India’s federal faultline

India’s economy is no longer split only between rich and poor. It is separating between states that generate growth and states that increasingly depend on it.

- PROF. VIKAS SINGH

India is producing regional winners and regional dependents at the same time. The gap between them is beginning to reshape economics, migration and political power.

Tamil Nadu builds semiconductors and exports automobiles to the world. Karnataka writes software for global corporations. Maharashtra anchors India’s financial system. Gujarat dominates ports, logistics and industrial manufacturing.

Meanwhile, large parts of northern India still struggle to create enough non-farm jobs for their own populations. Millions continue leaving in search of work, wages and functioning urban economies elsewhere.

The old Indian divide was between rich and poor. The new divide is between states that generate growth and states that increasingly depend on it.

India’s airports, factories, export corridors, tax revenues and skilled workers are increasingly concentrated in the same states. Southern and western India now account for a disproportionate share of GDP, exports and direct tax collections despite representing a much smaller share of the population. India’s growth story now has a postal code.

This divergence did not emerge accidentally. Southern and western states invested earlier and more consistently in education, healthcare, urbanisation and industrialisation. They built stronger administrative systems, attracted private enterprise and integrated more effectively into global supply chains. Many northern states remained dependent on agriculture, public employment and welfare politics for far longer.

The consequences are now visible across almost every economic indicator that matters.

THE STATES PULLING INDIA FORWARD