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TAGS: EAGR ECON ECPS EFIN EINV ENRG EPET ETRD IN
 
SUBJECT: RAJASTHAN GETTING BACK TO BASICS 
 
REF: NEW DELHI 02110 
 
¶1. (SBU) Summary:  An economic reporting trip to Jaipur and Udaipur 
Rajasthan the week of September 23-25 revealed a high level of 
dynamism and engagement in the state bureaucracy surrounding a 
number of programs geared to "get the basics right" in 
infrastructure,  education, and service delivery.  These include the 
introduction of biometric "smart" cards to 5 million poor 
households, public-private partnerships in improving basic and 
vocational education, and leasing of heritage properties to expand 
tourism and its job creation further through the state.  If service 
delivery and better governance matter at the ballot box, as some say 
Narendra Modi's re-election in Gujarat this year indicates, then the 
BJP state party in Rajasthan could win a second consecutive term in 
November's polls.  End Summary. 
 
Background 
---------- 
 
¶2.  India's largest state by land size and home to 25 national 
parliamentary seats, Rajasthan is one of the states identified as a 
bellwether state to political and economic change in the country. 
Historically, Rajasthan has been grouped with other poor, northern 
Hindi belt states, including Bihar, Madhya Pradesh, and Uttar 
Pradesh, collectively known as the "BIMARU" states (taken from the 
states' names but also meaning "sick" in Hindi).  Yet, Rajasthan has 
been slowly and quietly improving its economic performance, 
averaging 6.6 percent GDP growth per annum during 1993-94 to 
2004-05, the fourth highest among the major states.  The government 
has also embarked on a major investment push which is covered 
septel.  Still, it has a distance to go: Rajasthan is still ranked 
in the lower band of states by income level, more than half of 
Rajasthan's children drop out of elementary school and female 
literacy is just 43 percent. 
 
Back to Basics in Infrastructure 
-------------------------------- 
 
¶3.  (SBU) A recurring theme among government officials with whom 
Econoffs spoke was that the Government of Rajasthan (GoR) is very 
focused on the basics of infrastructure - ensuring good roads, 
electricity supply, and water.  In electricity, Industry Principal 
Secretary Ashok Sampatram noted that the GoR had undergone power 
reforms for the past decade, including a World Bank project to 
increase metering and decrease power theft.  The GoR had also 
diversified sources of power, so that in addition to thermal power 
plants, Rajasthan also has hydro, nuclear, gas-based power, solar 
and wind-generated power.  Further, Rajasthan buys electricity from 
its neighbors Punjab and Gujarat.  By next year, Sampatram claimed, 
the GoR expects to be surplus in power and to sell it to neighboring 
states.  The result so far, officials maintained, was that the 
government was able to provide electricity in Jaipur, the state 
capital and largest city in Rajasthan with 5 million residents, for 
23 hours a day (a condition corroborated by local businesspeople and 
consistent with Econoffs' experience while there).  (Comment: 
However, some contacts reported during an earlier reporting trip 
this year that there was inadequate electricity supply in rural 
areas, per reftel.  End comment.) 
 
¶4.  (SBU) Roads are another area where Rajasthan's government, over 
the past ten years, has sought to improve the network to facilitate 
both tourism and business.  Rajasthan has benefited from the central 
government's highway program, with parts of both the Golden 
Quadrilateral (that connects Delhi, Mumbai, Chennai and Kolkata) and 
the East-West Corridor falling inside the state.  Adding to this, 
the state government contracted with well-known Indian 
infrastructure company, IL&FS, to build a network of secondary roads 
to complement the central government's projects.  Most of these, 
Sampatram explained, are toll roads that needed little government 
funding.  These roads are opening up swathes of Rajasthan to 
commerce and tourism opportunities, Sampatram asserted. 
 
