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Informist, Tuesday, May 19, 2026

 

NEW DELHI – India's economic activity remains heavily concentrated in select states, with Maharashtra, Tamil Nadu, Uttar Pradesh, Karnataka and Gujarat contributing nearly 48% of India's GDP in 2024-25 (Apr-Mar), according to a report by Client Associates. The bottom 10 states accounted for less than 3% of India's GDP in FY25, while Maharashtra alone contributed 13% to the national GDP, the private wealth management company said in a report. 

 

"India's growth story remains concentrated among a handful of states, with a few economies growing at over 10% while others continue to pull the national growth rate closer to 7%," Client Associates Co-Founder Rohit Sarin said. "The real opportunity lies in expanding economic momentum beyond the top growth states."

 

According to the report, of the INR 4.22-trillion equity foreign direct investment in India in FY25, five states — Maharashtra, Karnataka, Gujarat, Delhi and Tamil Nadu — accounted for 83% of total inflows. Tamil Nadu and Haryana emerged as fast-rising FDI destinations, while Uttar Pradesh and Rajasthan are increasingly becoming investment hubs driven by policy reforms and infrastructure development, it said. 

 

As per Sarin, if more states accelerate reforms to attract investment, India has the potential to move towards double-digit growth. "Achieving this will require stronger private sector participation, sustained capex and deeper reforms to attract larger global capital flows," he said. 

 

The report also noted that economic size does not necessarily translate into individual prosperity. Sikkim, Goa and New Delhi recorded the highest per capita incomes, while Bihar remained at the bottom. The national average stands at INR 258,000, with only 16 states exceeding this figure. Uttar Pradesh and Bihar, despite accounting for over 27% of India's population, continue to remain heavily concentrated in the poverty headcount.

 

The study on states' fiscal health shows that Arunachal Pradesh, Manipur, Meghalaya, Mizoram, and Tripura have the lowest debt-to-GDP levels, while Punjab, Rajasthan, Kerala, West Bengal, and Uttar Pradesh are among the worst, the report said.

 

Economic leadership in India is no longer defined only by size, but also by fiscal discipline, institutional quality, capital efficiency and the ability to attract private investment, Client Associates Director – Investment Research and Advisory Nitin Aggarwal said. "While some states continue to dominate GDP contribution and investment inflows, emerging states are improving competitiveness through reforms, infrastructure development and governance improvements," he said. "At the same time, widening disparities in income and fiscal sustainability remain key challenges India must address over the coming decade."

 

Based on nine economic and governance parameters, combined into a single investment-readiness score by Client Associates, Gujarat emerged as the top-ranked state due to strong performance in employment generation, FDI attractiveness, and fiscal discipline, followed by Karnataka, Maharashtra, Jharkhand, and Uttar Pradesh. The wealth management company distributed the states among four categories based on their performance. This is detailed in the table below.

 

Tier 1 (LEADERS: Strong fiscal health, investment magnets)	Tier 2: (STRONG PERFORMERS: Above-average growth, stability)	Tier 3: (EMERGING POTENTIAL: Improving but below-average on key indicators)	Tier 4: (ASPIRING: Lagging on many fronts high improvement potential)
Rajasthan	Madhya Pradesh	Ladakh	Chattisgarh
Gujarat	Bihar	Jammu & Kashmir	Odisha
Punjab	West Bengal	Uttar Pradesh	Telangana
Haryana	Meghalaya	Maharashtra	Tamil Nadu
Himachal Pradesh	Arunachal Pradesh	Karnataka	Puducherry
Uttarakhand	Mizoram	Sikkim	Jharkhand
Assam	Andhra Pradesh	Kerala
Tripura	Goa

 

*State rankings based on FY25 data

End

 

Reported by Priyasmita Dutta

Edited by Saji George Titus

 

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