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Informist, Monday, May 11, 2026

 

NEW DELHI – In order to realise the full potential of states, India needs to move towards state-specific growth strategies, Reserve Bank of India Deputy Governor Poonam Gupta said while highlighting that the growth gap between richer and poorer states has narrowed in recent years. 

 

"If the past rates of growth are maintained, many states will become or come close to becoming "rich" by 2047 (as per the prevailing international thresholds of prosperity). On this basis, India's per capita income is projected to grow by 4 times in USD terms by 2046-47," Gupta said at an event in Columbia University on Apr. 11.

 

"This expansion is expected to be broad-based: both above-median and below-median states are projected to record substantial gains, with below-median states contributing considerable momentum, reinforcing the inclusive nature of India's growth trajectory," she added. The speech was published on the RBI website Monday. 

 

Gupta said the growth gap between richer and poorer states has narrowed in recent years due to the better performance of relatively lower-income states such as Odisha, Assam, and Uttar Pradesh during the past decade, among other factors. Meanwhile, "convergence has been faster and more decisive across a wide set of welfare and development indicators: per capita consumption expenditure, literacy, nutrition, access to basic services, financial inclusion, and a range of health and gender outcomes. Lagging states are catching up, and the distribution of wellbeing across India is becoming more equal," she added. 

 

The deputy governor highlighted that between FY12 and FY24, states with historically lower consumption levels have started recording faster consumption growth. This marks a meaningful shift toward distributional convergence in living standards across Indian states, she added. 

 

However, she flagged that interstate convergence seems limited for some of the structural variables, including the share of agriculture in state economies, the pace of movement out of agriculture, productivity growth, capital formation, foreign direct investment inflows, and bank credit growth. 

 

In the last two decades, average per capita incomes across states have surged nearly fivefold in current US dollar terms and more than threefold in constant rupees, Gupta said. However, the pace of income growth has varied across states, she said. 

 

"Per capita income levels in more prosperous states have grown faster than in relatively less prosperous ones. The fact that richer states have experienced greater prosperity than the poorer states in the past, and that this trend has not reversed, implies that income levels across states have not been converging," she said. 

 

In order to sustain or exceed recent growth trajectories to reach an even higher level of prosperity by 2047, we will have to extend our growth frameworks at the subnational levels, according to Gupta. Policy priorities will naturally differ across the spectrum of states, she added.  End

 

Reported by Pratiksha

Edited by Vandana Hingorani

 

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