India’s economic recovery driven by strong state-level growth

India’s economic recovery from the pandemic has been powered by strong subnational growth, with several states outpacing the national average. A recent India Ratings report highlights how states like Odisha, Assam, Tamil Nadu, and Karnataka led the rebound with robust GSDP growth, while sectoral trends in agriculture, manufacturing, and services shaped the broader revival.

Between FY20 and FY25, several Indian states spearheaded the country’s economic recovery from pandemic lows, with Odisha, Assam, Tamil Nadu, and Karnataka recording over 6% compound annual growth rate (CAGR) in gross state domestic product (GSDP), according to India Ratings. The agency’s analysis shows that half of India’s 28 states outperformed the national growth average, demonstrating resilience and solid economic revival.

Gujarat, Rajasthan, Andhra Pradesh, Uttar Pradesh, Jharkhand, and Chhattisgarh contributed significantly to national growth with GSDP CAGRs ranging between 5% and 6%. Nationally, the economy grew at a CAGR of 5.3% during this period, recovering strongly from the multi-year low of FY20, which was affected by an economic slowdown prior to the pandemic.

While the share of agriculture in national gross value added (GVA) declined, Uttar Pradesh and Bihar saw notable gains in agricultural output, helping maintain momentum in rural-led growth. In the manufacturing sector, Odisha, Assam, Jharkhand, Punjab, and Andhra Pradesh expanded their industrial bases, aided by growth in sectors such as chemicals, apparel, food processing, and machinery.

Odisha increased its manufacturing share from 22.8% of real GSVA in FY20 to 26.7% in FY24, supported by higher production of basic metals and petroleum products, and gradual diversification. Assam raised its manufacturing share from 15.8% to 18.4% over the same period, benefiting from growth in chemicals, petroleum products, beverages, and metal goods.

On the flip side, Uttarakhand, Maharashtra, Uttar Pradesh, and Madhya Pradesh experienced a sharper decline in manufacturing’s share—by more than one percentage point—during FY20–FY24. In contrast, the services sector became the key driver of growth in states like Uttarakhand, Himachal Pradesh, Chhattisgarh, Karnataka, and Telangana.

India Ratings emphasizes the need to understand state-wise and sectoral growth patterns to better interpret the drivers of India’s overall economic rebound. These subnational dynamics reveal the diverse growth engines powering the post-pandemic recovery across India.