Why Assam's rapid growth is more than a low-base effect
An RBI report places Assam as India's fastest-growing state over five years, driven by fiscal discipline, infrastructure spending and administrative reform rather than a low-base rebound
 "Why Assam's rapid growth is more than a low-base effect")
The narrative of India’s economic growth has traditionally been dominated by the industrial powerhouses of the south and west. However, a recent Reserve Bank of India (RBI) report has upended this conventional wisdom, i.e., Assam has topped the RBI’s report as the fastest-growing state economy over the last five years, fundamentally reordering the hierarchy of India’s sub-national growth engines. This structural breakout saw its gross state domestic product (GSDP) (constant prices) surge from ₹2.4 trillion in FY20 to ₹3.5 trillion in FY25.
Though critics have attributed this to the low base and post-Covid uptick in GDP growth after a decline, a comprehensive, comparative analysis with similarly placed states presents a completely different picture, signalling a need to delve deeper into the robust governance frameworks that have led a state like Assam to the top.
Comparing on various parameters with states similar states like West Bengal (demographics and borders the state), Chhattisgarh (state size and a similar economic size), Kerala (similar population size), Haryana (population size and geographical area), Punjab (comparable size of economy, similar population and provides for regional diversity), Assam seems to outperform not only in GSDP growth but various other fiscal prudence parameters like a sustainable level of debt and high capital outlays, showing government focus on productive spending and investment.
The rapid expansion in state economies often raises concerns about fiscal profligacy (growth from unsustainable debt). Assam, however, presents a rare case of “fiscal expansion with prudence.” Despite high growth outlays, the debt-to-GSDP ratio remains stable (24.4 per cent in 2020-21 to 25.1 per cent in 2024-25) and well within the Fiscal Responsibility and Budget Management limits. This stability confirms growth is funded by revenue efficiency and prudent borrowing, not leverage. Furthermore, the efficiency of capital deployment has improved drastically, with the budget utilisation rate rising from 65 per cent in 2020-21 to 85 per cent in 2024-25, ensuring funds translate into economic activity.
Fiscal discipline provided stability, while the engine has been Infrastructure, which has provided the velocity for this expansion. This acceleration stems from the focus on asset creation and expenditure quality, with capital expenditure dramatically rising to ₹26,409 crore in 2024-25 from ₹4,441 crore in 2010-11, evident in projects like the ‘Asom Mala’ road network and bridges spanning the Brahmaputra. This shift is partly due to the effective use of central schemes, particularly the “Special Assistance to States for Capital Expenditure” (SASCI) scheme, with receipts surging to ₹7,428 crore from ₹450 crore in 2020-21 in 2024-25.
The state’s portfolio of MDB (World Bank and ADB) funded - Externally Aided Projects (EAP), has surged to nearly ₹39,759 crore from ₹15,000 crore since 2021, with expenditure soaring 342 per cent to ₹5,211 crore from ₹1,179 crore in over four years. A ₹57,566 crore project pipeline confirms robust global capital inflow, validating the state’s improved creditworthiness and execution. This economic shift is bolstered by the ₹27,000 crore Tata Semiconductor Assembly and Test (OSAT) facility in Jagiroad, marking Assam’s entry into the high-tech Industry 4.0 landscape.
Agriculture and allied activities are often overlooked in high-growth stories, while agriculture remains a bedrock of Assam’s expansion. The sector has seen vital modernisation, particularly in allied areas like fisheries and the formalisation of the tea economy. With rural infrastructure funding (RIDF) jumping by 53% to ₹2,797 crore in 2024-25, the connectivity between farm gates and markets has improved, allowing for better price realisation and higher rural liquidity.
This fiscal health has also allowed for targeted social engineering and schemes like Orunodoi 3.0, the state’s largest DBT, which delivers financial support to over 3.7 million women. Uniquely, welfare schemes like the Mukhya Mantri Mahila Udyamita Abhiyaan link financial support to responsible demography, mandating family size limits for sustainable development.
Historically, the northeast had a low Credit-Deposit (CD) ratio—a measure of deposits loaned locally. This ratio climbed steadily from 55.33 per cent in June 2021 to 71.94 per cent in November 2025, signalling a growing appetite for credit among local entrepreneurs and greater banking confidence in Assam. Per capita income (at current prices) also surged by 54 per cent, reaching ₹1,59,185 in 2024-25, suggesting the state is narrowing the gap with the national average.
These data try to explain why Assam’s growth is not just a low base effect but the result of effective administrative processes and mission-mode implementation of policies that have reached the last mile. Assam, however, is also among the very few states that grew during the pandemic. The 45 per cent real growth in the last five years is the result of a cohesive strategy involving fiscal prudence, aggressive asset creation, and core sector revitalisation. For the national economy, Assam’s rise offers a template for how frontier states can leverage policy stability to drive convergence. The last 10 years in Assam have been about consolidation; however, the sustained momentum in the next 10 years, I believe, will be based on reform.
The author is Chief Economist, Chief Minister’s Secretariat, Assam
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper