Karnataka leads growth trajectory as southern states perform well: Rubix Data Sciences

Mumbai: Four southern states of Karnataka, Telangana, Andhra Pradesh and Tamil Nadu ranked among the top ten contributors to India’s GDP - with their share collectively increasing from 25 per cent in FY2015 to 27 per cent in FY2025, reflecting a steady performance as growth engine.

Karnataka led with a 7.8 per cent average real growth rate, followed by Telangana (7.1 per cent), Andhra Pradesh (6.9 per cent), and Tamil Nadu (6.8 per cent).

This broad-based growth reflects the region’s strong performance across manufacturing, services, and technology-led sectors, according to Rubix Data Sciences, which came out with its latest report —  ‘State of the States; Assessing State-level Performance: Driving India’s Economic Transition’.

The report further reveals that Maharashtra continues to be the single-largest contributor to India’s GDP, but its share moderated to 13 per cent in FY25 from 15 per cent in FY15. Among the largest states, Gujarat has emerged as one of the fastest-growing major state economies, recording an average real growth rate of 7.9 per cent between FY15 and FY24.

Regionally, India’s capex remains concentrated in the North as large industrial and infrastructure-led states continue to anchor aggregate investment flows. Notably, three states, Uttar Pradesh, Maharashtra, and Gujarat, accounted for nearly 30 per cent of the country’s capex in FY25. 

However, with the top 10 states accounting for almost 67 per cent of India’s total capex, a broader dispersion of public and private investment across lagging regions is essential to support balanced development. More importantly, industrial credit also remained concentrated in the West and North with 34 per cent share of each region. This means two-thirds of the country’s total industrial credit went to these two regions.

Another notable aspect is that Gujarat, Maharashtra, and Tamil Nadu account for almost 61 per cent of India’s goods exports. Region-wise, goods exports remain highly concentrated in the West and South, with the West maintaining a dominant share of about 48 per cent in both FY18 and FY25. 

Notably, the South’s export share has risen significantly from 26 per cent to 33 per cent over the same period, reflecting its expanding manufacturing export capacity in sectors such as automobiles, electronics, ad engineering goods.

“India’s growth story is fundamentally a state-level story. This decadal analysis shows we are at a point where growth is broadening beyond its traditional anchors, but concentration risk remains real. How effectively emerging states convert current investment momentum into durable industrial capacity will define India’s next growth phase,” said Mohan Ramaswamy, Founder and CEO, Rubix Data Sciences.

The South’s leadership extends beyond aggregate GDP. Among larger states, Telangana (Rs 3.88 lakh), Karnataka (Rs 3.81 lakh), and Tamil Nadu (Rs 3.62 lakh) recorded the highest per capita Net State Domestic Product (NSDP) in FY25, outpacing states such as Maharashtra (Rs 3.09 lakh) and Haryana (Rs 3.53 lakh). These three states also featured among the top 10 in average decadal growth of per capita NSDP, exceeding 6 per cent annually at constant prices, proof that their economic expansion is translating into measurable prosperity for residents, not just headline GDP numbers.

India’s fixed capital stock remains heavily concentrated in the West (33 per cent share in FY24), but the pattern of new investment tells a different story. Gross Fixed Capital Formation (GFCF) trends show a gradual geographic rebalancing: Gujarat’s dominant share in new investments has moderated (from 31 per cent to 18 per cent), while Tamil Nadu, Odisha, and Uttar Pradesh have increased theirs. In terms of capital efficiency, Karnataka and Telangana reported productive capital-to-invested capital ratios above 100 per cent in FY24, a rare indicator of rapid economic dynamism and strong private sector activity. Gujarat and Maharashtra continue to anchor India’s industrial heartland, but the next wave of capital formation is spreading.