Industrial Sector of Rajasthan :

In the planned era, state played a major role in promoting industrial development. However, in Rajasthan industrial development had never been on agenda as is visible from investment outlays in various plans. The outlay earmarked for industry and mining sector stood at 0.85 percent of total outlay during the first plan and it touched 6.35 percent during the seventh plan; the highest ever since the first plan. A decline is observed in the next plan to rise again in the next plan to 7.79 percent. However, the share of this sector fell to 3.5 percent in the tenth plan. It is not to say that in absolute terms the funds for industry and mining sector slowed down; it stood at all time high at Rs.2l 540.9 million when it was mere Rs.5.5 million during the first plan. But a significant decline occurred during the tenth plan. Since the liberalization began in the early nineties, the funds allocation almost doubled. These trends are reflected the performance of industrial sector in Rajasthan.

Structure :

The structure of Rajasthan's industry is largely unorganized. The organized industries as per the Annual Survey of Industries reveal that there were 3839 factories in 1992-93 at the beginning of the reform period. The number of factories grew by I 8.2 percent by 1995-96 and then by 26.5 percent by 2004-05. Thus, the growth of industries has been faster after 1995-96. Overall since liberalization began, the number of organized factories grew by almost 50 percent to 5740 in 2004-05. But this growth in industries did not lead to employment. During 1992-93 and 1995-96, the employment significantly grew by I 1.8 percent, but declined thereafter by 8.7 percent by 2004-05. However for the period as a whole employment grew by 2.1 percent in the organized industrial activities, the same rate as the population growth. In absolute terms'3839 factories employed 263 thousand workers and in 2004-05 the number stood at 268 thousand workers. It is surprising that wages paid increased by 53.7 percent between 1992-93 and 1995-96whenthisgrowthdeclined to36.4 percent between 1995-96 and 2004-05. However, between 1995-96 and 2004-05, the wage bill increased by 109.6 percent. The above reveals two facts: one that a pick up in industrialization took place after 1995-96 and second that shift in employment took place for more skilled workers that demanded higher wages. Contract workers are also on an increase.

Unorganised  Manufacturing  :

Unorganized manufacturing sector predominates in Rajasthan. In Rajasthan. there were 466044 enterprises in I 994-95 which increased to 623553 in 2000-0I (33 .8% increase), while the number increased to 636470 in 2005-06 (a 2.1% increase). The growth pattern is almost similar across regions, though the number of urban enterprises increased at a faster rate during 1994-95 and 2005-06. Unorganized enterprises are classified into three categories viz., own account enterprises (OAME), non directory enterprises (NDME) and directory enterprises (DME). It is found that in 1994-95, 65.15 percent unorganized manufacturing enterprises were rural and this proportion declined to 62.75 percent in 2000-01, but marginally increased to 62.98 percent in 2005-06. However, in 1994-95, 88.65 percent enterprises were own account enterprise that is using family labour only. This proportion increased to 90.37 percent in 2000-01 to decline to 86.89 percent in 2005-06 and this gain has been of directory enterprises i.e. enterprises employing more than five workers on wages. 

 It is further noticed that during the three years preceding 2001-01, 13.8 percent rural enterprises reported expansion and 54.7 percent were stagnating and22.0 percent were contracting. The situation reversed in 2005- 06 when I 7.3 percent enterprises reported expansion, 48.3 percent reported stagnation and 23.8 percent were contracting. In case of urban enterprises, there was no change in expanding enterprises though proportion reporting stagnation declined and those contracting the proportion increased. For all enterprises, also a similar trend is noticed. In Rajasthan, thus these five years have observed increase in proportion of enterprises expanding and contracting, but reduction in stagnating enterprises.

As regards the industrial structure in the unorganized manufacturing sector is concerned, it is based on six top industrial groups are: manufacture of wearing apparel; dressing and dyeing of fur; manufacture of food products and beverages; manufacture of furniture; manufacturing nec; manufacture of wood and products of wood and cork, except furniture, manufacture of articles of straw and plaiting materials, manufacture of other non-metallic mineral products and manufacture of textiles accounting for 86.21 percent enterprises in 2000-01, while in 2005-06 the top six industries included manufacture of wearing apparel; dressing and dyeing of fur; manufacture of furrniture; manufacturing nec; manufacture of food products and beverages; manufacture of other non-metallic mineral products; manufacture of textiles and manufacture of wood and products of wood and cork, except funriture, manufacture of articles of straw and plaiting materials accounting l-or 82-76 percent enterprises. No new industrial group has emerged during this period though of the top six some have gained and some have lost ground. The same set of industrial groups predominates  its rural and urban areas with varying importance.

Recent Industrial Investment Scenario  :

The thrust of the new industrial policy at the national level has been to enable entrepreneurs to take investment decisions based on their own commercial perception with a greatly reduced regulatory role of the government Licensing stands abolished for most of the industries, and the entrepreneurs are only required to file an investment intention. The structure has also invoked response from foreign investors. Since the new industrial policy (NEP) aimed at making industries globally competitive, the process of foreign collaboration through technology agreements was considerably simplified. In Rajasthan many step have been taken to boost investment. During past decade the govemment has set up Economic Development Board, Board of Infrastructure Development and Investment promotion, Inland container Depot at Bhilwara, Rajasthan Foundation and various committees to advise the State government on industrialization processes. The investment climate in Rajasthan during August I99I and December 2004 shows that a total of 2662 IEMs ( Industrial Equipment Manufacturing ) (4.73 percent of national share) were filed to bring in investment of Rs417600 million (2.43 % of national share) and would have created employment to the tune of481069 (4.42% of national share)

Though the World Bank that is highly praising economic performance of Rajasthan reports that to date the record is that Rajasthan has failed in attracting private investment, it is only modest. It reports that what is of more serious concem is that private investment rates have been falling since the early I990s (World Bank 2006). Private investment stood at less than 6 percent of GSDP in 2002-03 (15.7% of national), while public investment stood at 5.7 percent of GSDP (6.3% of national)