Synopsis: The growth of the Indian economy is being boosted by a few high-performing states that are not only inviting investment but also making investment easier by creating infrastructure, in addition to creating jobs at an unprecedented pace.
India’s economic growth story is no longer driven by just a handful of states. A few states have become the fastest-growing economy centers in the country, which will have a significant influence on the growth path that India will take in the future.
Assam
Assam has become the fastest growing state economy among all the states of India due to the robust infrastructure investment, industrial growth and growing government expenditure. The state has shifted from a tea and oil based economy to now quickly diversifying into a growth hub for the Northeast.
- The growth rate of GSDP (Growth in Gross Domestic Product) for Assam Economy in FY24 was estimated at 13.9% which places it as one of the fastest growing state economies in the country.
- The state’s economy grew by almost 45%, well above the national average, from FY20 to FY25.
- The Gross State Domestic Product (GSDP) of the state rose from around ₹2.9 lakh crore in FY20 to over ₹6.4 lakh crore in FY25, reflecting the quick economic growth.
- Significant investment has been made in the Brahmaputra crossing of highways, railways, airports and Logistics infrastructure, which has enhanced trade and business activity in the region.
- Assam has been one of the important hubs of the Indian oil and natural gas sector. Meanwhile, other industries like food processing, manufacturing, tourism, logistics, and petrochemicals are booming.
- The state’s per capita income has been steadily rising, driving increased consumer spending and demand for housing, retail and services.
What makes Assam unique?
Unlike many states, which depend on just one or two sectors, Assam is benefiting from a variety of infrastructure investment, industrialisation, energy resources and its strategic location as a gateway to the North East Indian region. The diversified growth has enabled the state to become the fastest growing economy in India.
Telangana
Led by Hyderabad’s thriving IT sector, Global Capability Centres (GCCs), life sciences sector and massive infrastructure development, Telangana has emerged as one of India’s fastest growing state economies. The state remains a very attractive place to invest, attracting both local and foreign investors.
- After five years, there was an excess growth of more than 39% in the economy.
- From FY20 to FY25, GSDP has grown from about ₹9.7 lakh crore to over ₹14 lakh crore, creating Telangana as one of the fastest-growing major state economies in India.
- The state’s economy is largely dependent on Hyderabad with the contribution from the city reaching almost half of the state economy.
- Today the capital city is one of the leading technology hubs in India with more than 1,500+ GCCs, major IT companies, and a growing startup ecosystem. The city accounts for a large portion of the economic output of Telangana.
- The exports from Telangana IT industry jumped to ₹3.13 lakh crore for FY25 which is more than double from ₹1.3 lakh crore in FY20. This sector is one of the great contributors to employment with more than 10 lakh workers.
- The construction of the Outer Ring Road (ORR), expansion of the metro system, flyovers, improvement of airport connectivity links, and development of new commercial districts have made Hyderabad a global business hub.
- Hyderabad is known as India’s “Vaccine Capital” and is responsible for producing almost one-third of the world’s vaccines. Investment in the pharmaceutical and biotechnology industries is continuing at a high level in the city.
- Telangana is always in the list of top states for attracting investments in its industrial approval, data centres, GCC expansion, etc. and manufacturing.
What makes Telangana unique?
States that rely heavily on manufacturing are quite common, but Telangana has a well-rounded growth plan featuring technology, life sciences, real estate, infrastructure and services. The talent and potential for drawing the foreign companies to Hyderabad has led to the emergence of Telangana in the list of the fastest-growing and dynamic business economies in India.
Karnataka
The economy of Karnataka continues to be one of the best in India, reinforced by Bengaluru’s dominance in technology, start-ups, GCCs, aerospace, and advanced manufacturing. The state has managed to move away from IT to other sectors like electronics, semiconductors, renewable energy and research based industries.
- The economy crossed ₹30 lakh crore mark for the first time.
- The state’s gross domestic product (GSDP) is estimated to be one of the largest state economies in India, exceeding ₹30 lakh crore in FY25.
- The economy in the state has increased by over 36% over the last 5 years.
- Bengaluru is the hub of the startup ecosystem in India.
- The city harbours more than 16,000 startups and is home to almost 40% of India’s unicorns. Bengaluru remains a draw for startups, venture capitalists and global technology firms alike.
- Karnataka has the largest number of Global Capability Centres (GCCs) with over 875.
- More than 10 lakh people are associated with these centres and are also playing a significant role in the economy of the state.
- India’s biggest IT exporter state of Karnataka continues to export software and technology worth ₹4 lakh crore per year. Major Companies such as Microsoft, Google, Amazon etc. have huge offices in Bengaluru.
- The per capita income of Karnataka is one of the highest among all the states in India, indicating high employment generation, better wages and the healthy presence of the services sector.
What makes Karnataka unique?
Karnataka is a state that has technology, innovation, manufacturing, aerospace, research and entrepreneurship in one package, unlike many fast-growing states that depend on a few industries. This diversified economy, coupled with Bengaluru’s international image, is keeping Karnataka one of the most growing and powerful economies in India.
