Structure of Rajasthan's Economy  :

Rajasthan's economy is predominantly agrarian and rural in nature and there are wide fluctuations in the growth rate of the Net State Domestic Product ( NSDP ) owing to uncertainties in agricultural production, which is almost entirely dependent on rainfall. Agriculture provides livelihood to almost two thirds of the population and contributes about 30 per cent to the NSDP. However, more than 60 per cent of the cropped area in Rajasthan is rainfed.

More than 40 years of the last six decades have been drought years for Rajasthan. This has harshly affected the State’s economy. Water, employment and safeguard measures for survival of the livestock population have become the main worries of the Government in these drought years. Without any doubt, these efforts have huge financial implications. The situation is more alarming in the drought years because agriculture sector continues to be the main source of livelihood for about 70 % of people. Most of the State is dependent on groundwater, both for irrigation as well as for drinking water. Due to sharp increase in human and livestock population there has been tremendous increase in the biotic pressure on the fragile resources of this desert State and rapid decline in the groundwater level. Basic structural features of state economy are :

1.Rajasthan has only 1.04 per cent water resources of the country. With short and erratic monsoon, Rajasthan is the most water deficient State in the country.

2. The contribution of the agriculture sector including agriculture, animal husbandry, forestry and fishing towards NSDP was 31.72 per cent in 1999-2000, rose to 36.40 per cent in 2003-04 and again declined to 29.33 per cent in 2008-09. Its contribution was lowest at 25.74 per cent in 2002-03. Share of agriculture sector in NSDP has declined during the last six decades yet it continues to be a very important sector as it employs around two third of the workforce. The performance in agriculture sector continues to be essentially monsoon driven.

3. Agriculture in Rajasthan is mostly dependent on monsoon and its duration is also very short. The average rainfall of the State is 580 mm. The average rainfall is ranging from less than 100 mm 1.2 in Jaisalmer to 1000 mm in Chittorgarh, Jhalawar, Baran and Kota. The average rainfall in western and eastern parts of Rajasthan is 310 mm and 700 mm respectively. Nearly 90 per cent of rains are received in Kharif (June/July to September). While the development of water resources has always been the top priority in Rajasthan, water harvesting and conservation efforts have nevertheless been hampered due to inadequacy of resources.

 4.The Industries sector includes mining, manufacturing (registered & un-registered), construction, electricity, gas & water supply. During the last 10 years, contribution of this sector was around 25 per cent. This was highest at 26.78 per cent in 2002-03 and lowest at 22.13 per cent in 2001-02.

5. The Services sector consists of railways & other transport, storage, communication, trade, hotel & restaurant, banking & insurance, ownership of dwellings, legal services, business services, public administration and other services. Contribution of this sector in NSDP was lowest at 40.83 per cent in 2003-04 and highest at 47.48 per cent in 2002-03. The contribution of the services sector in the economy of Rajasthan is restricted due to inadequate availability of skilled manpower.

 6. If composition of NSDP during last 10 years is analyzed, contribution of Industries sector remained almost around 25 per cent but Agriculture & Services sectors show the autocorrelation with vice-versa decreasing and increasing trends.

7.  The gap between the per capita income at National and State levels is due to faster growth of population in the State which curb the overall growth and repeated droughts, affecting production in agriculture and allied sectors.

8. Monsoon is the main determining factor in the estimation of State Domestic Product in the State which could be seen in the year to year fluctuations. This makes analysis of the pattern difficult, as it is possible to generate any growth pattern, merely by changing the base and the terminal years. Therefore, the plan period wise growth rates shown above need to be interpreted with great caution as they often indicate merely whether the first year of the plan was with good or bad monsoon.

9. NSDP shown a good growth track but it has been curbed by population growth which could be seen by growth in per capita income. During last five decades, agriculture growth has remained lower than the growth rates witnessed in the industrial and services sectors. These inter-sectoral differences in the growth performance raises the issue of differential growth in per capita income of the people engaged in agriculture relative to those employed in other sectors.

