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Vasundhara Raje Scindia's Rajasthan model has a long way to go

It was a cautious start. As the Rajasthan Chief Minister Vasundhara Raje Scindia re-initiated her flagship investors summit Resurgent Rajasthan, she was cautious in making claims.

twitter-logoAnilesh S Mahajan | November 20, 2015 | Updated 09:48 IST
Rajasthan Chief Minister Vasundhara Raje Scindia
Rajasthan Chief Minister Vasundhara Raje Scindia (Photo: Reuters)

Anilesh Mahajan, Associate Editor, Business Today
It was a cautious start. As CM Vasundhara Raje Scindia re-initiated her flagship investors summit Resurgent Rajasthan, she was cautious in making claims.

She announced that in the past two years, Rajasthan has garnered 295 agreements worth Rs 3.3 lakh crore of investments, and it may generate 2.5 lakh jobs. These agreements range from power, solar, mining, auto, IT, chemicals and fertilisers, food processing, infrastructure et al. The CM says the state has signed these MoUs over the past two years after doing proper due diligence.

In 2007, during her last tenure, she got assurances of 357 projects with commitment of Rs 1.67 lakh crore, but only 40 per cent of those projects could see the light of day. Obviously this doesn't make one confident.

However, her bureaucrats point out that in the past two years, the state has managed to change several laws to set the ball rolling.

Last year, President Pranab Mukherjee used a rare provision in the Constitution under Article 254 (2) - he gave his consent to Rajasthan's amendments in the labour law. This was rare, as the new labour laws over-ride laws of the union, but also indicated the intent of the government to pave the way for easing processes for business. Since then, she has been tweaking the archaic laws governing factories, labour employment and cutting down on red tape.

In all, 61 article laws have been repealed, and 187 amendments have been enacted till now. On November 19, when she resurrected her flagship Resurgent Rajasthan event, inviting the industry captains, she had a solid presentation to make. In her last tenure she did the first edition of this event, and restarted again this year November.

Rajasthan is attracting players from solar as well wind energy, but there is a limit for the state to allow solar expansion, especially if the distributing companies are not healthy. The state has not decided as yet on the Union government's offer UDAY scheme. To avail this scheme, the state government is required to take on 75 per cent (50 per cent+25 per cent) of debt from the distribution companies onto its own books in the next two years, and ensure rationalisation of tariff. The state is facing fiscal deficit of 2.99 per cent of GSDP, which is roughly Rs 20,610 crore. The cumulative losses made by the distribution companies of the state, till september 2015 is Rs 81,000 crore. It will be a tough call for Scindia to make.

Challenges for Scindia are not limited to the electricity sector. As Finance Minister Arun Jaitley pointed out, she is also required to reduce the time taken for permissions for businesses to start operations. This also needs cleaning up of processes.

Along with reforms, Rajasthan remained in the news for allegations of corruption. In September, Rajasthan's mining secretary Ashok Singhvi was arrested by the state's anti-corruption bureau on charges of bribery. During the investigation it was found that he might be involved in a mining scam.

An embarrassed Raje cancelled all the mining licences issued since October 2014. In the ongoing Resurgent Rajasthan event, she announced that by January 2016, the state will do e-auctions for mines. Hence, Rajasthan will become first state to do so.

All these are essential to turn the MoUs signed into reality on the ground.

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