India’s eight states will have an over $1 trillion economy as the country moves towards becoming a developed nation by FY47, India Ratings and Research (Ind-Ra) noted in its report Monday.
“Ind-Ra estimates that of the 28 states, Maharashtra, Karnataka and Gujarat would be the first ones to achieve the $1 trillion mark, and this would happen in FY39,” the domestic rating agency said.
Ind-Ra pointed out that Maharashtra will be the first to hit the $1 trillion mark, followed by Karnataka, Gujarat, and Tamil Nadu. In contrast, Uttar Pradesh will only reach the target by FY42.
The states are likely to miss their goals to become a $1 trillion economy. Maharashtra has set a goal to achieve $1 trillion economy by FY28, followed by Uttar Pradesh, Tamil Nadu in 2030 and Karnataka by 2032.
Karnataka replaced Uttar Pradesh as the third-largest state economy in FY23.
According to an ET analysis, India plans to reach the $5 trillion mark by FY28, at which point only three states are expected to be near $0.5 trillion at the current growth rate.
The wait for states to reach developed nation per capita levels may be longer. Most Indian states belong to the lower middle-income category, with per capita incomes between $1,086 and $4,255.
“As per the World Bank’s income classification level for FY23, Goa and Sikkim were the only states in the upper middle-income category (per capita income of USD4,256-13,205),” Ind-Ra said. UP and Bihar were in the low-income group category (per capita income less than USD1,085),” it said.
National per capita income has logged a 4.2% compounded annual growth rate between FY14 and FY23.
Chhattisgarh, Uttar Pradesh, Rajasthan, West Bengal, Bihar, Jharkhand and Punjab grew slower than the national per capita rate, whereas seven states witnessed a growth rate higher than 6%.