According to the reports, five south Indian states, Karnataka, Tamil Nadu, Andhra Pradesh, Kerala and Telangana have topped the list in contributing to the nation’s economic growth. These states share around 30% of India’s GDP.

Moreover, Tamil Nadu has a Gross State Domestic Product (GSDP) of Rs. 24.8 lakh crores and currently is the biggest economy in south India. After it comes Karnataka whose GSDP stands at Rs. 22.4 lakh crores, then Telangana at Rs. 13.3 lakh crores, followed by Andhra Pradesh and Kerala at Rs. 13.2 lakh crores and Rs. 10 lakh crores respectively.

There are certain factors which play a significant role in increasing the GSDP of the states and these are as follows:

Per Capita Income

This is one of the most important factors that affects the GDP of a state, as it is the amount of money earned per person in a state. In FY 2023, Telangana registered the highest per capita income of Rs. 2,75,443. It was then followed by Karnataka with ₹2,65,623, Tamil Nadu with ₹2,41,131, Kerala with ₹2,30,601, and lastly, Andhra Pradesh with ₹2,07,771. These five states were the major South Indian states with the highest per capita income. In fact, the combined per capita income of these five states was higher than the national average of Rs. 1,50,007.

State Tax Revenues

These taxes include fees, licenses, fines and charges for services as imposed by the legislature on individuals, agencies and businesses outside of the state government. Therefore, in this case, Tamil Nadu has the highest tax revenues – of Rs. 1,26,644 crores. It is followed by Karnataka at ₹1,11,494 crores, Telangana at ₹92,910 crores, Andhra Pradesh ₹at 85,265 crores and Kerala at ₹71,833 crores.

Lower Dept-to-GDP Ratio

In simpler terms, this is a metric which helps a country to understand its ability to pay back its debts. It is believed that a lower debt-to-GDP ratio is ideal because it shows that a country is producing more funds than it is borrowing. On this parameter, Telangana has the lowest debt-to-GSDP ratio of 25.3%, followed by Karnataka (27.5%), Tamil Nadu (27.7%), Andhra Pradesh (32.8%) and finally Kerala (37.2%).

Gross Fiscal Deficit

This refers to the excess of total expenditure – including loans net of recovery over the net of revenue – and non-debt capital receipts. Also, a fiscal deficit refers to the total revenue and expenditure of a government in a particular financial year. In this manner, Karnataka has the lowest fiscal deficit at 2.8%. This is followed by Andhra Pradesh (3.2%), Tamil Nadu (3.8%), Telangana (3.9%) and Kerala (4.2%).

Interest Payments to Revenue Receipts Ratio

This shows how much money is required for debt servicing. This is because if Interest Payments are high, then the state has lesser money to spend on its developmental works. So, in case, Telangana has the lowest Interest Payments ratio, which stands at 11.3%. This is followed by Karnataka (4.3%), Andhra Pradesh (14.3%), Kerala (18.8%), and finally, Tamil Nadu (21%).

There is no doubt that because these five South Indian states are performing so well, there is tough competition between them. As we see from the data above, Telangana and Karnataka are at the top of the pyramid in terms of covering all the economic factors. 

Other Factors Which Make These South Indian States Economically Big

While around 48% of south India’s population is engaged in agriculture, the southern region of the country is the most industrialized, with the city of Chennai as the hub for automobile manufacturing. This undoubtedly plays a major role in strengthening the economy of southern India. 

To add further, because Information Technology is a growing field in south India, country’s top software exporters states are Bangalore, Chennai and Hyderabad.  

According to a recent Niti Aayog report, Kerala has been ranked as a state which is most investment friendly. At the same time, the Human Development Index and the living standards of people in Kerala is far ahead from all other Indian states.

This, as a whole, is a good sign for making India’s economy grow and progress.

Proofread, Edited & Published By Naveenika Chauhan