1       economic base

1.1    Overview of Economic Situation in Himachal Pradesh

Overall economic growth in total State Domestic Product during 2004-05 was 7.6%. The GSDP during 2004-05 was estimated at Rs. 20093 Cr. Per capita income was Rs. 27486. Percentage contribution of primary sectors to total SDP is 25.40%, while that of secondary sector is 35.59 % and tertiary sector is 39.01%. 

1.2    Overview of Shimla Economics

Shimla being state & administrative capital of Himachal Pradesh, majority of economic activities are concentrated in Shimla. Natural resources play a key role in economic survival of the town and hinterland, as tourism and agriculture, are the mainstays of the economy. The shift from agriculture to horticulture has changed the economic pattern of the region, as Shimla has become major center for collection and distribution. 

1.3    Work force participation

Shimla houses major state level and district level government offices. A considerable proportion of the city’s workforce is engaged in these establishments and tourism sector.

Table  STYLEREF 1 \s 1. SEQ Table \* ARABIC \s 1 1  Work Force Participation

Types of work

No. of persons

No. of persons

% of Total Workers

No. of Males

No. of Females

1991

2001

Total Population

82054

142555

81186

61369

Total Working Population

33699

54404

44611

9793

Total Main Workers

31965

52809

97.1%

43514

9295

Total Marginal Workers

1734

1595

2.9%

1097

498

Total Non Workers

48355

88151

36575

51576

Cultivators

363

439

0.8%

310

129

Agriculturalists

62

149

0.3%

120

29

Household Industries

147

504

0.9%

392

112

Other Workers

31392

53312

98.0%

43789

9523

Table 5.1 indicates the total working population has decreased from 41 % in 1991 to 38 % in 2001. The female working population is about 15% in comparison to 55% male working population.  This may be attributed to normal Indian family structure. About 98% of workers in 2001 are other workers involved in horticulture, trade & commerce, transport, storage and communication, and all other service industries.About 48% of the other workers are contributed by government office employees

1.4    Industries

The industries are not well developed in and around Shimla like any other hill station because of the unavailability of proper infrastructure, hilly region, long distance from other cities and exorbitant cost of transportation. Traditional small-scale industries like wool spinning and weaving, basket making, metal work, that use local resources are still alive without much progress.  Apart from this, wood working, black-smithy, dying and manufacturing works, oil crushing, leather works, pottery, gold smithy, food processing are other small scale industries practiced in the town. The drivers for the majority of these industries are tourists and local people. Single largest industry of Shimla, tourism gained momentum pursuant to declaration of status of Industry by Union Government.  Incentives and subsidies offered by the Government encouraged private entrepreneurs to involve in establishment of tourism related infrastructures that ultimately provided impetus to the growth of tourism industry in State, and Shimla in particular.

1.4.1   Tourism

Tourism is considered and accepted major growth driver for Himachal Pradesh and for Shimla. It has been engine for the growth of the economy of the state including Shimla.  Tourism provides direct employment opportunity in hotel and guesthouses, bars and restaurants, guides, travel agents, photographers etc and also generates large indirect employment. The details of number of people working directly in the tourism industries are shown in Table 5.2.

      Table  STYLEREF 1 \s 1. SEQ Table \* ARABIC \s 1 2  Employment in Tourism Industry

 Profession

2001

2002

2003

2004

2005

People working in Hotel/ Guest House

2934

2973

3130

3192

3268

People working in Bars and Restaurants

246

249

276

298

348

Guides

218

223

235

246

270

Travel Agents

182

182

188

196

208

Photographers

212

212

220

226

257

Total

3792

3839

4049

4158

4351

           

 

 

1.4.2   Small Scale Industries

There are around 259 registered small scale industries in Shimla and can be classified in sectors as shown in Table 5.3.

  Table  STYLEREF 1 \s 1. SEQ Table \* ARABIC \s 1 3  Small Scale Industries in Shimla

Category of Industry

No. of Units

No. of Workers

% of  Total Workers

Food based Industries

30

123

15%

Textile

16

39

5%

Leather

6

5

1%

Wood and Wood Works

40

137

16%

Paper & Paper products.

22

80

9%

Other Manufacturing and Service Industry

145

460

55%

TOTAL

259

844

100%

As shown in Table 5.3, 55% of the workers are engaged in category of ‘Other Manufacturing and Service Industry’ that includes auto repairs, dry cleaners, steel fabricators, steel metal products etc.

1.4.3   Food based Industries

With the development of well-planned orchards and agriculture in the district and surrounding areas of Shimla town, the food based industries assumed greater importance.  Though the horticultural products and export has increased over the years but the food-based industries have not considerably increased.  There are only 30 units registered with a total number of 123 people engaged in various food-based industries like, bakeries, Juice and Jam, Mushroom, Honey Processing etc.

