The structure of the economy of Rajasthan has undergone a change earlier Rajasthan’s economy was primarily agrarian and industrial activity was restricted to places like Jaipur, Bhilwara, Alwar and Jodhpur while cities like Ganganagar and Chittorgarh grew as agro-processing and cement producing centres. However, the high growth phase started in the state after the announcement of the New Industrial Policy, which led to increased investments in large and medium scale industries. The secondary sector showed rapid growth, followed by the tertiary sector, while sectors like IT/ITES, and Retail also emerged.
Within the secondary sector, manufacturing and construction have an 87% contribution; manufacturing has witnessed the highest growth during the last few years. In the tertiary sector, trade, hotels, restaurants and transport have the highest contribution.
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 per cent of Rajasthan’s industrial output comes from four regions 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 driving industrial growth are Ajmer, Alwar, Barmer, Bharatpur, Bhilwara, Bikaner, Bundi, Chittorgarh, Jaipur, Jodhpur, Kota and Udaipur.
The informal sector contributes significantly to employment in Rajasthan; there are an estimated 1.84 million enterprises in the informal sector in the State, generating employment for 2.9 million workers. Also, over 70% of the enterprises in the informal sector are currently involved in activities related to manufacturing, trade, and repair activities.
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 Financial Corporation (RFC), and Project Development Corporation are fully operational. The State Government has also put in place investor friendly sector specific policies.
The Resurgent Rajasthan initiative is also designed to bring significant investments into Rajasthan, and going forward, is expected to drive the secondary and tertiary sectors as well.
Rajasthan has factor advantages in a number of sectors backed by favourable 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.
With the above understanding of the State and the industrial scenario therein, the state government has introduced Rajasthan Investment Promotion Scheme – 2014 which is particularly come into force for promoting investment in the state and benefiting new or sick medium and small scale enterprise in the state.