Introduction
In her budget announcement for 2024-25, the deputy chief minister and finance minister Diya Kumari set an ambitious target for the government to achieve a $350 billion economy by 2029-30. In the 2025-26 budget, the government reiterated the same target. Further, she also announced the path to achieve this ambitious goal, which includes strategic interventions in agriculture, industrial expansion, renewable energy investments, and leveraging cultural tourism. The budget outlines key growth drivers, including the development of smart cities, digital infrastructure, and industrial clusters, painting an optimistic picture of Rajasthan’s economic future.
Setting a target of a $350 billion economy is only the first step, but is Rajasthan ready to achieve this bold goal? What does the historical economic data or trend of Rajasthan’s economic growth tell us? Is Rajasthan going in the direction of achieving this ambitious goal, or is it a political stunt? In short, the government’s budget announcement needs a closer examination. For the 2025-26 financial year, the government estimated the GSDP to be 19,89,000 crores with a growth rate of 16.73% annually. This is a positive sign for the economy after declining for three consecutive years.
Rajasthan is known for its rich culture and historical significance. The state is a land of forts, vibrant traditions, exquisite attire, and a long history of wars and valiant kings. Geographically, its proximity to the national capital is a strategic advantage. Rajasthan also bridges Delhi, the National Capital Region (NCR), and Mumbai, India’s financial capital, through infrastructure developments like the Delhi-Mumbai Expressway. The state is also part of the Golden Quadrilateral highway network, pivotal for boosting Rajasthan’s economy. In addition to these advantages, Rajasthan is witnessing growing industrial development. Although Gurgaon, a central industrial hub, lies in neighboring Haryana, the spillover effect also benefits Rajasthan. The state is gradually urbanizing, with an increasing population contributing to expanding its service sector, which remains a critical pillar of economic growth. Furthermore, Rajasthan is one of the top tourist destinations, attracting domestic and international tourists captivated by its cultural heritage, historical landmarks, and unique desert landscapes.
However, despite these opportunities, Rajasthan faces several significant challenges. Rising crime rates, particularly crimes against women, are a serious concern, with the state ranking among the highest in India for such incidents. Social issues, including caste-based divisions, further hinder socio-economic progress. Additionally, Rajasthan’s harsh climate, characterized by extreme temperatures and water scarcity, poses natural obstacles to development.
Nevertheless, Rajasthan remains one of India’s top 10 states regarding economic potential and continuous growth. The state is poised for sustained development with strategic infrastructure projects, a growing tourism industry, and an expanding service sector. Addressing social and environmental challenges will be crucial for Rajasthan to fully capitalize on its strengths and achieve even more significant economic prosperity. This article critically analyzes whether the $350 billion target is a realistic policy objective or a politically motivated promise. Exploring historical growth patterns and sectoral contributions seeks to determine whether Rajasthan can bridge the gap between aspiration and reality — or if this ambitious projection is more a product of electoral calculus than grounded economic strategy.
Historical Trend of the Economy of Rajasthan
The economic trajectory of Rajasthan, as depicted through its Gross State Domestic Product (GSDP) at current prices, reveals a robust pattern of growth over the years 2020–21 to 2025–26, reflecting the state’s evolving economic landscape. In 2020–21, the GSDP stood at ₹1,017,917 crore, with a modest growth rate of 1.70%, likely reflecting the economic downturn induced by the COVID-19 pandemic. However, the subsequent fiscal year (2021–22) witnessed a remarkable recovery, as the GSDP surged to ₹1,195,641 crore, with an impressive growth rate of 17.46% — the highest in the observed period. This sharp rebound can be attributed to the revival of key sectors, increased government spending, and policy measures to restore economic stability after the pandemic.