¶5.  (SBU) The government has also worked to upgrade its air 
connectivity, recognizing its importance to the tourism sector. 
Tourism Principal Secretary Mira Mehrishi told Econoffs that the 
Government of Rajasthan has approached the Central Ministry of 
Aviation to get carriers to provide flights from the major metros to 
Rajasthani tourist towns of Bikaner, Jodhpur, and Jaisalmer.  She 
 
NEW DELHI 00002666  002 OF 005 
 
 
noted that Rajasthan's size (equivalent to France) meant that 
traveling by car or train constrained some of the tourist options 
that could be increased through air connectivity.  In addition, she 
noted that the Jaipur Airport had received permission from the 
Center to upgrade to an international airport, expected by March 
¶2009. 
 
¶6.  (SBU) One of Rajasthan's major challenges is water provision in 
a state with arid and semi-arid regions.  Sampatram called Rajasthan 
a "water-stressed" state, but noted that the government was adding 
new infrastructure to address that.  Tourism's Mehrishi elaborated, 
noting that for Jaipur, the GoR was laying underground pipelines to 
carry water from a dam about 100 miles away, to diminish the local 
use of tubewells, which draw down aquifers. (Comment: Econoffs saw 
the groundwork on the edge of town.  End comment.) In addition, 
canal water from the Indira Gandhi canal on the Punjab border is 
being brought to Jaisalmer, Jodhpur and Bikaner through a hydraulic 
lift system.  Finally, Econoffs heard in Udaipur, in southern 
Rajasthan, that the government had already started laying pipelines 
in another project to draw water from a reservoir on the border with 
Gujarat. 
 
Education a Major Focus 
----------------------- 
 
¶7. (SBU) Shubhra Singh, Commissioner of the Rajasthan Education 
Initiative (REI), described the program, which seeks out private 
sector partnerships with government elementary schools to leverage 
resources.  Singh explained that the genesis for the program was 
Chief Minister Raje's trip to the World Economic Forum in 2005, 
where she learned that several Middle Eastern countries, including 
Jordan and Egypt, had begun such programs.  For Rajasthan, the 
government has so far secured support from Microsoft, Intel, and an 
Indian Institute of Technology (IIT), among others, for a total of 
33 partnerships across 6000 schools.  In the arrangement, the 
corporate sponsor devises pilot programs focused on training, 
curriculum development and pedagogy. Last month, the Raje government 
also announced free education for all students up to class XII in 
government-run schools. 
 
¶8. (SBU) Singh identified several other new education efforts 
underway in Rajasthan, including providing school vouchers to 
families to enable them to enroll in private schools.  Another 
program used buses installed with computers to bring computer 
training into urban slum areas.  One last program that Singh 
described was a school adoption program conducted by Bharti 
Foundation (funded under the corporate social responsibility aim of 
Bharti Airtel, a large Indian company).  To date, the Foundation has 
adopted 100 schools, where they fund and place additional teachers 
and develop new curricula.  The Foundation is identifying 250 more 
schools to adopt, and have indicated they would support a total of 
500 schools.  (Comment: While the Raje administration has 
successfully pursued public-private partnerships in the public 
sector, some worry that the growth in privatization at all levels of 
education has crowded out public investment and affected the 
poor/working class's access to education, per reftel.  End comment.) 
 
 
¶9.  (SBU) Rajasthan is also courting higher educational institutions 
as well, seeking both liberal arts and vocational/technical colleges 
and universities.  Atul Kumar Garg, currently chairman of Rajasthan 
Financial Corporation, most recently oversaw Rajasthan's higher 
education efforts.  He told Econoffs the GoR had recently undergone 
a big initiative to bring in 10 private universities, with another 
30 in the pipeline.  These included a chapter of Manipal University, 
the Management Development Institute in Gurgaon, and one of the new 
IITs the central government has pledged to build. 
 
¶10.  (SBU) Garg stated that the GoR was not imposing regulations on 
the colleges and universities regarding fees or the selection of 
students.  Garg also claimed that Rajasthan's relatively better law 
and order than some states made it an attractive university 
destination for parents concerned about the security of their 
children.  He cited Chittore University, near Udaipur, where parents 
from villages in Uttar Pradesh sent their daughters, because they 
saw it as safer than many towns in UP.  He also pointed to the 
Rajasthani community across India that had left the state in prior 
years in order to pursue economic opportunities.  Those families 
 
NEW DELHI 00002666  003 OF 005 
 
 
were eager to send their children to Rajasthani schools.  Garg 
estimated that the number of students in universities in Rajasthan 
had more than doubled in the past five years, going from 350,000 to 
one million enrolled students.  On-campus recruitment was up, with 
major companies present, as well as the IT association, NASSCOM. 
 
