In our 2024 bestseller ‘Behold the Leviathan: The Unusual Rise of Modern India’ we had dedicated a chapter to how southern India is rapidly pulling away from the rest of India in economic growth. (The South pulled away from the rest of the country on social indicators several decades ago.) To our surprise, this point of view irritated some of our readers who had been otherwise informed that wonderful things were happening in the rest of the country. The Reserve Bank’s data for FY25 validates our point of view. Not just the North, not just the East, even Western India is now falling behind the South.
Using data from the RBI’s Handbook of Statistics on Indian States, 2024-25, Udit Bubna reports for The Print:
“India’s export landscape is witnessing a shift with Tamil Nadu and Telangana powering ahead—with 19.6 percent and 36.3 percent growth in export value, respectively, in 2024-25—and traditional export heavyweights Gujarat and Maharashtra staring down a decline in export value.
Although Gujarat with USD 116.3 billion in export value in 2024-25 continues to dominate overall exports in the country, it recorded one of the sharpest declines of over USD 18 billion in export value, from USD 134.4 billion in 2023-24….
Tamil Nadu registered a rise in export value to USD 52.1 billion in 2024-25 from USD 43.6 billion in 2023-24, a jump of 17.6 percent. From USD 26.15 billion in 2020-21, the export value of Tamil Nadu has almost doubled in the last five years…
Another southern state that has emerged as a breakout performer is Telangana, with exports value surging by 36.3 percent in 2024-25 to reach USD 19.1 billion from USD 14.0 billion in 2023-24. The data suggests Telangana too has more than doubled its share of export value from USD 8.7 billion in 2020-21…
Karnataka also posted a healthy gain, rising from USD 26.6 billion to over USD 30.4 billion.”
So why is the south pulling away from the rest of India, including the Western Indian states? Tamilnadu has seen the dollar value of exports double post-Covid and Telangana has doubled its export share in the post-Covid era. The interesting thing is that the daily commentary in the mainstream media portrays these states as hotbeds of corruption rather than beacons of India’s economic renaissance. A visit to Hyderabad therefore is recommended for those who still haven’t figured out that the future of India lies in its southern states. Mr Bubna writes:
“The growth suggests Tamil Nadu has steadily strengthened its electronics, automobiles, and engineering goods pipeline and placed itself firmly among India’s most dynamic export hubs….
“Telangana is becoming a major hub for traditional engineering goods, whereas Tamil Nadu is witnessing development of new industries related to electronics products,” Shishir Gupta, senior fellow at the Centre for Social and Economic Progress (CSEP), a policy think tank, told ThePrint.”
Now, let’s move to Gujarat and Maharashtra and try to understand what’s gone wrong in these states. Quoting Mr Bubna:
“…traditional export powerhouse states of Gujarat and Maharashtra saw a decline of 13.4 percent and 2 percent in export value in 2024-25 since 2023-2024, respectively…
…Gujarat with USD 116.3 billion in export value in 2024-25…recording one of the sharpest contractions from 2023-24 of over USD 18 billion in export value of USD 134.4 billion….
this decline was not a one-time occurrence, Gujarat saw a decline in exports the previous year as well, underscoring persistent pressure on the state’s traditional industrial pillars of petrochemicals, gems and jewellery, and textiles.
Maharashtra, another long-term leader in exports, also saw a downward drift, with export value slipping from USD 67.2 billion in 2023-24 to USD 65.8 billion in 2024-25.”
So what is going on in these two states which were once India’s industrial powerhouses. We live in Mumbai and drive around Maharashtra extensively. The infrastructure in Maharashtra is now decades behind south India – bad roads and intermittent power supply are now serious issues in every industrial area in the state. We also travel around Gujarat and have reached the same conclusion although in comparison to Maharashtra, Gujarat is better off. (If you want to do a compare and contrast then you should visit the industrial areas in, Coimbatore and Hyderabad and compare those to the potholed industrial areas of Pune and Surat.) Mr Bubna concludes his article in the following manner:
“A key reason for Gujarat not doing well in 2024-25 exports compared to the previous year is due to turbulence in global oil markets, whereas Maharashtra may be losing out on competitiveness to other states,” said Gupta of the CSEP.”
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