(MENAFN- KNN India) New Delhi, July 24 (KNN) India's aspiration to become the world's third-largest economy by 2028 and achieve a GDP of USD 10.6 trillion by 2035 will be shaped significantly by the economic performance and policy strategies of its states and union territories, according to a recent Morgan Stanley report titled 'Building Block of India's Prosperity'.

The report underscores the transformative role of subnational governments in accelerating India's rise as a global manufacturing hub, emphasising that state-level policy frameworks, fiscal capacity, and infrastructure development will be pivotal in sustaining long-term economic momentum.

Morgan Stanley projects that five leading states-Maharashtra, Tamil Nadu, Gujarat, Uttar Pradesh, and Karnataka-are likely to reach individual economic sizes of approximately USD 1 trillion between 2030 and 2035, thereby becoming core engines of national growth.

As of now, nine of India's 18 major states have surpassed the national per capita GDP average of USD 2,547.

These include Andhra Pradesh, Gujarat, Haryana, Karnataka, Kerala, Maharashtra, Punjab, Tamil Nadu, and Telangana-indicating a growing dispersion of economic strength beyond traditional centers.

In terms of growth, Assam, Gujarat, Karnataka, and Odisha have posted a five-year real GDP compound annual growth rate (CAGR) above the national average of 6.1 percent.

On capital investment, seven states-including Assam, Bihar, Odisha, and Uttar Pradesh-have capital expenditure levels above the national average of 3.2 percent of GDP, signaling an increasing focus on infrastructure and productive spending.

However, the report also flagged key structural challenges that vary widely across regions.

These include disparities in natural endowments, governance quality, institutional capacity, fiscal autonomy, debt burdens, and uneven infrastructure development.

Effective policy implementation and state-level coordination with national strategies will be critical to overcoming these obstacles.

The analysis reinforces the growing consensus that India's economic trajectory will not only be determined by national policy, but by how effectively states mobilise resources, attract investments, and deliver reforms tailored to their unique socioeconomic contexts.

(KNN Bureau)

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