As India charts a course to achieve rich-country status by its independence centenary in 2047, requiring an annual economic expansion of around 8%, the spotlight falls on the handful of states reliably achieving such dynamism. Two coastal powerhouses, Gujarat and Tamil Nadu, are continually held up as exemplars, offering vastly different models for India's poorer regions.
Gujarat: The infrastructure-led engine
Gujarat, the heavily industrialised western state once led by Prime Minister Narendra Modi, represents about 5% of India’s population but accounts for over 8% of national GDP and more than a quarter of the country’s exports. In the decade leading up to 2022-23, its economy expanded at a robust annual rate of around 8%, placing its income per person 60% above the national average.
The state's success stems from its history as a manufacturing hub and its recent pivot to capital-intensive megaprojects in pharmaceuticals and petrochemicals. Gujarat won business through vast investments in infrastructure, five-folding its power-generating capacity over two decades and building an ever- expanding network of high-quality roads.
However, this growth comes with a significant caveat: too few ordinary Gujaratis have benefited. Nearly 12% of the population lives in "multidimensional poverty," a rate five times higher than Tamil Nadu and similar to much poorer states. This is partly due to mega-factories that are profitable but not major job creators, and poor human capital investment. Less than half of the state’s youngsters’ study to high-school level, below the national average of 58%.
Tamil Nadu: The social policy champion
Tamil Nadu, which is similarly rich and populous, offers a contrasting blueprint. Last year, its economy surged by 11%, making it the top performer among the states. This spurt is largely attributed to the rapid growth of electronics manufacturing, including Apple’s expansion in the state, which accounted for around $15bn in electronics exports last. The state is also a major manufacturer of cars and motorbikes.
Tamil Nadu’s advantage lies in its investment in health and education. Its primary-health centres boast about 60% more doctors than Gujarat's, and its public hospitals have more than twice the number of beds. Critically, over 80% of its youngsters stay in school for the maximum period, and about half of young adults proceed to college or university (the national average is 28%).
This commitment to social development, rooted in a century of social reform, ensures the spoils of growth are widely distributed; despite a similar GDP per person, Tamil Nadu has far fewer impoverished people than Gujarat. Industry leaders note that the state’s high concentration of engineering colleges produces abundant talent, and its well-educated female workforce has been key to attracting electronics assembly.
The central lesson for India is clear: while politicians across the country favour visible infrastructure projects, unleashing the true power of India’s young population requires significant investment in health and education, a long-term strategy that Tamil Nadu has proven can ultimately deliver both growth and widespread prosperity.