Vibrant state

Print edition : January 26, 2007

THE HAWA MAHAL. Built in 1799, it is one of Jaipur's landmarks and major tourist attractions. The city has many camel riders, who offer rides to tourists.-REUTERS/PAWEL KOPCZYNSKI

Rajasthan is all set to witness a boom in industrial growth as a result of its government's efforts.

THE Vasundhara Raje government in Rajasthan, which has completed three years in the saddle, can rightfully claim to have set the trail blazing with outstanding achievements in the areas of infrastructure, Information Technology, tourism and the social sector.

Chief Minister Vasundhara Raje took over the reins of power in December 2003. In the very first year itself, her government prepared a road map for development in consultation with members of the Economic Policy and Reform Council, specifically constituted for attracting investment. Efforts to improve infrastructure were undertaken, keeping in mind the fact that an investor always looked forward to an easy-to-understand tax regime, a proactive government and some fiscal concessions.

Balanced development of every region, efforts towards the advancement of social equality and good governance at all levels have completely metamorphosed the image of Rajasthan in the last three years. Whether it is the construction of 12-kilometre-long roads connecting four villages every day, distribution of free textbooks to all children up to Class XII, expenditure of Rs.200 crores under various pension plans benefiting eight lakh people, approval of 3,202 rain-harvesting works or the formation of over 116,723 self-help groups for women, the government seems to have touched upon every aspect of governance with utmost impact and care. There has been a deliberate policy shift in order to benefit every section of society.

One of the primary areas where the government sought to implement the policy shift was in the corporate sector. It took on the challenges of liberalisation head on by setting into motion policy initiatives in various sectors to lure private sector investment in the State. Recognising that a basic prerequisite to attract investments was a policy environment that would allow private investors to flourish, the government sought to remove red tapism and other procedural bottlenecks. The government therefore registered industries, set up an Institute of Plastic Engineering and Technology in Jaipur and urban haats in Jaipur and Ajmer, and announced a rebate of 100 per cent on luxury tax and 50 per cent on stamp duty and conversion charges on new industrial units.

The government encourages constant feedback from industry to help build a better regulatory and administrative framework.

Medical tourism is one of the stated priorities of the government. It is looking at making the State an attractive destination for the corporate sector, especially those who might be interested in setting up hospitals, nursing homes and even institutes of medical education. However, it needs to ensure that a certain quantum of health care services are reserved for the poor in the superspeciality institutions for the corporate sector. Land will be provided at special prices to all new medical institutions and dental colleges, diagnostic centres, blood banks and nursing and paramedical training institutes.

The medical policy includes encouraging other parallel and recognised streams of medicine such as Ayurveda, homoeopathy and naturopathy. In fact, a land bank has already been set up to give land to medical institutions that are interested in promoting alternative therapies.

On the other hand, nursing and paramedical institutions will have to make an investment of at least Rs.50 million to benefit from the policy. Likewise, nursing homes and 15-bed hospitals planning a facility within 50 km from regional headquarters or 20 km from district headquarters or in a village or a town with a population of less than 50,000 will need to invest at least Rs.5 million. Lest it should be assumed that there are no regulations here, the government has placed the condition that the investors will have to abide by environment protection rules for hospital waste disposal and also the rules and regulations set up by the Committee of Standards. Corporates have already begun showing interest in setting up hospitals in the State.

The government has also unfolded a hotel policy, which is primarily directed at promoting investment and developing infrastructural facilities in the tourism sector. Under this, District Collectors and functionaries of the Jaipur Development Authority, local bodies and gram panchayats have been directed to identify and reserve land to set up hotels.

The government has already announced heavy concessions and rebates for new investors; in other words, the interests of the private players in development have been taken care of. As in the case of land banks to set up hospitals, under the hotel policy the government has come up with a land bank for hotels, details of which will be made available on the government website.

What does the hotel policy envisage? Three-star hotels would be given 1,200 square metres of land, five-star hotels 6,000 sq m and bigger hotels 18,000 sq m. They will be charged only 50 per cent of the commercial reserved price of the land. And if there are two parties interested in the same piece of land, the matter would be decided by auction. All information, including the rates of land, will be made available on the website and proposals will be invited through advertisements.


Considered a backward State in terms of industrial development, Rajasthan today is all set to change this image. Although agriculture continues to be the backbone of the State in terms of economic activity, manufacturing, construction and mining are fast catching up. The economy of the State has shown a structural shift, with the manufacturing sector making a 13.1 per cent contribution to the Net State Domestic Product (NSDP) in 1997-98 (in 1987-88, this was a mere 1.6 per cent). Manufacturing got an impetus in the late 1990s, which the State government is determined to take forward.

As per some advance estimates, the contribution was likely to go up further by 11.76 per cent in 2005-06. This is what is called building on gains. In terms of production value, the textile industry, with a 21.96 per cent share, dominates the large and medium category of industries. This is followed by industries catering to agro-based, food and allied products; cement and cement products; chemical gases, lubricants and plastics; heavy machinery; metal allied products, automobile parts and machine tools parts; electrical and electronics-related products; minerals, stones and lime; drugs and pharmaceuticals; ceramics and glass-wares; and leather and footwear.

