Assam economy: Gains and gaps amid growth, debt, welfare challenges

Assam has emerged as India's fastest-growing state economy over five years, but a low base, fiscal pressures and social challenges temper the headline growth story

Assam Chief Minister Himanta Biswa Sarma recently cited Reserve Bank of India (RBI) data showing Assam as the fastest-growing state economy over the past five years, from 2019-20 (FY20) to FY25. 

According to the data, Assam’s gross state domestic product (GSDP, at constant prices) grew by 45.33 per cent during this period, increasing from ₹2.4 trillion in FY20 to nearly ₹3.5 trillion in FY25 — the highest growth rate recorded by any Indian state in these five years. Over the same period, India’s overall GDP expanded by 29.33 per cent. 

Assam recorded double-digit GSDP growth in FY23 and FY24, before growth moderated to 7.78 per cent in FY25. Over the past 10 financial years, the state’s GSDP growth rate has generally exceeded the national growth rate. This growth has been accompanied by a rise in per-capita income. By FY25, Assam’s per-capita income had increased to over 77 per cent of India’s per-capita income, compared with 64.15 per cent in FY16. 

However, these figures do not fully capture the underlying context. Assam’s relatively low economic base is among key factors behind its high growth rate. States such as Tamil Nadu, Karnataka and Uttar Pradesh also grew by more than 35 per cent between FY20 and FY25, despite having significantly larger GSDPs than Assam. Comparable data for Gujarat, one of India’s largest state economies, was not available. 

From a fiscal perspective, nearly one-fourth of Assam’s revenue receipts over the past decade came from its own tax revenue. At the same time, the state remained substantially dependent on grants-in-aid from the central government and its share in central taxes. 

Capital outlay as a proportion of GSDP more than doubled to 7.64 per cent in FY25 (revised estimate). Alongside this increase, Assam’s revenue and fiscal deficits widened. The state’s debt-to-GSDP ratio rose gradually in the past decade, reaching 25.2 per cent in FY25, although the level remained within manageable limits. 

Despite improvements in economic indicators, Assam continues to face challenges on the socio-economic front. In 2019-21, the state ranked sixth worst in India in terms of the proportion of the population facing multidimensional poverty, and was the worst-performing among the north-eastern states, after Meghalaya. In addition, Assam’s unemployment rate since 2017-18 has largely remained above the national average. As of 2023-24, the state’s unemployment rate stood at 3.9 per cent, against 1.7 per cent in 2022-23. 

Assam’s recent economic performance has again drawn attention to the role of India’s Northeast in addressing regional economic imbalances and supporting broader national development. Sustained efforts will be required to ensure that growth in the region contributes meaningfully to the goal of achieving ‘Viksit Bharat’ by 2047.