¶11.  (SBU) Companies are also assisting in establishing or upgrading 
technical or vocational schools as well, part of a Mission on 
Livelihoods, Sampatram explained, to help degree holders top off the 
skills they need in today's marketplace.  Garg noted that ICICI Bank 
had committed to assist twenty Rajasthani colleges in building 
3-month courses in banking, finance and insurance, with an eye 
towards campus recruitment of graduates.  Similarly, US-based BPO 
Genpact has set up five knowledge centers with three-month courses, 
from which Genpact can select graduates.  Finally, Garg described 
new courses being provided by companies in the hotels, restaurant 
and transport sectors, in order to source new graduates with the 
skills the companies needed. An English-language Rajasthan magazine 
called Rajasthan Mirror claimed that Jaipur is becoming the 4th 
largest engineer hub in the country, after Bangalore, Pune, and 
Noida.  While Bangalore and Pune graduate 15,000 engineers a year, 
Jaipur graduates 5500, but with 35 engineering colleges in the 
pipeline through Public-Private Partnerships, it is expected to rise 
to 10,000 engineering graduates a year. 
 
Improved Service Delivery Top Goal 
----------------------------------- 
 
¶12.  (SBU) Mr. Subhash Garg, Principal Secretary (Finance) 
identified governance and service delivery as a major reform focus 
for the Raje Government.  He described the new Bhamashah, or 
Financial Empowerment Scheme, that was just announced in March 2008. 
 The scheme plans to provide a smart card (capable of biometrics) 
for a no-frills local bank account to every Rajasthani household 
that is below the poverty line (BPL) or is a small or marginal 
farmer.  In addition, scheduled caste/scheduled tribe families who 
are not BPL or a small or marginal farmer may be eligible, based on 
other indicators of need.  Garg estimated that the government had 
already enrolled 4.6 million households out of five million believed 
to be eligible (Note: The total number of households in Rajasthan is 
roughly 8 million.  End note.) 
 
¶13.  (SBU) He also pointed out other elements of the Bhamashah 
program, including that the bank accounts are opened in the name of 
the woman of the household, and that the card is envisaged as a 
"multiple benefit" card.  As such, the government planned to 
disburse health insurance, national rural employment guarantee 
program (NREG) wage payments, eligible school vouchers, and pension 
benefits through the card.  The GoR was also providing a starting 
balance in the new accounts of Rs 1500 (roughly $31) per family. 
Subhash Garg explained that the government intended the program to 
cut down on intermediaries (an NREG program officer noted the direct 
payments would help cut down on "misappropriation").  He contrasted 
the program with the common tendencies of states to give away "free" 
power or wheat, which he said was not effective.  The government has 
also planned a second phase of financial inclusion, where ration 
shops for BPL families would be replaced with direct cash transfer 
of food coupons or food voucher to the families on the smart card. 
 
 
¶14.  (SBU) A tour of two NREG sites outside of Udaipur also showed 
the GoR's efforts to improving service delivery to Rajasthan's 
poorest.  First, the state government has hired new state employees 
to implement the program and placed them as program officers in each 
of Rajasthan's 33 districts.  (Comment: One criticism of the NREG 
program is that it puts the burden on the state governments to fund 
extra personnel to implement the administratively detailed programs. 
 When Econoff visited a district in Uttar Pradesh in 2007, it had 
not hired extra staff, forcing the extra burden to fall on the 
district and block development officers, already overburdened from 
other government schemes.  End comment.) Kirti Rathore, Program 
Officer for the District of Girwa, on the outskirts of Udaipur, 
showed Econoffs two projects that the villagers had requested, an 
"all-weather" road between two villages and the creation of check 
dams to stop soil erosion and flooding of other roads. 
 
