Over the last few years, India has gone through a challenging economic journey, from a sharp slowdown during the COVID-19 pandemic in 2020 to a recovery in recent years. The national GDP tells a wide story of recovery and growth. A closer look at the data of Indian states reveals a complicated and uneven economic path. States like Telangana and Uttar Pradesh are ahead with strategic investments and favourable policies. Other states, like Punjab and West Bengal, have hung back due to structural issues and governance challenges.

India's National Growth

India's GDP from 2020-2025 reflects a clear image of a sharp decline followed by a strong recovery. In Financial Year (FY) 2020-21, India’s GDP shrank by 5.8% due to the nationwide lockdown and global trade disruptions. In FY 2021-22, it rebounded with 9.1% growth, due to rising demand, COVID-19 vaccinations, and government support. Later, in FY 2022-23, growth moderated but remained strong with 6.8% GDP, and 6.4% in FY 2023-24. India is growing at 6.2%-6.5% in FY 2024-2025 and the coming years, making it one of the fastest-growing economies globally. But this number hides the fact that some states are growing, while others are struggling.

Fast and Focused States:

• Uttar Pradesh: Uttar Pradesh (UP), once considered a slow-growing state, has made significant progress in recent years. From 2021-2025, the GSDP grew at a rate of 15.2% each year. This growth has been driven by major projects such as new expressways, industrial corridors, and logistics parks. UP’s “Viksit Bharat @2047” plan aims to make it a $1 trillion economy in the next two decades.
• Telangana: Telangana has become one of the fastest-growing states, with an impressive rate of 11.9% GSDP growth in FY 2023-24 and 10.1% in FY 2024-25. The state's success is due to its IT and life sciences industries, with proactive investment policies. From 2022-2024, the state attracted over ₹3 lakh crore in investment, which helped create jobs and grow its services-based economy.
• Bihar: Bihar’s growth is impressive. Once considered one of the poorest states in terms of per capita income, it is now seen as having strong economic growth, with a 13.5% rate in FY 2024-25. The growth is led by agriculture, rural spending, and better roads and transport. However, the state still faces challenges in attracting big private companies and investments.
• Andhra Pradesh: Andhra Pradesh has delivered high growth rates of 8.2% in FY 2024-25. The state benefits from strong agriculture, industrial corridors, and port-based development.

Moderate States:

• Karnataka: The state, known as India's Silicon Valley, has grown steadily due to its IT sector and startups. Though its annual growth rate is around 7-8%, it remains one of the most innovative states in the country.
• Gujarat: An industrial powerhouse, Gujarat has seen consistent, mid-to-high growth rates of 7-9%, due to its business-friendly policies, petrochemical industries, and port infrastructure.
• Tamil Nadu: The state has a mixed economy with industries like textiles and automobiles, which helped it achieve a 7-8% growth rate. It is also a top state when it comes to income per person.

Structural and Policy Barrier States:

• Punjab: Punjab’s economy has not grown significantly in recent years. Its average GSDP between 2014 and 2023 was only 4.6%. Once considered India's breadbasket, the state now faces rising debt, falling industrial activity, and over-reliance on agriculture. A recent study warned that Punjab is at risk of slipping into a “debt trap” with limited options for sustainable growth.
• Meghalaya and Jammu and Kashmir: Both states have grown more slowly than other states due to their political issues, hilly terrain, and poor infrastructure.
• West Bengal: The state has not grown as fast as expected, with an average GSDP growth of between 4-5%. The main reasons were slow government processes, political instability, and a lack of new policies.

Regional Patterns:

Emerging Economic Clusters: States like Bihar, Odisha, and Jharkhand, which used to grow slowly, are now experiencing strong economic growth. To support this, the central government is promoting special economic zones (SEZs), training programs, and offering tax benefits. The aim is to fix historical imbalances and unlock the East’s economic potential.

Southern states, Telangana, Tamil Nadu, and Karnataka, dominate the IT and services sectors. These states profit from better education, urban infrastructure, and strong FDIs, making them strong for India’s services economy.

Maharashtra, Gujarat, and parts of UP make India’s manufacturing and logistics core. These states have used industrial corridors and international trade connections to maintain their economic growth.

Core Factors Behind State’s Growth

States like Uttar Pradesh and Gujarat have heavily invested in infrastructure and have attracted more investments, leading to faster growth. Telangana and Tamil Nadu have built strong economies by developing diverse industries, while Punjab still depends on agriculture, which has become a liability.

Andhra Pradesh and Karnataka rank high in international ease of doing business and promoting investment inflows. States like UP and Bihar, with large working-age populations, have seen a rise in domestic expenditure.

Outlook for 2025 and Beyond

As India moves towards FY 2025-26, the national economy looks optimistic, with growth expected to stay around 6.2% to 6.5%. States like Andhra Pradesh, UP, and Telangana are expected to keep growing fast due to ongoing investments and improvements in policies.

Policy-making groups like NITI Aayog are working towards the “Viksit Bharat” (developed India) vision, which includes targeted interventions for slower-growing regions through infrastructure, education, and healthcare resources. States that follow this vision are likely to get support from the central government and attract more investors.

India's growth story between 2020 and 2025 is not uniform; it depends on how the state is run, the industries it focuses on, and its population's needs. While states like Telangana and Uttar Pradesh are racing ahead, other states like Punjab and West Bengal need urgent reforms to improve. If India wants to become a $5 trillion economy, it is essential to reduce the gap between fast and slow-growing states. Fair and global policies will be crucial for long-term growth and equity.

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