Assam and Meghalaya have emerged among India’s fastest-growing state economies over the past five years, signalling 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 found that while major economic centres such as Maharashtra, Karnataka, Tamil Nadu, Uttar Pradesh and Gujarat continue to drive the national economy, jointly contributing nearly 48 per cent of India’s Gross Domestic Product (GDP), several smaller and mid-sized states are now posting some of the highest growth rates in the country.
Among the states analysed, Assam recorded the fastest nominal GDP growth among large states, registering a five-year compound annual growth rate (CAGR) of 17.3 per cent. The report attributed the state’s performance to improvements in connectivity infrastructure, including the expansion of roads and bridges backed by central funding, alongside growth in tea production, agro-processing industries and a more favourable investment climate.
The findings reflect the growing economic transformation underway in the Northeast, a region that has traditionally lagged behind western and southern India in industrial development and infrastructure. Over the past decade, increased investment in highways, rail connectivity, airports and inland waterways has helped integrate the region more closely with national supply chains and markets.
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Meghalaya also figured prominently in the report, recording a five-year nominal GDP CAGR of 15.3 per cent. Although the growth came from a relatively smaller economic base, the study said the pace of expansion remained notable in percentage terms.
The report observed that five-year nominal CAGR data presents a more “democratised” picture of India’s economy than conventional GDP rankings, indicating that structural catch-up growth is now emerging across a wider cross-section of states.
Besides Assam and Meghalaya, Uttar Pradesh recorded a 15.3 per cent CAGR, a figure the report described as significant given the size of the state’s economy. The study credited reforms undertaken during the current administration, including the NIVESH MITRA single-window clearance portal, digitisation of land records and expansion of logistics and defence manufacturing infrastructure, for driving economic momentum.
Karnataka and Manipur also posted 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 attracts only a limited share of global capital flows and still possesses considerable room for long-term economic expansion.
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