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Uttar Pradesh
Uttar Pradesh has become one of India’s fastest growing economies with a huge infrastructure project, industrial growth and increased investments. It is the most populous state in India and is well poised to become a manufacturing hub with its large consumer base, strategic location etc. and policy support.
- The economy has crossed ₹36 lakh crore with a 35% 5 year-growth.
- Uttar Pradesh is the second largest State Economy in India with GSDP projected to touch ₹36 lakh crore in FY25 from approximately ₹17 lakh crore in FY20.
- The government has heavily invested in infrastructure initiatives like Purvanchal Expressway, Bundelkhand Expressway, Ganga Expressway and the recently opened Noida International Airport (Jewar). These projects are enhancing logistics and bringing in businesses.
- Noida and Greater Noida have become big hubs for manufacturing of Smartphones, Consumer Electronics and Electronics Components. Major companies like Samsung, Dixon and various international suppliers have established themselves in the area.
- The Uttar Pradesh Defence Industrial Corridor (UP-DIC) is a corridor that encourages investments in the defence industry and aerospace manufacturing between the cities of Lucknow, Kanpur, Agra and Jhansi.
- During the 2023 Global Investors Summit, the state of Uttar Pradesh attracted investments valued at more than ₹40 lakh crore across various sectors including manufacturing, logistics, renewable energy, data centres, and urban infrastructure.
- The government of the state has been striving to make Uttar Pradesh a $1 trillion economy through industrialization, export, infrastructure development and job creation.
What makes Uttar Pradesh unique?
Uttar Pradesh’s development is being fuelled by large-scale industrial investments, manufacturing, infrastructure, and logistics, as opposed to technology-intensive states like Karnataka and Telangana. It is one of the most promising growth engines of India due to its size, strategic location, and its development projects.
Rajasthan
The Rajasthan economy has become one of the fastest growing in India owing to the investments in large scale renewable energy projects, industrial growth, mining and infrastructure development. The State now attracts more and more manufacturers and green energy initiatives.
- The growth in the economy has crossed ₹17 lakh crore with 34% 5 year-growth.
- The economic expansion in Rajasthan has been robust with its GSDP increasing from around ₹10 lakh crore in FY20 to over ₹18.75 lakh crore in FY25.
- Services are the largest contributors with roughly 45%, industry by 27%, and agriculture by 26%.
- The state is now a renewable energy powerhouse with more than 30 GW of solar and renewable energy capacity installed. Billions of dollars are being pumped into massive solar parks in the districts of Jaisalmer, Bikaner and Jodhpur.
- Billions of dollars are anchored in massive solar parks. The Bhadla Solar Park in Jodhpur is among the world’s largest with an installed capacity of 2,245 MW.
- Many industries like cement, chemicals, textiles, engineering goods and manufacturing are growing in Rajasthan. Industrial zones in and around Jaipur, Neemrana, Bhiwadi and Alwar still have a decent attraction for industrialists both domestic as well as foreign.
- The Delhi-Mumbai Industrial Corridor is a key enabler of the creation of industrial nodes, logistics hubs and smart cities, which is adding to the industrial ecosystem of the state.
- Rajasthan is a big contributor to the production of several minerals like limestone, zinc, lead, marble, etc. in India. Mining is still a significant source of income and contributor to industrial development for the State’s economy.
- Rajasthan’s tourism industry, excluding the industry segment, has also bounced back and created job opportunities and increased economic activity in the cities of Rajasthan including Jaipur, Udaipur, Jodhpur and Jaisalmer.
What makes Rajasthan unique?
The uniqueness of the growth story of Rajasthan is that it is the confluence of the renewable energy leadership, industrialization, strength of the mining sector and tourism. The state has got vast land area, infrastructure development and increased investments making it one of the most important growth centres in India for the next decade.
What are the reasons behind these states’ rapid growth?
- Infrastructure boom: Construction of new express roads, airports, industrial belts and logistics centres provides for connectivity and investments.
- Manufacturing growth: States have emerged as hubs of electronics, defence and engineering, manufacturing and employment and have also become export hubs.
- Karnataka and Telangana are getting their impetus from the IT and GCC expansion.
- Business-friendly policies: To promote business investment, state governments are providing incentives, expediting approvals and streamlining regulations.
- New investment opportunities: Big solar and wind energy projects are offering new investment opportunities, particularly in states like Rajasthan.
- Rising urbanisation: Local economies are bolstered by the growing cities, rising incomes, and rising consumer spending.
Conclusion
The rapid development in Assam, the technological advancement in Telangana, and the infrastructure development in Uttar Pradesh are creating new business and investment opportunities. With India’s rapid industrialisation, urbanisation and innovation, state-led growth has been a driver of the country’s economic transformation and is expected to do so in the years ahead.
Written by Boyapati Sai Jasmitha