1.4.4   Wood and Wood Products

Around 40 units and 137 workers are engaged in making of wooden toys, wooden baskets, walking sticks, fancy wooden, rulers, baton etc.  Wooden toys are mainly manufactured from waste wood and packing cases as well as from other wood.  The products find ready market mostly during the summer season when tourists’ inflow is at peak.  ‘Lakkar Craft Bazaar’ is the market dealing in wood works. The sawmills are located at different parts of Shimla and occupy a total area of 0.31 sq. km of total developed land within the municipal limits.

1.4.5   Mining & Related Industries

A few brick kilns are working which makes bricks from the clay obtained through mining. There are no medium or large-scale industries in Shimla.

1.4.6   Horticulture

The geo-climatic features are favorable for the development of horticulture activities especially for temperate fruits. Various fruits like apple, plum, peach, apricot, pear, citrus, green-almonds and walnuts are produced in Shimla district. Apple is the biggest export item for the state as well as the district.

 Table  STYLEREF 1 \s 1. SEQ Table \* ARABIC \s 1 4  Production of Apple

Production of Apple (in MT)

2002-03

2003-04

2004-05

Shimla district

 229030

294402

318450 

HP

348260

459492

527600

As shown in Table 5.4, more than half of the apple production of state is attributed to Shimla district. Apple export is one of the major contributors to the growth of state economy. Shimla is major center for collection and distribution. 

1.4.7   Trading

Shimla town is vibrating with trade and commercial activities including retail and wholesale. The existing main trading areas are concentrated in and around Mall, Middle Bazar, Lower Bazar, Lakkar Bazar and Chhota Shimla. As per the survey conducted by TCP in 1997, there are about 3000 commercial establishments in Shimla Planning Area

1.5   Economic Potential, Strategy and Recommendations

The key sectors have been identified as key economic drivers for economic growth of Shimla Planning Area. These include tourism, healthcare, education, agri-processing and trading hub and IT. The section also provides the strategies and recommendations for the economic development of Shimla.

1.5.1  Tourism:

Tourism has been driver for overall economy of the State. These would also be a consequent need to sustain and hence focus on entertainment and city beautification through development of entertainment/tourism zone, heritage precinct and parks/gardens. The strategies to sustain the tourism sector have been separately presented in section 13.7 of the report.

1.5.2  Healthcare:

Historically, Shimla has been convalescence center. It has witnessed limited development in this sector. With a focused approach Shimla can be directed to promote development of health tourism. Following strategy is recommended

·                    GoHP should develop the State Health Policy on improving the infrastructure, services and financing for the health tourism. The policy should encourage the private sector participation in establishment of convalescence centers, medical education facilities like nursing institutions etc in the Shimla Planning Area 

·                    A task force having representation from Health Department, Tourism Department, Industry Department, the medical educational institutions, pharmaceutical companies, health care providers, and insurance company be established to take the initiative forward       

·                    Strengthening of Telemedicine System for establishment of referral links between convalescence health centers and tertiary health centre

1.5.3  Education:

Shimla is historically known for educational institutions like Auckland School, Chapslee School and Edward School. Shimla has potential to become hub for educational institutions. GoHP has promulgated the Himachal Pradesh Private Universities (Establishment and Regulation) Act 2006 for establishment of private universities in the State for higher education. It is recommended that for promotion of the quality education infrastructure in the state, the education hub offering a rich spectrum of academic and specialty courses from secondary school to university levels may be established in Shimla Planning Area

1.5.4  Agri-Processing and Trading Centre :

Shimla district in Himachal Pradesh is designated as Agro Economic Zone (AEZ) for Apples. Shimla being a major collection and distribution center for horticulture products, has potential for food processing and providing backward linkage in agriproduce retailing chain. Looking towards the potential, major challenge lies in providing infrastructure for its sustainability. Integrated food parks with cold chains, ware houses, post harvest handling and grading, sorting, waxing, precooling, packaging center, processing units etc transport nagars, vegetable and fruit market would address the needs of the sector.

GoHP has entered into MoA with Government of India for development AEZs in 2002. GOHP has estimated an investment of Rs 57 Cr with about Rs 27.5 Cr to be contributed by GoI and GoHP and balance to be raised through private sector investments. So far no investment has come through.

It is recommended that GoHP undertake development of food park in Shimla Planning Area on PPP leveraging the financial assistance available from GoI under the scheme. GoHP may initiate the development of Food Park through a Special Purpose Vehicle and later on induct the private sector partner through competitive bidding process at appropriate time. This would improve the marketability of project for private sector to walk-in and smooth transfer of project to implementing agency.

1.5.5  IT Park :

NASSCOM has projected Rs 20, 000 Crore IT potential for state by year 2009-10. GoHP has formulated the State IT Policy and is envisaging establishment of IT Park at Waknaghat in Shimla District. With extension of special industrial package to state upto 2010, the sector has potential to provide fillip to the economy of the region. It is recommended that the project should be taken up on the fast track for development in order to realize the potential.