita income and socio economic

indicators) by the year 2020.This can be a reality, provided appropriate and innovative

policy measures are introduced and there is coherence between different policies and their

implementation. Coherence is not only required at different level in a state, but also among

different states and between a state and the center.

The challenge for Rajasthan is to raise its per capita income (i.e. per capita SDP) from

Rs.13,800 in year 2002 to Rs. 25,000 by year the year 2010 and Rs.55,000 by the year 2020

This is possible, provided appropriate measures are taken for economic development and

accompanied by measures for social development so that the average decadal rate of growth

of population becomes 24 percent for the period 2001-2011 and 18 percent during 2011-

2021.