The State is almost the sole producer in the country of certain minerals like wollastonite, zinc and copper. Besides this, it is also a leading producer of crops such as mustard, bajra, barley, maize, cotton and spices. There is also a huge population of livestock that sustains the livelihoods of several communities across the State.

Infrastructure creation has been one of the priority areas of the government, not only for industry but also for the common man. Industrial areas with a ready-to-use base with supportive infrastructure facilities have been set up. In the arid and semi-arid areas, water availability has been stepped up. The extension of the Indira Gandhi Nahar Pariyojana, one of the largest irrigation systems in the world, turned the desert districts of the State into green belts of prosperity.

All parts of the State are connected by road and rail barring some areas where the broad gauge rail network is yet to be set up. But there is a well-established inter-State road network connecting all the important towns of Rajasthan with the rest of the country. Jaipur, Jodhpur and Udaipur are connected by air as well as rail to Delhi, Mumbai and Ahmedabad. For cargo movement, there are inland container depots at Jaipur, Jodhpur, Kota and Udaipur. Soon, Bhiwadi near Alwar and the textile town of Bhilwara will have their own depots.

The industrial areas developed by the Rajasthan State Industrial Development and Investment Corporation (RIICO) are self-sufficient in that they have water, power, road network, shops, telephone and fax facilities, housing and recreation facilities.

HAND PRINTING IN progress in a textile unit on the outskirts of Jaipur.-BY SPECIAL ARRANGEMENT

The State has undergone tremendous changes in the decades following Independence. It is this momentum that the Vasundhara Raje government is determined to take forward while keeping in mind the need for social equity. From about a thousand small-scale industries at the time of Independence, their number had gone up to 2,21,369 by the end of 2000-01. The sector today employs 8.57 lakh people and accounts for an investment of Rs.3,116.06 crores.

Similarly, at the time of Independence, there were eight large- and medium-scale industries in the State. Today, there are about 400 such industries with a total estimated investment of over Rs.15,000 crores and providing employment to 0.15 million people.

Needless to say, the future of the State lies in industrial growth and in the revival of the industrial sector, which suffered many setbacks in the previous decades. There was a lot of economic distress in industrial hubs such as Kota and many industries shut down.

Even as the government plans to attract new investment, it needs to have a concrete plan to revive sick industries so as to reduce labour unrest and economic and social distress. In fact, the government boasts of a steady decline in the number of industrial disputes in the past three years. Industrial units in the State claim to enjoy a healthy working environment compared to the environment in most other States.

The Mahindra group is setting up an SEZ called Mahindra's World City as a joint venture with the Government of Rajasthan. It is being developed over 3,000 acres (one acre is 0.4 hectare) as a multi-product SEZ that will provide world-class infrastructure for both the service and manufacturing industries and assist them to compete globally by offering a hassle-free environment and attractive fiscal incentives.

The first step has already been taken by Information Technology giant Infosys, which plans to invest Rs.90 crores, in the first phase of Mahindra World City in Jaipur. This facility, which will employ about 3,000 professionals, is being developed for both software development and Business Process Outsourcing (BPO) operations. It will invest Rs.150 crores in the second and third phases of the project. Another IT giant Wipro is planning to develop its campus over 100 acres of land and invest Rs.100 crores in two phases, offering employment opportunities to approximately 1,000 people in the next two years and to over 5,000 people in the next five years.

Be it the acquisition of land, developing the requisite social and industrial infrastructure, providing loans or maintaining industrial data bank with all relevant inputs, RIICO has excelled its role as a catalyst. Some 303 industrial estates are being planned all over the State and 98 of them are located on the Golden Quadrilateral corridor. Other industrial clusters, in Bhiwadi, Alwar, Khushkhera, Nimrana, Jaipur and Kota, have been provided with basic infrastructure.

As a result, there has been a spurt in investment. Until September 2006, 1,619 projects with a total proposed investment of Rs.25,075 crores were cleared under the single-window system. Out of them, 650, with a total investment of Rs.2,984 crores, have materialised and 199, with a total proposed investment of Rs.21,781 crores, are under implementation. Cairn Energy India Private Limited (a company incorporated in Australia) along with the Oil and Natural Gas Corporation (ONGC) is planning to invest $2 billion to develop oilfields in the State. There is also the possibility of investment in the Greenfield Oil Refinery in western Rajasthan. The SEZ to be set up in collaboration with the Mahindra group envisages an investment of about Rs.13,000 crores. The government also has in mind plans to expand the operations of Hindustan Zinc Limited. The automobile major Honda is planning to set up a car project in the State with an investment of Rs.2,000 crores.

