Narrowing Gaps: RBI Deputy Governor Highlights State-Wise Prosperity Trends; Telangana and Sikkim Lead Growth

Mumbai: Indian states have become more prosperous than before, yet the pace of income growth has varied across states. While some states have become five to ten times more prosperous over the last two decades, others have recorded more modest gains of around three times, said Poonam Gupta deputy governor of the Reserve Bank of India. However, she noted that the growth gap between richer and poorer states has narrowed in recent years.

Gupta was delivering a lecture at the Columbia Indian Economy Summit 2026’ on Indian Economic Policy at Columbia University last month. The speech was uploaded on the RBI site on Monday.

She said that prosperity is both India’s ambition and its destiny and if growth trajectories of the past two decades are sustained, the average state per capita income could approach high-income thresholds by 2046-47.

Gupta said that the per capita income levels in more prosperous states have grown faster than in relatively less prosperous ones. “The fact that richer states have experienced greater prosperity than the poorer states in the past, and that this trend has not reversed, implies that income levels across states have not been converging.”

Overall, the outperformance of the richer states in the past has been driven not only by higher income growth but also by slower population growth. States above median income levels have both higher gross state domestic product (GSDP) growth as well as slower population growth, resulting in a faster growth in per capita income.

According to RBI data, states with the highest ratio of per capita GSDP in 2024-25 to 2003-04 in constant rupee terms were Sikkim (6), Telangana (4.5), Tamil Nadu (4.2), Mizoram (4.3), Gujarat (4), while lowest were Manipur (2.1), Meghalaya (2.2), Jharkhand (2.1), West Bengal (2.5), Arunachal Pradesh Uttar Pradesh and Chattisgarh at 2.7.