Recent studies have brought into light the performance of state of Indias across various development parameters. Maharashtra, Gujarat, and Karnataka have emerged as the leading states based on a comprehensive evaluation of economic, fiscal, infrastructure, financial development, social, governance, and environmental indicators. This ranking is based on a report by CareEdge Ratings, which assessed 50 indicators to provide a clear picture of state performance.
Ranking
Maharashtra topped the list among large states with a composite score of 56.5. Gujarat followed closely with a score of 52.4, while Karnataka secured third place at 51.9. In the smaller states category, Goa led with an impressive score of 62.1. The rankings reflect a shift from the previous year, where Tamil Nadu was in the top three.
Key Performance Areas
The report identified several key performance areas. Maharashtra excelled particularly in financial development, attributed to Mumbai’s status as India’s financial capital. Gujarat’s strong economic performance stemmed from impressive figures in per capita Gross State Domestic Product (GSDP), Foreign Direct Investment (FDI) inflows, and gross fixed capital formation.
Fiscal Performance
Fiscal health was another crucial metric. Odisha ranked highest in this category, scoring 71.1, despite an overall ninth position. The state’s effective management of revenue deficits, interest payments, and outstanding liabilities contributed to its fiscal strength.
Infrastructure Development
When it comes to infrastructure, Punjab and Haryana were the top performers. They achieved high scores in metrics such as per capita power availability, railway density, and net irrigated area. These factors are essential for supporting economic growth and improving living standards.
Environmental and Governance Metrics
Southern states, particularly Karnataka, Telangana, Andhra Pradesh, and Tamil Nadu, excelled in environmental metrics. Andhra Pradesh also stood out in governance, scoring high in business environment, court conviction rates, and timely legal processes. These factors are crucial for encouraging a conducive atmosphere for investment and social well-being.
Social Indicators
In the social category, Goa and Mizoram led the rankings. Their success is attributed to improved outcomes in critical areas such as infant mortality and multidimensional poverty rates. These indicators reflect the overall quality of life and health standards in these states.
Methodological Changes
It is important to note that the rankings from 2023 and 2025 are not directly comparable due to changes in the methodology used for assessment. This evolution in evaluation criteria may influence future rankings and perceptions of state performance.
Questions for UPSC:
- Examine the impact of financial development on Maharashtra’s economic growth.
- Critically discuss the factors contributing to Odisha’s high fiscal ranking despite its overall position.
- Analyse the significance of infrastructure development in enhancing economic performance in Punjab and Haryana.
- Point out the relationship between governance metrics and investment climate in Andhra Pradesh.
Answer Hints:
1. Examine the impact of financial development on Maharashtra’s economic growth.
- Maharashtra’s financial development is largely driven by Mumbai, India’s financial capital.
- High credit penetration and adoption of mutual funds and insurance products contribute .
- Financial inclusion initiatives have improved access to financial services for the population.
- Investment in financial infrastructure has attracted Foreign Direct Investment (FDI) and boosted economic activities.
- The state’s strong financial health enhances government revenue, enabling further economic growth initiatives.
2. Critically discuss the factors contributing to Odisha’s high fiscal ranking despite its overall position.
- Odisha scored 71.1 in fiscal health due to effective management of revenue deficits.
- Low interest payments as a percentage of revenue indicate sound fiscal management.
- Strong debt management practices have kept outstanding liabilities under control.
- Government guarantees are well-managed, contributing to fiscal stability.
- Despite ranking ninth overall, these fiscal strengths reflect a commitment to sustainable economic policies.
3. Analyse the significance of infrastructure development in enhancing economic performance in Punjab and Haryana.
- Punjab and Haryana excelled in per capita power availability, crucial for industrial growth.
- High railway density facilitates efficient transport of goods, reducing logistics costs.
- Increased net irrigated area supports agricultural productivity, a key sector in both states.
- Robust infrastructure attracts investments, boosting economic activities and job creation.
- Improved infrastructure enhances the quality of life, contributing to overall economic performance.
4. Point out the relationship between governance metrics and investment climate in Andhra Pradesh.
- Andhra Pradesh’s high governance scores indicate a favorable business environment.
- Timely completion of court trials enhances legal certainty for investors.
- High court conviction rates promote trust in the legal system, encouraging investments.
- Strong judge strength ensures efficient dispute resolution, vital for business operations.
- Good governance practices attract domestic and foreign investments, boosting economic growth.