INFRASTRUCTURE BUILDING AND creating additional facilities for the supply of water and electricity are high on the development agenda of the government.-

Recognising that roads are the arteries of modern development, the government has launched an ambitious road development project in the public sector costing Rs.2,300 crores. A State Road Fund was created to leverage capital for road development and to get the private sector involved. The government also legislated the Road Development Fund Act, 2004. By levying a cess on diesel and petrol, the government created a revenue stream to gather money for the Road Fund. The government then joined hands with Infrastructure Leasing and Financial Services (IL &FS) in augmenting the national highway programme by converting 1,000 km of State highways to world-class expressways under the Mega Highways Project. The work of renovating and improving the Statewise road network was taken up in earnest. It is no surprise that the State has perhaps the best road network in the country today.

The Chief Minister's Road Development Programme of Rs.2,300 crores envisages, among other things, a Rs.1,500-crore Mega Highways Project, construction of cement concrete roads in habitation portions of State highways, and major district roads at a cost of Rs.144 crores; upgradation of 4,500 km of roads to bitumen roads at a cost of Rs.412 crores; and the construction of 1,000 km of new roads to link places of tourist and religious importance at a cost of Rs.120 crores.

The government has accorded high importance to power generation and the State boasts of being a leader in power sector reforms. The priority areas for the government are bridging the demand-supply gap and electrifying all villages by 2007. An important initiative has also been taken to minimise transmission and distribution (T&D) losses. To ensure efficient supply and distribution of power, a special monitoring cell has been set up. There are monitoring committees at the grid and sub-station levels comprising public representatives, farmers and officials. These committees monitor power supply, ensure equitable distribution of power and handle dispute resolution.

Power being an essential input in agriculture, the government has been trying its best to meet the demand for at least minimum power supply from the farming sector. The State has been witness to many struggles by farmers over power supply and water. A massive Feeder Renovation Programme is under way, and by 2008-09 all 8,474 rural feeders will be covered to reduce T&D losses by 15 per cent. This will also enable 24 hours of uninterrupted single-phase domestic power supply in rural areas. The government has resolved to replace malfunctioning transformers within 72 hours.

While the average energy availability has increased by 15 per cent, the government is leaving no stone unturned in augmenting existing power supply. For this, work has commenced at the new power plants at Giral, Dholpur, Chabra, Kota Unit VII, Suratgarh Unit VI and Barsingar.

The government has also notified a policy for the promotion and participation of the private sector in power generation. The features of this policy include exemption from stamp duty on execution deeds, exemption/remission from various taxes on capital goods and facility of single-window clearance. The private sector projects will be mandated to sell at least 50 per cent of the power produced within the State. The mega projects under the public-private partnership for power generation include a gas-based thermal power plant near Dholpur, a coal-based thermal power plant near Chabra and a thermal plant using lignite deposits at Barmer. The government is also encouraging power generation from non-conventional energy sources. All in all, the government plans to generate 5,000 megawatts of power in the next two years.

A MUSTARD FIELD in Alwar district. Agriculture will retain its place in Rajasthan's economy though manufacturing is steadily increasing its contribution to the Net State Domestic Product.-GOPAL SUNGER

Rajasthan's traditional strength lies in tourism. International tourism contributes substantially to the foreign exchange reserves of the country and the State is a major contributor to the kitty. It was estimated in early 2006 that the State was likely to receive 10 lakh foreign tourists by the end of 2006. The target seems to have been achieved already.

For the first time in the State, a tourism sub-plan was mooted wherein all departments were required to spend part of their annual budget on tourism-related activities. Several concessions and subsidies were given for investment under the tourism investment policy.

At present, development projects worth over Rs.1,000 crores are in the pipeline. The government has taken upon itself to restore the beauty of several monuments and heritage centres. More importantly, the State government has invested over Rs.1,750 crores in developing infrastructure in the main tourist cities . For heritage conservation alone, the government has kept aside Rs.50 crores. In order to promote tourism by cutting down costs, the government has abolished luxury tax on heritage hotels for seven years.

A new heritage train has been launched in collaboration with the Rajasthan Tourism Development Corporation. And a new "Palace on Wheels" is likely to be launched in 2007 in addition to the existing one. The new train will have a dance floor, a massage parlour, a conference hall, a bar, a kitchen, a gym and also a steam bath. All this is apart from the government's efforts to promote rural, medical and religious tourism.

The new hotel policy, accompanied with a thrust on infrastructure development in the tourism sector, is part of this "attract tourist" policy.

There is something in this for the private sector as well. The government's decision to license out the management of its monuments to the private sector will not only generate extra revenue but also inject life into the neglected heritage of the State. While doing so, it must ensure that the public is not made to pay the costs of private management and that major decisions are retained by the government department concerned.

At present, the State earns a measly sum from maintaining its heritage structures while several of the erstwhile royalty have turned their properties into hotels or buildings of tourist importance. The State has in its upkeep nearly 250 monuments and earns Rs.5 crores per annum through the sale of tickets. The government also feels the need to augment revenue from this sector.

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