Recent Developments and Initiatives to boost Economic Activity at the State Level  :

1. The global financial crises and the recessionary trends have impacted the national economy. By December, 2008 Rajasthan had spent around 70% of targeted plan expenditure of Rs. 14,020 crores. The pace stands accelerated however, there is a risk of Plan expenditure getting decelerated on account of the overall tax collections witnessing a decline during the third quarter of the current fiscal. In Rajasthan, the collections from Value Added Tax have risen by just 9.78 per cent in November 2008 as compared to cumulative growth of 24.65 per cent between April-October, 2008. Registration and Stamps as well as Transportation are showing negative growth even in gross terms. Along with lower tax receipts by the State, the lower collections in Central Taxes would also hurt state finances.

2.  While protection has to be given through individual beneficiary and area development programmes that help the vulnerable sections of our society, economic and financial difficulties should not be allowed to impinge upon such programmes.

3. Rajasthan has on its part taken steps to minimise this impact by taking a number of steps to deal with the emerging challenge. Acutely aware of the need to supplement efforts being made by the Government of India, the State is making all efforts to provide a contra–cyclical stimulus via enhanced Plan expenditure in the current year as well as in the next year. The initiative taken by the Government of India to stimulate the economy through a number of monetary and fiscal steps, including acceleration in plan expenditure of major schemes and programmes, would undoubtedly help the economy to weather the storm of global crisis.

 4. Rajasthan has taken all possible steps to speed up expenditure, both under State Plan as well as Central Sector Programmes and Centrally Sponsored Schemes. By December, 2008 Rajasthan had spent around 70% of targeted plan expenditure of Rs. 14,020 crores and the Revised Estimates for 2008-09 has been taken at Rs. 14,915 crores. Similarly, expenditure under Central Sector Programmes and CSS is also taking place at a brisk pace.

5. The State has prepared an Action Plan for January-March, 2009 with well defined goals and targets. The Action Plan Reviews are done every fortnight to ensure effective and smooth implementation of schemes and projects.

6. Inline with the several measures to stimulate the economy announced by the Government of India and facility of additional market borrowings, Rajasthan has made provisions to absorb additional funds under PMGSY, JNNURM, NREGA, Indira Aavas Yojana, ARWSP and many other programmes.

7. Under NREGA, as against anticipated and budgeted expenditure of Rs. 4600 Cr. in the current year, Rajasthan had spent Rs. 4100 Cr. by December, 2008 and expect to reach the level of Rs. 5700 Cr. by March, 2009. Rajasthan accounts for around 20% of the total expenditure in the country under this programme.

 8. Rajasthan would be achieving the target of road connectivity under PMGSY and Bharat Nirman in 2008-09 by covering all the habitations of 500 and above in general areas and 250 and above in Tribal/Desert areas except a limited number of habitations where work is held up due to litigation or otherwise.

9. In the year 07-08, Rajasthan accounted for 24% of the road length constructed and 27% of habitations connected in the country.

10. Expenditure level has also gone up significantly in National Rural Health Mission, JNNURM, Indira Avas Yojana and other programmes. The pace of implementation stands sufficiently accelerated in the State.

11. Since Rajasthan would be achieving the target of connecting habitations under PMGSY and Bharat Nirman in the current year itself. The State intends to take up habitations in the lower population range of 250-499 in the general areas and 150-249 in the tribal and desert areas.

 12. In NREGA works, considering the requirement of providing job within 5 Kms. of the residence of a job seeker, there is limitation of having productive and useful works in many Panchayat areasparticularly in desert region from within the list of permissible works. Flexibility to take up other works as per need and requirement is of great importance for Rajasthan considering that expenditure under NREGA is extremely high, being more than 1/3rd of the State's plan spending. The Planning Commission and Government of India were requested to provide specific relaxations to Rajasthan in the meeting on economic stimulus.

 The steps being taken by the State Government to support the initiatives of the Government of India, in bringing back the economy to earlier high growth path through enhanced plan expenditure in would provide fillip to the economy at this critical juncture.