Tamil Nadu, Karnataka, Odisha, and Assam steer ahead India’s better-than expected economic recovery during last six years, India Ratings & Research (Ind-Ra) said on Thursday.
The report has studied growth based on Gross State Domestic Products (GSDP) of various States during pre and post pandemic times. It revealed that that half of the 28 states had witnessed a better economic recovery than the national level. “In fact, Odisha, Assam, Tamil Nadu and Karnataka were among the major states which spearheaded India’s recovery from pandemic lows (during FY20-FY25), by witnessing a CAGR (Compounded Annual Growth Rate) of over 6 per cent in GSDP”, Paras Jasrai, Associate Director & Economist with Ind-Ra said. These states can be categorised as ‘high recovery’ states.
Given the unprecedented nature of the COVID pandemic, the economy was initially expected to be witness a gradual recovery. However, the Indian economy recovered much better despite recurring shocks post FY21 (geopolitical wars). The economy grew at a CAGR of 5.3 per cent during FY20-FY25 after recording a decadal low growth rate of 3.9 per cent in FY20.
During the period under consideration, Gujarat, Rajasthan, Andhra Pradesh, Uttar Pradesh, Jharkhand and Chhattisgarh were among the major states whose GSDP recorded a CAGR between 5-6 per cent during FY20-FY25. These can be categorised as ‘moderate recovery’ states.
The rest of the states can be categorised as ‘low recovery’ states whose CAGR of GSDP was less than or equal to 5 per cent during FY20-FY25. Maharashtra, Telangana, Punjab, Madhya Pradesh, Bihar were some of the states which featured in this category. The economic growth between FY20-FY25 improved for majority of the major Indian states compared to multi-year low growth in FY20 (due to the economic slowdown) before the pandemic.
Notably, “there were three states namely Gujarat, Telangana and Himachal Pradesh whose CAGR during FY20-FY25 was lower than the GSDP growth they witnessed in FY20 (7 per cent, 5.4 per cent and 4.1 per cent, respectively),” the report highlighted.
Talking about sub-sectoral trends at the national level, the study found share of the industrial sector increased to 30.8 per cent of GVA (Gross Value Added) in FY24 from a 16-year low of 29.6 per cent in FY20. This was led by the manufacturing and construction sectors. “The strong push by the government (both at the state and union levels) in its capex along with the better economic recovery for the upper income households helped in lifting up the construction sector,” the report said.
At the same time, the share of the services sector fell 0.8pp to 54.5 per cent of the real GVA in FY24 from FY20, largely “due to the laid-back recovery for the trade & repair, other services, public administration (due to restrained operational spending by the government) and transport sectors.” However, there were some sectors such as financial services and ‘real estate, ownership of dwelling and professional services’ (RODPS) and hotels & restaurants which registered an enhanced recovery.’
Talking about firm sector, the report said that it recorded a decline at the national level to 14.7 per cent of GVA in FY24 from 15.1 per cent in FY20, led by the crop sector. The trend has been uniform mostly across the major states. However, “there were states such as Uttar Pradesh and Bihar where agriculture was among the leading drivers of economic growth between FY20-FY24,” the report said.
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Published on April 10, 2025