The growth momentum continued in 2022–23, with the GSDP rising to ₹1,356,480 crore, although the growth rate moderated to 13.45%. This tapering growth suggests the economy was transitioning from a phase of post-pandemic recovery to more sustainable growth patterns. The following years demonstrate a steady expansion: in 2023–24, the GSDP reached ₹1,521,510 crore, with a growth rate of 12.17%, while 2024–25 saw further growth to ₹1,704,339 crore, albeit with a slightly lower growth rate of 12.02%. Projections for 2025–26 indicate continued positive growth, with the GSDP expected to climb to ₹1,989,000 crore and the growth rate rising again to 16.73%. This anticipated acceleration suggests renewed economic dynamism, possibly driven by infrastructural development, enhanced industrial output, and strategic policy initiatives. The chart illustrates Rajasthan’s economic resilience and capacity to navigate external shocks while maintaining a long-term growth trajectory. The data underscores the state’s potential for sustained economic development, provided structural challenges are addressed and growth-enabling policies continue to be implemented.
Chart – 1.1
The Projection Based on Historical Data with the CAGR Growth
Analyzing Rajasthan’s economic growth over the past years reveals a compelling upward trajectory. With a Compound Annual Growth Rate (CAGR) of approximately 14.34% from 2020–21 to 2025–26, the state’s economy has demonstrated resilience and dynamism. This consistent growth reflects the cumulative impact of policy reforms, sectoral development, and a strong post-pandemic recovery. Given this growth rate, future projections offer a promising outlook. For instance, if the state continues to grow at the same pace, it is estimated that Rajasthan could achieve an economic size of $350 billionin approximately 3.18 years. This projection highlights the state’s potential to significantly contribute to India’s financial landscape, with increasing opportunities for infrastructure development, foreign investment, and enhanced socio-economic indicators.
Such forecasts underscore the importance of sustaining policy momentum, fostering innovation, and addressing structural bottlenecks to ensure Rajasthan capitalizes on its growth trajectory. If current trends persist, the state’s economy could reach new heights and serve as a sustainable and inclusive development model for other regions.
Chart – 1.2
Sectoral Contributions in Rajasthan’s GSDP
The Rajasthan government’s ambitious target of achieving a $350 billion economy requires a nuanced understanding of the evolving sectoral contributions to the state GDP. To understand the future of any economy, it is essential to understand the main contributors. So, in the case of Rajasthan’s economy, we will examine the three main sectors: agriculture, industry, and service. Historically, Rajasthan agricultural state agriculture has always played an essential role in the Rajasthan economy and the job creation. However, agriculture is considered an unorganized and low-paying job creation sector. For the modern economy, the agricultural surplus should be used for the manufacturing and the service sector. It is essential for a robust economy. If the agricultural surplus is not used in the manufacturing or service sector, it will be hard for the economy to sustain itself.
Punjab is the best example of this for a long time. Punjab has been an agricultural surplus state, but because of insufficient and long-term policies, the agricultural surplus is not used for the manufacturing and service sectors. Hence, this is the result of the current state of Punjab. Punjab is a failed state in industry and service sector. So, to achieve a $350 billion economy target and become one of the top economies of India, Rajasthan has to invest more in the industry and service sectors than the agriculture sector. A transition from the agriculture economy to the manufacturing and service sector economy is very important. The data from 2020–21 to 2024–25 highlights shift in the relative shares of agriculture, industry, and services sectors, which have substantial implications for the state’s growth trajectory and development strategy.
Chart – 1.3
Agriculture Sector
The agriculture sector’s contribution to state GDP has continually declined from 30.45% in 2020–21 to 26.92% in 2024–25. Rapid urbanization, the decreasing fertility of the land, the increasing cost of farming, and the increase in the literacy rate are some of the central reasons behind this. Millennials and the Gen Z generations mainly study in urban cities and dream of finding either government or corporate jobs.While this decrease may initially seem alarming, it aligns with the typical trajectory of an economy transitioning towards higher development stages. A declining share of agriculture is the right direction for the modern economy. Still, it is equally essential to accompany this decline in the agriculture sector by the service and manufacturing sectors. The increase in service and industry sectors in the economy will improve people’s livelihoods and create high-paying jobs. Rising productivity and improved rural livelihoods can be positive, signaling that labor and resources are being reallocated to higher value-added sectors. However, given the sector’s critical role in employment and rural sustenance, the state must balance this transition with investments in aggrotech, sustainable practices, and rural infrastructure to prevent distress migration and safeguard food security.
