Strong growth across the South India, but divergence risks ahead

Over the next five years, India is forecast to be the fastest growing major economy across Asia-Pacific. We expect India’s real GDP to grow on average 6.7% per year between 2024 and 2028. In general, we expect the Southern states to lead GDP growth rankings, while the Central, Eastern, and Northeastern states are anticipated to lag.

What you will learn:

• A key factor in determining the differences in the sub-national outlooks is each state’s industrial structure. Over the next five years, we expect India’s professional and technological service sectors to drive the country’s strong rate of economic growth, for which we forecast real gross value added (GVA) will expand on average by nearly 10% per year.
• The Southern states Telangana and Karnataka are at the forefront of these sectors leading our medium-term GVA growth rankings. These respective states are home to two of India’s most rapidly growing cities—Hyderabad and Bengaluru. The professional and technological service sectors of these cities are forecast to grow the fastest out of all major Indian cities.
• As more activity is generated in professional and technological services, we forecast that the employment in these sectors will grow significantly faster than India’s overall labour force.
• Productivity is one driver of wages, and so we anticipate these states to have the fastest growth in real per capita income and therefore consumer spending. In contrast, we forecast that across Central, Eastern, and Northeastern regions, per capita income and per capita consumer spending will grow significantly slower.