Reforms -  Engine of Economic growth in Rajasthan :

Even though Rajasthan is India's largest state in terms of geographical size, its impact on national politics and the country's overall economic trajectory will remain relatively small. Despite rapid growth in past years it remains an economic laggard, with little industry and a pronounced agricultural sector. However, the state government has made noticeable progress on improving the business environment, and Rajasthan has consequently been gaining a reputation as a reform- and business-friendly state. Going forward further reforms, combined with the state's proximity to the National Capital Region (NCR), will bolster economic growth and attract investment.

Fast economic growth, albeit from a low base :

The landlocked western state of Rajasthan is India's biggest state in terms of geographical size, accounting for over 10% of the country's land mass. However, much of it, especially the Thar Desert in the west, is sparsely populated. Rajasthan borders five Indian states: Punjab to the north, Haryana and Uttar Pradesh to the north-east, Madhya Pradesh to the south-east and prosperous Gujarat to the south-west. It also shares a 1,048-km border with Pakistan, giving the state special importance with regards to national security.

Nevertheless, the state has been unable to capitalise on its large size and remains relatively poor. Within India it was known as one of the so-called BIMARU states, the label for the four backward northern states of Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh. They are generally landlocked and underdeveloped, as well as populous and poorly endowed with natural resources. In the public mind, these states—which together account for nearly half of India's 1.3bn population—also still symbolise the country's rural backwardness (in Hindi, bimar means sick).

At about Rs72,200 (US$1,100) in fiscal year 2014/15 (April–March), Rajasthan's average income per head was the highest among the BIMARU states but still only one-third of that in the capital, New Delhi, and well below that in Maharashtra or Tamil Nadu. Still, the state has witnessed rapid economic growth over the past decade, albeit from a low base. In addition, booming tourism and the state's proximity to the NCR, one of the world's biggest urban agglomerations, have driven economic expansion. In 2014/15 Rajasthan's real GDP stood at US$95.3bn—roughly on a par with countries such as Ecuador and Slovakia.

The make-up of Rajasthan's economy differs from most other Indian states: services contribute relatively less to GDP and agriculture relatively more. Agriculture accounts for 21% of total output, with manufacturing contributing 20% and services 58%, according to data provided by the Central Statistics Office for 2013/14. The services sector provides 47% of all jobs, followed by agriculture (44%) and manufacturing (8%). The large share of agriculture also explains why Rajasthan is one of India's least urbanised states. According to the 2011 census, three-quarters of the population lived in rural areas. There are only three cities with a population greater than 1m: Jaipur, Jodhpur and Kota.
Rajasthan has a sizeable mining sector and is a big producer of cement and polyester. It is India's second-largest domestic source of crude oil. Still, its industrial sector is underdeveloped. However, the state is likely to benefit from the construction of the Delhi Mumbai Industrial Corridor, as a large part of the corridor will run through Rajasthan. Among other things, this "megaproject" is expected to lift foreign direct investment (FDI), which totalled merely US$1.3bn in 2000–15, equivalent to 0.5% of India's total FDI in the same period.

Caste politics dominate :

Established as a state in 1956, Rajasthan's politics in the early years were dominated by the Indian National Congress party, then synonymous with the Indian state itself. The rise of the Bharatiya Janata Party (BJP) in Rajasthan dates back to the early 2000s. In the 2013 state assembly election, the BJP won by a landslide, securing 163 out of 200 seats and displacing the Congress-led government. The current chief minister is Vasundhara Raje Scindia, a politician from a prominent political family.

As is the case in most north Indian states, caste and community will continue to play a big role in politics. The main castes in Rajasthan are the Jats, Rajputs, Gujjars, Bishnois and Meenas. They compete for access under India's so-called reservation policy—an elaborate quota system for government jobs, places in publicly funded colleges and elected assemblies. The fiddling with reservation policy is a key lever of influence for political parties, meaning that castes tend to vote as a bloc for those who promise to promote their status. Issue-based politics often take a back seat as the incentive to put forward reform legislation is lowered by the rent-seeking activities of castes. The BJP has come under increased pressure in the states that it rules to increase allocations for certain castes, but caste politics will continue to be particularly pronounced in Rajasthan.

Slowly improving governance :

This notwithstanding, economic governance in Rajasthan has been better than in other Indian states. Rajasthan has been gaining a reputation as a reform- and business-friendly state. An assessment in 2015 of states' implementation of business reforms by the Ministry of Commerce and Industry ranked Rajasthan 6th out of 32 states and union territories. The ministry classified it as an "aspiring leader", along with more prosperous states such as Gujarat and Andhra Pradesh. Rajasthan ranked third for complying with environmental procedures and registering and complying with tax procedures, and fourth for allotting land and providing construction permits. But obstacles will remain. Going forward, Rajasthan's main economic challenges will include further improvements in literacy (female literacy in Rajasthan is the lowest in India), workforce skills and the status of women, as well as leveraging inflows from tourism and remittances from outward migration.