Stateside Story: A Tale Of How India's Top Four States Lead The Growth Momentum in Six Charts

Maharashtra, Gujarat, Karnataka, and Tamil Nadu, the four coastal states have turned out to be the 'wunderkind' in the state pack growing between 7.9 per cent to 9.4 per cent, with Maharashtra turning out to be the fastest growing state.

A quick glance at economic statistics and the charts they yield shows that India's ambition to become a US$ 5 trillion economy in the next three years crucially depends on these four states' economic performance.

Back On Post-Pandemic Recovery Track

These states have a  legacy of decades of economic growth. Though the pandemic briefly applied brakes to the trend, their growth story is back on track. 

In 2022-23, Maharashtra experienced the highest growth rate in gross state domestic product (GSDP) at 9.4 per cent, followed by Tamil Nadu at 8.2 per cent.

Gujarat's GSDP in the same year grew by 8.0 per cent, not far from its pre-pandemic growth level of 8.9 per cent in 2018-19, while Karnataka’s GSDP growth rate was a solid 7.9 per cent.

Average Income Of The Population On The Rise

Gujarat led the race among the top four states in increasing the average income of its population. In 2022-23, the state’s yearly per capita net state domestic product (NSDP) was around Rs 1.8 lakh, compared to about Rs 1.7 lakh in Karnataka and more than Rs 1.6 lakh in Tamil Nadu.

Maharashtra’s annual per capita NSDP has been more than Rs 1.5 lakh in 2022-23.

Notably, both Maharashtra and Tamil Nadu have larger populations than Karnataka and Gujarat. That explains the marginal difference in average income in these two sets of states.

Calculating average income divided by the population is not always a sound methodology for measuring inequality. Nevertheless, this is viewed as a general sign of prosperity – as is evident from the figures of these leading states.

Unemployment Under Control Again

The first one and a half decades of the new millennium witnessed the unemployment rate crawling to a higher level in the entire nation. Around 52 people in every thousand, in rural Gujarat and 43 people in every thousand in urban areas of Gujarat were unemployed in 2017-18.

Maharashtra had 33 unemployed in rural areas and 74 in urban areas, per thousand population, in 2017-18.

The corresponding figures in the same year for Karnataka were 39 in rural and 65 in urban, and for Tamil Nadu - 79 in rural and 72 in urban areas.

Despite difficulties in creating employment during the pandemic, both rural and urban unemployment numbers have gone down substantially in all the states.

By 2022-23, just 22 rural and 14 urban people (per thousand of the population) in Gujarat were unemployed.

As can be observed by a glance at the chart below, Karnataka  also brought down unemployment substantially in 2022-23.

Tamil Nadu's and Maharashtra's unemployment rates too remained on the lower side, though slightly higher in comparison to the other two states.

Price Rise Affecting Topper States

Inflation, fuelled by price increases in most food items, has risen in the past three years or so.

The price hike in essential items cooled down as late as June-July 2024. This is quite evident in the inflation trends observed in these four states (See Chart below).

In the second year of the pandemic (2020-21), inflation shot up considerably, and then slightly moderated in the next year, before reaching another high in 2022-23.

Tamil Nadu experienced the highest CPI-based inflation at 7.5 per cent in 2020-21, followed by Maharashtra at 6.8 per cent.

Gujarat and Karnataka did well to control inflation at 5.9 per cent and at 5.8 per cent, respectively.

In the subsequent period, Karnataka did relatively better in coping with the price rise. Among the other three, inflation in Maharashtra and Gujarat once again was around the 7.0 per cent mark by 2022-23.

The latest CPI-based inflation for July 2024, however, shows a substantial dip.

Inflation has been around 3.2 per cent in Maharashtra and Gujarat, 3.5 per cent in Karnataka, and 3.0 per cent in Tamil Nadu.

In comparison, All-India CPI (consumer price index) inflation stood at 3.5 per cent in July 2024.

All Four Increased Forest Cover In Last 3 Decades

As sustainability and climate change firmly start counting in the economic agenda, the relevance of indicators like forest cover has also gone up.

Maharashtra, Gujarat, Karnataka and Tamil Nadu substantially increased their forest cover over the last 30 years.

In 1987, Maharashtra had the highest forest cover at 45,616 sq km, Karnataka had 32,268 sq km, Tamil Nadu - some 17,472 sq km, and Gujarat had about 11,991 sq km of forest cover.

By 2021, Tamil Nadu added 8,947 sq km, Karnataka another 6,462 sq km, Maharashtra - 5,182 sq km and Gujarat - 2,935 sq km more forest cover. Given the large amount of barren geography in Gujarat, the addition of forest cover, though lower than the other states, is significant.

However, there is a caveat to this forest cover improvement saga.

The Forest Survey of India defines forest cover as “all lands, more than 1 hectare in area with a tree canopy density of 10 per cent irrespective of ownership and legal status”. As a result, orchards, bamboo and palm oil plantations are also included in the category.

Natural forests are vital ecosystems that support diverse flora and fauna, regulate the climate, and sustain indigenous populations. Monocultures like plantations are not as ecologically sustainable as a diverse forest cover.

So, the rise in forest cover all over India including these four states ought to be taken with a pinch of salt. 

Improvement In SDGs Score

Sustainable development goals (SDGs) are going to be the hallmark of economic development in the next few decades. India’s stride towards becoming a net-zero economy by 2070 is crucially hinged upon SDG performance.

States are ranked by their overall score in the SDG Index. The overall score measures the total progress towards achieving all 17 SDGs which include  eliminating poverty, providing decent work, economic growth, climate action and life on land.

The score can be interpreted as a percentage of SDG achievement. A score of 100 indicates that all SDGs have been achieved.

The topper states have made notable progress in improving their SDGs scores. Tamil Nadu has increased its SDGs score from 66 in 2018 to 78 in 2024, while Karnataka increased its score from 64 in 2018 to 75 in 2024.

Similarly, Gujarat has improved its SDGs score from 64 in 2018 to 74 in 2024. While Maharashtra increased its score from 64 to 73 in the same period.

While Tamil Nadu and Karnataka are the leaders among this pack of four as far SDG scores are concerned, Gujarat and Maharashtra have also improved their tally in the last six years.