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A recent paper by the Economic Advisory Council (EAC) to the Prime Minister has revealed a stark contrast in the economic fortunes of India's states, highlighting the remarkable rise of southern states and the continued decline of West Bengal. The paper, titled 'Relative Economic Performance of Indian States: 1960-61 to 2023-24,' analyzed the share of each state in India's GDP and their per capita GDP as a percentage of the national average since 1960-61.
The analysis underscores the significant economic shift that has occurred in India since the economic liberalization of 1991. Prior to this period, southern states did not exhibit exceptional economic performance. However, in the post-liberalization era, they have emerged as the leading economic powerhouse. Notably, Karnataka, Andhra Pradesh, Telangana, Kerala, and Tamil Nadu together account for approximately 30% of India's GDP in 2023-24. Karnataka and Telangana have emerged as particularly strong economic engines, with Karnataka's GDP share rising from 5.4% in 1960-61 to 8.2% in 2023-24, making it the third-largest contributor to India's GDP. Similarly, the combined share of Andhra Pradesh and Telangana has increased to 9.7% in 2023-24, driven largely by Telangana's growth.
In contrast to the impressive performance of southern states, West Bengal has experienced a consistent decline in its economic contribution. While holding the third-largest share of India's GDP at 10.5% in 1960-61, West Bengal's share has dwindled to a mere 5.6% in 2023-24. This decline can be attributed to a number of factors, including lack of industrial investment, bureaucratic inefficiency, and political instability. The EAC paper highlights the need for West Bengal to undertake significant structural reforms to revive its economy and attract investment. The paper further underscores the importance of addressing the regional economic disparities in India, emphasizing the need for policies that promote equitable growth and development across all states.
Source: Southern states have 30% share in India’s GDP, Bengal economy consistently declining: EAC-PM paper