¶15.  (SBU) Rathore explained that she had a staff of six to seven 
junior engineers who monitored progress on the chosen projects, 
 
NEW DELHI 00002666  004 OF 005 
 
 
providing the basis for how much the NREG participants were paid. 
She used 2001 Census data to identify BPL families as the main 
targets of the program, noting that over the three years of the 
program in her district, awareness about the program had grown 
considerably, with more than 90% of eligible households registered. 
Rathore stated that the daily wage had risen from Rs 50 three years 
ago to Rs 100.  Further, she claimed that the workers were now 
demanding higher wages during the agricultural seasonal work, to 
match that of the NREG program. 
 
¶16.  (SBU) Women are a targeted beneficiary of the NREG program and 
the NREG sites that Econoffs visited reflected that.  Roughly 80% of 
participants were women.  Rathore explained that the men go to 
Udaipur for daily work, since it pays higher wages than NREG, and 
their wives work the fields as agricultural laborers and participate 
in NREG for the additional income.  As part of the Bamashah 
financial inclusion program, Udaipur District officers recently 
opened basic savings accounts for the NREG participants in close by 
regional rural banks. 
 
Enhancing Tourism Sector 
------------------------ 
 
¶17.  (SBU) Principal Secretary (Tourism) Mira Mehrishi highlighted 
for Econoffs several new initiatives being undertaken.  First, she 
cited the initiative to get more four and five-star hotels in 
Jaipur, Rajasthan's capital and a favored tourist destination.  She 
mentioned that there are 7-8 high-end hotels which will be completed 
within five years, adding roughly 1200-1500 more hotel rooms to the 
city.  Mehrishi also estimated that each new hotel room generates 
six new jobs. 
 
¶18.  (SBU)  Mehrishi stressed that her office's approach to 
increasing tourism potential in Rajasthan (already one of the 
largest tourist destinations in India) was to invite the private 
sector in where she could, since the private sector can "do many 
things better than the state."  For example, she noted that the GoR 
owns 72 heritage forts in the state, but 40 of them are loss-making. 
 Her office is now planning to lease the forts with land to the 
private sector across the state for converting into hotels. 
Likewise, the government has launched an "Adopt a Monument" scheme 
for 15 monuments so far.  She pointed to Jaipur's Wind Palace as an 
example.  (Comment: Located in the center of town, the Wind Palace 
has clearly undergone outside renovations and makes the other nearby 
buildings look decrepit.  End comment.) 
 
¶19.  (SBU) Other innovations that Mehrishi identified include adding 
a deluxe "Royal Rajasthan on Wheels" to the other already popular 
(and expensive) "Palace on Wheels", developing Kumbhalgarh, 
reportedly the second largest wall outside China, and hot air 
ballooning in Jaipur and Udaipur.  She also said her office is 
focusing on smaller towns as tourist destinations, since the new 
national highways have decreased travel time.  She also noted that 
the GoR has asked the central government to open up more sand dunes 
on the border with Pakistan, outside the fort city of Jaisalmer. 
Mehrishi then described the introduction of several new "light and 
sound" shows at key tourist destinations and the creation, already 
underway, of an "elephant village" for providing shelter for the 100 
elephants that are used to draw tourists up to Jaipur's Amber Fort 
and Palace. 
 
Comment 
------- 
 
¶20.  (SBU) Econoffs were struck by the level of engagement and even 
enthusiasm evinced by the bureaucrats with whom they met.  Drawn 
from the Indian Administrative Service (IAS), these state top 
bureaucrats seemed empowered and challenged to introduce innovative 
programs aimed at raising investment and job levels and improving 
service delivery across Rajasthan.  These senior bureaucrats often 
mentioned Chief Minister Raje as the source of new program ideas and 
goals.  And as Econoffs traveled around Jaipur and Udaipur, the 
signs of infrastructure and urban improvement were visible.  But 
when roughly three-fourths of Rajasthanis still live in the rural 
areas, it is there that improvements will be critical.  Steps like 
the establishment of more schools and the creation of smart-card 
based benefits transfers could make an important difference to the 
majority of Rajasthanis.  Election results in November may well 
 
NEW DELHI 00002666  005 OF 005 
 
 
indicate whether these programs are working. 
 
WHITE