Rajasthan has hit the high road to industrial growth with an elaborate plan, determined to shed the tag of backwardness that has remained attached to it for decades.
THE Vasundhara Raje-led Bharatiya Janata Party government in Rajasthan, which has completed two years in office, has chalked out policies it perceives as growth-oriented. Determined to take the State out of the Bimaru (a term denoting the backwardness of States such as Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh) tag, the Chief Minister has embarked on a trajectory of socio-economic growth, which projects the State as having reached the acme of economic reforms.
Rajasthan, the largest State today accounting for 10.4 per cent of India's total area and sharing a 1,040-km-long border with Pakistan, is a study in contrasts. It has a low population density with 165 persons per square kilometre as compared to the national average of 324 persons per sq km. The State has great demographic variety: 50 per cent of its total population of 5.65 crores (as per Census 2001) is under the age of 20, implying that the human resource potential of this segment cannot be underestimated. (In fact, the State's industrial policy, 2003, recognises the need to focus on infrastructure and human resource development.) Rajasthan's water resources are low, accounting for only 1.16 per cent of the country's resources.
In 1987-88, the contribution of the manufacturing sector to the State's net domestic product was 1.6 per cent. In 10 years, this grew to 13.1 per cent and reached 21 per cent by 2003-04. In terms of production value, the textile industry is still the largest, followed by gems and jewellery, processed foods, cement and cement products, ceramics, glassware, minerals and stones and leather. Evidently, the State government plans to concentrate on these existing resources, develop them further and encourage new areas of investment and growth. One such area has been the exploration of hydrocarbons. There is a huge potential for this in western Rajasthan.
Rajasthan was the first State to adopt the international competitive bidding route to set up power projects. It was also the first to announce a State road policy, which paved the way for the entry of private enterprise into the road sector. The government introduced a simplified sales tax policy to attract investment. Being a land-locked State, Rajasthan had failed to attract investment as it has no sea ports and lacks good rail and civil aviation network. Rural industrialisation has been high on the agenda of the BJP government.
Apart from infrastructure development whereby the State's resources can be utilised optimally with the involvement of the private sector, one of the thrust areas is the development of sectoral clusters such as special economic zones (SEZs). One of the prerequisites for attracting industrial investment is the creation of industrial infrastructure as opposed to general infrastructure. The Board of Infrastructure Development and Investment is a body specifically constituted to ensure a greater focus on industry-related infrastructure. The Board approved projects worth Rs.135.68 crores in the last two years.
The Project Development Corporation has been set up in the private sector with equity participation by the State government. This will offer investment banking reports on commercially profitable projects, tie-up finances and projects for implementation to investors. Within the designated industrial areas in the State, business centres will be set up and the Rajasthan State Industrial Development and Investment Corporation (RIICO) will provide land for the same. In fact, RIICO is in the process of developing industrial complexes for specific industries. Some of the important industries envisaged and their locations are: Gems and jewellery, Export Promotion Industrial Park (EPIP) and Gem park in Jaipur; hosiery, Chopanki (Bhiwadi); auto ancilliary at Ghatal (Bhiwadi) and Sitapura (Jaipur); ceramics, Khara (Bikaner); software technology, EPIP in Jaipur; electronics and telecom, Kukas (Jaipur); textiles at the traditional textile centres of Bhilwara, Sanganer, Balotra, Sitapura, Pali and Jodhpur; agro-industries, the Indira Gandhi Nahar Pariyojana area; leather industry, Manpur; wool industries, Beawar (Alwar); handicrafts, Shilpgram (the craft village) in Jodhpur and Jaisalmer; and dimensional stone industries, Kishangarh (Udaipur) and Chittorgarh.
As some of these areas will be developed as townships, there has been an attempt to incorporate social infrastructure facilities such as schools, hospitals, housing and shopping centres. As some of the regions such as Bhiwadi fall in the area designated under the National Capital Region, the entire belt around National Highway Number 8 between Jaipur and Bhiwadi will undergo integrated industrial development. There is a plan to develop Industrial Model Towns (IMT) and Integrated Industrial Parks (IIPs) on the pattern of industrial zones in Gurgaon, on the outskirts of Delhi. The development of these will either be in the private sector or through joint ventures with RIICO.
Among the main initiatives are a critical infrastructure development fund which is expected to meet the specific requirements of a particular project or area. An SEZ is proposed to be developed near Jaipur through a joint venture of RIICO and Mahindra and Mahindra. This project ran into some controversy after some questions arose over whether proper procedures had been followed in awarding the contract to the industrial group. Finally, the Cabinet approval was given and the project was passed. An investment of around Rs.8,800 crores will be made on 3,000 hectares of land to develop the SEZ. It is expected to generate direct employment to one lakh persons and indirect employment to another 1.5 lakh persons. An apparel park is also being developed at Mahal, again near Jaipur.
