State-level race in per capita income: Tracking shifts in NSDP rankings

Per capita net national product (NNP) — that is, net domestic product (NDP) plus net foreign income — at factor cost at current prices, which was only ₹255 in 1950-51, increased to ₹169,496 in 2022-23. India graduated from a low-income to a low-middle-income country in 2007. Yet, in 2025, India’s per capita gross domestic product (GDP), at $2,937, was still only 3.3 per cent of that of the United States and 21.2 per cent of China’s.

 

India, which lives in its 28 states and eight Union Territories (UTs), needs to persevere to become a developed country. It can have higher per capita income only when its states and UTs prosper. Here we focus on only how the 28 states, where 97 per cent of Indians live, have done from 1980-81 to 2023-24. Data availability dictated the choice of the period and restricted the analysis to Net State Domestic Product (NSDP) at factor cost at current prices — that is, income originating in the state and not income accruing to the state.

 

So, what has been the relative performance of the states in terms of ranking of per capita NSDP? Some have raced ahead. For example, Sikkim, which ranked 10th-12th in the first half of the 1980s, jumped to second position in 2009-10 and even displaced Goa as number one in 2021-22. Goa has always stayed ahead of all the others, except in 2021-22. Some have languished at the bottom — for example Bihar, with its per capita NSDP the lowest in both 1980-81 and 2023-24. There is no clear tendency of convergence — that is, poorer states catching up with their richer counterparts.

 

Grouping the states region-wise, we find that the South, consisting of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Telangana, improved their ranks, on average by 5.4. The stars among these five are Karnataka and Tamil Nadu. Karnataka rose rapidly in rank from 2011-12.

 

Tamil Nadu improved its rank from 13th in 1980-81 to sixth during the late 1990s and, after some deterioration in the intervening years, ended with the sixth position during the last four years. Karnataka and Tamil Nadu differed in terms of their nature of growth. While services were in the lead in Karnataka, in Tamil Nadu, it was driven by broad-based industry. The march of Tamil Nadu ruled by two regional parties — DMK or AIADMK — which were not always a part of the central coalition, is a testimony of the resilience of the Indian federal structure.

 

The West, consisting of Goa, Gujarat, Maharashtra, and Rajasthan, which follows the South, had a high rank in 1980-81, and more or less maintained its relative position with only a slight decline in average rank of only 0.25. Also, the Northeast, consisting of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura, suffered only a minor decline in its relative ranking on average, mainly due to the stellar performance of Sikkim, and the reasonably good performance by Mizoram and Tripura. The importance of law and order was starkly demonstrated by Mizoram, which, after the historic peace accord between the Government of India and the Mizo National Front on June 30, 1986, climbed from the 17th position in 1985-86 to eighth in the following year. The Northeast, and Uttarakhand in the North, give the lie to the widely held belief that all the Himalayan and Northeastern states are destined to be laggards in growth.

 

The average rank of the central region, consisting of Chhattisgarh and Madhya Pradesh (MP), deteriorated by 1.5. It was the combined effect of an improvement in the rank of Chhattisgarh, carved out of MP only in 2000-01, and a deterioration in the rank of MP by six.

 

The average rank of the North, consisting of Haryana, Himachal Pradesh, Punjab, Uttarakhand, and Uttar Pradesh (UP), slid by 3.4. Every state in the North, with the exception of Uttarakhand, either languished with its low rank or lost in ranking. Another state, Haryana, carved out of Punjab in 1966, has been a success story. After maintaining its rank around 3-4 from 1980-81 to 2001-02, Haryana even occupied the second position from 2002-03 to 2005-06. It struggled with its third rank between 2006-07 and 2019-20. It slid back to the fourth position in 2020-21, and remained at fifth in the three subsequent years up to 2023-24. In the North, the deterioration in the ranking of Punjab by 13 is particularly worrisome.

 

The two states with the largest population — UP (241 million) in the North and Bihar (131 million) in the East —remained at the bottom of the ranking over more than four decades, until 2023-24. Bihar consistently maintained its bottom-most rank, and in 34 of the 43 years, UP its second from the bottom position. As a proportion of the all-India per capita NNP, Bihar’s per capita NSDP (₹917) declined from 52.7 per cent in 1980-81 to 31.9 per cent in 2023-24, and UP’s from 73.4 per to 49.4 per cent. With more than one out of four Indians living in these two states, India’s growth story cannot be completed without lifting Bihar and UP from their current state.

 

Every state in the East, comprising Bihar, Jharkhand, Odisha, and West Bengal, lost its ranking. West Bengal mirrored Punjab in sliding 13 positions.  

 

The rapid decline in the ranking of two relatively ‘prosperous’ states of the country from yesteryear — Punjab in the North, bordering Pakistan, and West Bengal in the East, bordering Bangladesh — is a worrisome feature of the country’s economic performance. Indeed, both the states suffered the ravages of Partition and were carved out mostly from extant united Punjab and Bengal provinces. But 78 years is a long time and many countries that faced partition — for example South Korea and Taiwan — have not only recovered from their traumas but gone on to become developed countries.

 

Both Punjab and West Bengal went through socio-political turbulence —Punjab spectacularly around Prime Minister Indira Gandhi’s assassination in 1984; West Bengal with a slow build-up from the days of agitations during the acute food shortage and refugee rehabilitation crisis to the Naxalite agitation in the 1970s. Apart from insurgency, did Punjab get stuck in the green revolution trap of producing only more and more HYV wheat and paddy by unsustainably pumping subsoil water with subsidised power and selling it at MSP? Did West Bengal start living in its past glory of Bankim Chandra Chatterjee, Rabindranath Tagore, Netaji Subhas Chandra Bose, and myriad other luminaries? Was West Bengal driving by looking at the rearview mirror? Was trouble inevitable?

 

The author is a Bharatiya Janata Party member of the West Bengal Legislative Assembly and a former chief economic advisor in the Union finance ministry