Gujarat vs. Tamil Nadu: India's Divergent Growth Models Revealed

In 2025, India's Prime Minister Narendra Modi has set a goal for the country to gain "rich-country" status by 2047, the centenary of its independence. To achieve this, India's economy would need to expand by around 8% annually, up from the 6% average over the past 25 years. Two states, Gujarat and Tamil Nadu, are held up as exemplars of India's growth potential.

Gujarat, a heavily industrialized western state, has seen its economy grow by around 8% annually over the past decade. It is home to 5% of India's population but produces more than 8% of the country's GDP and accounts for over a quarter of exports. However, this rapid industrialization has come at a cost, with nearly 12% of Gujaratis living in "multidimensional poverty," five times more than in Tamil Nadu.

In contrast, Tamil Nadu in the southeast has been growing by double digits, making it India's top performer last year. The state's success is largely driven by the growth of electronics manufacturing, particularly Apple's increased production in India. Tamil Nadu also excels in providing a well-educated and healthy workforce, with over 80% of its youngsters staying in school and around half going on to college or university.

The two states offer different lessons for India's development. Gujarat's focus on hard infrastructure and megaprojects has brought economic growth, but failed to address social inequalities. Tamil Nadu's investment in human capital, including healthcare and education, has ensured the benefits of growth are more widely shared. As India seeks to unleash the power of its young and massive population, the example of Tamil Nadu suggests that investing in people, not just concrete, may be the key to sustainable and inclusive development.