Assam, Meghalaya emerge among India’s fastest-growing states in five-year GDP study

Assam and Meghalaya have emerged among India’s fastest-growing state economies over the past five years, reflecting a broader shift in the country’s economic growth pattern beyond traditionally dominant industrial states, according to a report released on May 19.

The study noted that while a handful of states such as Maharashtra, Karnataka, Tamil Nadu, Uttar Pradesh and Gujarat continue to serve as the primary drivers of the national economy — together contributing nearly 48 per cent of India’s Gross Domestic Product (GDP) — a number of smaller and mid-sized states are now recording some of the highest growth rates in the country.

Among them, Assam registered the fastest nominal GDP growth among large states, recording a five-year compound annual growth rate (CAGR) of 17.3 per cent. The report attributed the state’s performance to improved connectivity infrastructure, particularly the expansion of roads and bridges supported through central funding, alongside growth in the tea and agro-processing sectors and an improved investment environment.

Meghalaya also featured prominently in the report, posting a five-year nominal GDP CAGR of 15.3 per cent. The study observed that although the growth came from a relatively lower economic base, the pace of expansion remained significant in percentage terms.

The report stated that the five-year nominal CAGR data presents a more “democratised” economic picture than conventional state GDP rankings, indicating that structural catch-up growth is beginning to emerge across a wider section of the Indian economy.

Besides Assam and Meghalaya, Uttar Pradesh recorded a 15.3 per cent CAGR, a figure the report described as particularly significant considering the scale of the state’s economy. It credited reforms undertaken during the current administration, including the NIVESH MITRA single-window clearance portal, land record digitisation and the expansion of logistics and defence manufacturing infrastructure, for contributing to the momentum.

Karnataka and Manipur also recorded nominal GDP growth above 15 per cent during the five-year period, at 15.14 per cent and 15.04 per cent respectively. The national average nominal GDP growth during the same period until FY25 stood at 14.78 per cent.

Rohit Sarin, co-founder of Client Associates, said India currently receives only a small share of global capital flows, adding that the country continues to have substantial room for economic expansion in the coming years.