This Economic Report is the first by theWorld Bank on the economy of Himachal Pradesh (HP), and thefirst on a hill state in India. HP is a unique state in manyrespects-most importantly because of the enormous success ithas achieved over the past three decades, despite severestructural disadvantages of relative remoteness,environmental fragility, and a difficult hill terrain,characteristic of Himalayan states in India. The study setsout to document, first, the remarkable success that thestate has achieved in terms of sustained growth and humandevelopment, and the underlying reasons in terms ofsupportive policies and social cohesion. In this respect, HPmakes an important contribution to lessons of success forthe other nine Himalayan hill states in India. The second,and more extensive part of the Report, is forward-looking.It describes how it might be possible to build on the pastsuccess that HP has achieved, and, at the same time, addresssome crucial economic and social transitions that will beessential for the state to firmly secure its future: (i) asustained increase in income levels along with an enablingenvironment for the private sector; (ii) the creation ofsuitable jobs based on enhanced productivity and skill s ofits young labor force that can shift from public to privatesector employment; and (iii) the utilization of naturalresources like hydropower, forests, and water resourceswisely and well. There is every reason to be confident thatHP can meet these challenges. The state's past enviabletrack record is testimony to the ability of its people andleadership to forge a social consensus and compact necessaryto achieve such goals. The Report seeks to provide ananalysis of HP's current economic situation, and to layout a menu of reform options that can help build onHP's considerable strengths and opportunities, andaddress some of the main challenges ahead.
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