Maharashtra leads in growth and governance; Gujarat and Karnataka follows

Gujarat topped the economic chart of the country, driven by strong performance in per capita Gross State Domestic Product, Foreign Direct Investment (% of GSDP) and Gross Fixed Capital Formation

Maharashtra has emerged as the top-performing state in the CareEdge State Ranking Report 2025, delivering its strong performance across economic, social, environmental and governance parameters. Maharashtra’s inclusive growth, better infrastructure, and sound fiscal management positioned it as a top state in advancing the government’s vision of becoming a developed nation by 2047. This is followed by Gujarat and Karnataka, placed at the second and third positions respectively.

 

The annual rankings are based on 50 data points across seven areas: economy, government finances, infrastructure, financial growth, social development, governance, and environment.

 

However, Gujarat leads in economic performance due to the state’s high per capita income, strong foreign investment, and industrial growth.

 

Karnataka scores high because of its diverse economy and good environmental practices. Overall, states from western and southern India dominate the top spots.

 

“This exercise endeavours to capture the long-term growth potential while also focusing on the quality and inclusiveness of the state’s growth model. All these aspects remain crucial to assess the investment attractiveness of any state,” said Mehul Pandya, MD and Group CEO, CareEdge.  

 

Western and Southern states in top five rankings

 

According to the report, Western states stood out for their strengths in fiscal management, economic performance, and financial development, while Southern states scored high across economy, financial growth, environmental sustainability, and governance. 

(Source: CareEdge Ratings)

 

 

Odisha shines in managing public finances, especially in controlling debt and interest payments. It is followed by Gujarat and Maharashtra. Interestingly, Punjab and Haryana performed well in infrastructure, followed by Telangana. While Kerala and Tamil Nadu lead in social programmes. Andhra Pradesh is praised for good governance, and Karnataka again stands out for environmental efforts.

 

Goa ranks highest among smaller and hill states (Group B), with steady performance in finance, infrastructure, economy, and social areas. The rankings do not include Union Territories and focus on giving a data-based view of how states are doing and how attractive they are for investment.

 

“We believe such an assessment will enable key stakeholders and decision-makers to understand the state-specific nuances better. This will facilitate informed decision-making and fine-tuning existing policies to suit the diversity in Indian states,” Pandya said.