India’s growth over the next decade will be led primarily by eight high-performing states — Gujarat, Haryana, Maharashtra, Andhra Pradesh, Telangana, Tamil Nadu, Himachal Pradesh and Uttarakhand — which will account for 52% of incremental GDP between 2012-2025, according to a new report titled “India’s Economic Geography in 2025: states, clusters and cities” by McKinsey & Co.
“Along with these eight states, four “very high performing” cities/states — Delhi, Chandigarh, Goa and Puducherry — will house 57% of consuming class households in 2025,” said Anu Madgavkar, senior fellow, McKinsey Global Institute, and one of the co-authors of the report.
At a more granular level, the report says 69 cities and 79 districts housing them will account for 54% of incremental GDP, similar to the eight high performing states.
Though some states and urban clusters will outshine others in growth rates, a secular rise in income levels across the board will ensure that inequality will not rise, assuming low performing states also implement necessary reforms and productive investments, said Madgavkar.
The study says five states —West Bengal, Madhya Pradesh, Odisha, Chhattisgarh and Rajasthan — will be able to lift 18 million households from poverty and account for 51 million, or 30% of all neo middle class families in India. This is expected to stimulate growth in industries such as cement, low-cost housing, pharmaceuticals, fast moving consumer goods, apparel and footwear.
Apart from the very high performing cities, the study classifies, in order of growth, high performing ones, which includes Mumbai, Chennai, Ahmedabad, Surat and
Coimbatore, performing cities comprising Kolkata, Bangalore and Hyderabad among others, and low performing cities, which include Jamshedpur, Lucknow and Indore.