Industry Sector
The industry sector’s share shows mild fluctuations, rising from 26.77% in 2020–21 to 27.90% in 2021–22 and 2023–24 before slightly dipping to 27.16% in 2024–25. For Rajasthan to meet its economic target, sustaining industrial growth is crucial. The slight volatility may reflect global supply chain disruptions, policy shifts, or infrastructural bottlenecks. Steady industrial performance encourages resilience, but the state must focus on manufacturing, renewable energy, and mineral-based industries to drive consistent expansion. Special emphasis on MSMEs, ease of business, and export promotion can amplify industrial output and generate large-scale employment. Renewable energy can be a game changer for Rajasthan’s future economy. Given its geographical condition, high temperatures, and land availability, Rajasthan has tremendous opportunities for solar energy. A suitable climate for solar energy and the availability of land at a low cost are the key drivers for attracting companies to invest in Rajasthan for solar energy.
But recently, the state has also seen some political voices against such companies for various reasons, including harm to biodiversity and animals, as well as low pay for the land acquired by the companies. Although all these voices are in a very small or local way, the state needs to solve all these problems with the right policy and justified compensation. A good political environment for the companies is essential for the investment. The best example of this is West Bengal. Because of their bad political environment, a giant company like TATA Nano has to move their plant from West Bengal to Gujarat. This incident is an example of two opposite political conditions for investment. The first is the state of West Bengal, which had a bad political environment that forced a company to leave the estate, losing significant investments. On the other hand, in a state like Gujarat, which had a good business-friendly political environment and the political will that attracted the company with a large amount of investment. It’s essential to create a stable political environment for investment.
Services Sector
The service sector plays a vital role in the modern economy. If we compare the two sectors, service, and industry, the main focus should be on the service. And as we saw in the data, Rajasthan is moving in the service sector economy. The state needs a heavy investment and infrastructure to establish manufacturing or any other industry, and manufacturing has become very competitive in India. To grow in the industry sector, the state needs to attract companies, and, in return, the state needs to offer its resources at a very low or zero cost to the companies. After doing so, it is not sure that the state will get the expected returns since the sector is very competitive. However, the service sector needs less investment and infrastructure than the industrial sector to grow. A state like Rajasthan, known for its culture and glorious history, can leverage tourism to develop the service sector. In tourism, uniqueness is a very important factor. Rajasthan has many unique aspects, such as its forts, the Thar Desert in the western part, natural picnic spots like Mount Abu, diverse geography, traditional attire, and distinctive cuisine. All these elements are unique and can be transformative for the state. In recent years, Rajasthan has emerged as a popular destination for weddings. The government needs to formulate policies to promote these kinds of tourism to foster growth in the service sector.
The services sector emerges as the major contributor to the state GDP, increasing its share from 42.78% in 2020–21 to 45.92% in 2024–25. This consistent growth highlights the sector’s important role in advancing Rajasthan’s economy. The expansion of tourism, IT services, financial services, and health infrastructure likely fuels this upward trend. Strengthening urban infrastructure and promoting Rajasthan as a knowledge and tourism hub can further solidify the service sector’s growth potential.
Conclusion
Given the historical data of the economic growth and the projection based on the CAGR, Rajasthan can achieve the ambitious goal set by the government to make Rajasthan a $350 billion economy. It is a realistic goal that can be achieved with the current growth and infrastructure. The current sectoral contributor trend should continue and be rapid to accomplish this goal. The transition from the agricultural economy to the industry and service sector economy should be balanced, and the special focus should be on the service sector. Given the geographical conditions of the state and an advance in the service sector, it is imperative to make essential policies to leverage the service sector. The growing service sector will help achieve the target and will help sustain the economy. It will also help improve the livelihood of the people.
References
- https://finance.rajasthan.gov.in/ website/StateBudgetAll.aspx
- RAJAN, R. G., & LAMBA, R. (2024). Breaking the Mold: India’s Untraveled Path to Prosperity. Princeton University Press. https://doi.org/10.2307/jj.10819611
- https://assembly.rajasthan.gov.in/ Containers/Budget/BudgetSpeech.aspx
- https://rajasthan.gov.in
- https://statistics.rajasthan.gov.in
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