India’s economic geography in 2025

McKinsey has released a report that maps India’s economy 13 years from now. Highlights

GN Bureau | November 17, 2014




  • By 2025

  • India will be 38% urbanised
  • 79 metropolitan districts will account for 50% of India’s income pool, with the top quartile accounting for about half of it
  • 49 metropolitan clusters will account for about 77% of incremental GDP
  • These 49 clusters will provide access to 77% of India’s incremental GDP through 2025
  • 21 ‘high growth-high affluence’ clusters will provide access to 47% of India’s income pool in 2025 and 44% of its consuming class
  • These ‘high growth-high affluence’ clusters will outperform on core urban infrastructure
  • 8 of 12 ‘very high’ and ‘high performing’ states will be on average 55% urbanised
  • The number of ‘aspiring’ households will increase 1.5 times from 33 million to 51 million in the five largest ‘performing’ states
  • Some ‘low performing’ states will need to grow 1.5 times faster to catch-up with India’s per capita GDP of 2012
  • ‘High performing’ states will continue to capture a major share of India’s consuming class
  • Living standards of ‘performing’ states will mirror that of ‘high performing’ states today
  • ‘High performing’ states will offer markets as large as global middle income countries in 2012
  • The standard of living in ‘very high’ and ‘high performing’ states will mirror that of high and middle-income nations today.


High performing states

Gujarat

  • The state’s structural advantages – its long coastline, deep sea ports and strong entrepreneurial culture – contributed to its fast pace of growth
  • These factors were bolstered by its well-functioning administrative machinery, investment in infrastructure and emphasis on vocational training
  • Gujarat accompanied the manufacturing thrust with focused efforts to improve agricultural productivity and service sector growth

Tamil Nadu 

It has strong fundamentals such as skilled manpower, a favourable investment climate, and reasonable infrastructure

  • Has three of India’s 13 major sea ports
  • Chennai has emerged as an IT centre over the past decade. The rise of its adjoining areas as a major automotive hub also gave a fresh impetus to the state’s growth
  • Chennai is India’s biggest automotive cluster today accounting for about 30% of all automotive manufacturing in the country

Low performers and their potential

Bihar 

  • Efforts to improve the enforcement of law and order, and a modest increase in physical infrastructure, especially road connectivity, have made Bihar one of the fastest growing states

Madhya Pradesh

  • The power sector was reformed – separate feeder lines for farmers and domestic users in rural areas were established and distribution companies were restructured
  • Post 2008, Bihar and Madhya Pradesh have been on a path of convergence propelled by strong governance and focus on economic reforms

    Read the full report here.

 

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