The foundation for a World Trade Park with an investment of Rs.350 crores was laid on June 30. This park is expected to give a boost to business, trade and employment. Procedures for starting trade ventures have been simplified with the introduction of single-window clearance and easy land allotment, although some of the initiatives had been taken by the previous government.
The introduction of an economic policy and an improvement council has facilitated investment. The State overcame the problem of overdraft owing to efficient fiscal management. In its investment policy in 2003, the government announced its support to tiny and small industries by raising the loan limit to these. The government has set up 10 Laghu Vikas Kendras to facilitate small industries to come up in rural and backward parts of the State. In order to promote equitable industrial growth within the State, eight development centres have been set up. In order to revive several defunct industrial units, the State government launched a special assistance fund on August 31, 2004. With RIICO as coordinator and facilitator, a biotechnology park, which will include areas such as genetic engineering, cell culture, medical therapies, bio-informatics and bio-agriculture, is proposed to be set up at the Sitapura, Boranada and Sotanala industrial areas.
In keeping with the times, the State government encouraged the development of software for online registration of industries. The construction of 202 homes for salt workers has begun and Rs.56.70 lakhs has been sanctioned for this purpose. Similar encouragement has been provided to the handloom industry by providing yarn banks so as to soft-cushion yarn price fluctuations. The government undertook several measures to make the State's handicraft sector competitive in the international markets. The development in the industrial clusters in particular will focus on the development of handicrafts and on the small-scale sector. In the following year, as part of the cluster development approach, common facility centres and consortiums will be set up to facilitate clusters at the following places: Kaithun in Kota, famous for its Doriyan saris; Talwada in Banswara, famous for stone sculpting; leather and leather-based industries at Bansur in Alwar; dyeing and printing at Chipon ka Akola in Chittorgarh; and handloom at Dariba in Churu district. As part of its ongoing measures to attract investment, the Industry Department organised camps in Mumbai, Chennai, Coimbatore and Bangalore in July, and mobilised investment worth Rs.12,021 crores.
The State government is thinking of developing a trade promotion council on the lines of Pragati Maidan in New Delhi where trade fairs are held. A Rajasthan Trade Promotion Organisation is being conceived. This is in addition to the proposal to set up a textile industry at an SEZ in Sitapura spread over 250 acres (100 hectares), and two agro-food parks, one at Alwar and the other at Kota. New industrial areas have been identified for development. They are at Neemrana near Chandbaji, Pali Road near Jodhpur, Karni at Bikaner, Punaita at Pali and Narbadkhera at Beawar.
Mainly an agrarian State, Rajasthan is a leading producer of mustard, maize, barley, cotton, bajra and spices such as jeera and herbs such as isabgol. A major part of the population depends on agriculture and livestock-oriented occupations. However, a structural shift is now being attempted and the government, while being keen "to wipe the tears from every eye", is hoping to change the image of the State drastically.
Over the last few years, a fairly large number of global enterprises have set up base in the State in areas such as agro-processing, electronics, granite, cement and engineering. Several prominent industrial houses, some of which have had a traditional base, are located in the State. Some multinational companies have also set up operations, though it is premature to speculate on their long-term interests and employment generation potential. As of now, the textile industry is the State's second largest employer.
Bhilwara is well-known for its textile, dyeing and manufacturing units but is way behind other textile-producing areas in the country. It is estimated that the State accounts for nearly 40 per cent of the total synthetic blended yarn exports. However, gems and jewellery still account for the largest proportion of exports from the State.
This is a labour-intensive sector and there are more than 1,500 small and medium-sized units. The production of coloured stones, which have a growing international market, are located mainly in Jaipur and Jodhpur. There is a lot of expectation on the new export and investment policies.
There are some issues that the State government would like the Central government to consider. For instance, the State has the largest deposits of low-grade asbestos but there is a Central ban on asbestos mining. The Government of India has prohibited the renewal of existing leases and the grant of new leases to mine asbestos in view of the adverse effect of asbestos dust on the health of those working in these mines. The State government seeks an amendment in the Mines and Minerals (Development and Regulation) Act, 1957, which can enable the States to conduct effective and quick development of its mineral resources. Under Section 5(1) of the MMDR Act, prior approval of the Government of India is required before the grant of reconnaissance permit, prospecting licences and mining leases for the First Schedule Minerals, which include hydrocarbon/energy minerals such as coal and lignite, atomic minerals and metallic and non-metallic minerals.
The State government wants that first and third category minerals to be excluded from the above section so that the grant of mineral concessions is expedited and mineral resources are developed by the State government as per its priorities.
The State government has contended that lead, zinc, copper, silver, precious and semi-precious stones and lignite are important minerals found in the State, which can play an important role in employment generation apart from contributing to the economy. Therefore, it has suggested to the Government of India that barring atomic minerals every other mineral should be excluded from the First Schedule of the MMDR Act.