20

Mar

India’s Growth: Gujarat, Bihar & Tamil Nadu’s Diverging Paths

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A person with a mustache AI-generated content may be incorrect.The past may haunt us, but the future holds promise. Predictors—from street-side palmists to gold-plated astrologers—are always in demand, as are scholars and corporates relying on 'neural networks' and 'decision trees' for predictive models.

One such study, undertaken by academics of impeccable credentials, forecasts the growth trajectory of three Indian states—Gujarat, Bihar, and Tamil Nadu—over the next 25 years. Released in February 2025, the study, "The Challenge of Contrasted Regional Dynamics," is led by Dr. Christophe Jaffrelot, a senior fellow at Institut Montaigne, a Paris-based think tank. Vignesh Rajamani, a research fellow in Indian and Indonesian politics, and Neil Bharadwaj from Delhi University join him.

Institut Montaigne’s analysis explores India’s potential as a counterweight to a U.S.-China duopoly. Using a methodology similar to its studies on Russia and China in 2024, it focuses on four major themes: food security, environmental sustainability, industrial development, and regionalism.

The study highlights India's urgent need to diversify agricultural production and modernise its value chain to combat malnutrition and achieve sustainable growth. It also identifies key environmental priorities, such as tackling the country’s crises in water, air, and forest degradation.

Marie-Pierre de Bailliencourt, Managing Director of Institut Montaigne, states that in early 2025, the study expanded to include an assessment of ‘Make in India’ and the economic policy disparities among Indian states.

With its vast federal structure, India resembles the European Union in size and complexity. Each state operates like an independent entity, with its own language and governance challenges. The study highlights stark contrasts between the Hindi-speaking North and the South, not just in culture but also in political power dynamics. The ruling party dominates much of the north but holds no ground in the south. Maharashtra and Gujarat, two key western states, play crucial roles in shaping India’s economic landscape.

 

Column at a Glance
A study titled "The Challenge of Contrasted Regional Dynamics," led by Dr. Christophe Jaffrelot from Institut Montaigne, forecasts the growth trajectories of three Indian states—Gujarat, Bihar, and Tamil Nadu—over the next 25 years. The analysis highlights India's potential as a counterweight to the U.S.-China duopoly, focusing on food security, environmental sustainability, industrial development, and regionalism.
Thursday Thunder
By R.K. Mishra
 It emphasizes the urgent need for India to diversify agricultural production and modernize its value chain. The study reveals stark contrasts in development models: Bihar suffers from persistent underdevelopment, Gujarat relies on capital-intensive industrialization but struggles with inequality, while Tamil Nadu exemplifies a balanced growth model that integrates industrial and human capital development. The findings underscore the diverse economic paths of these states and their implications for foreign investors as India aims to establish itself as a global power.

Despite the Modi government's push for centralization since 2014, Indian states retain significant control over key policy areas, such as infrastructure, education, healthcare, and economic development. This autonomy has led to starkly different development models, as exemplified by Bihar, Gujarat, and Tamil Nadu.

Bihar remains India's poorest state, much like its northern counterparts, Uttar Pradesh and Madhya Pradesh. With a population of 130 million, it suffers from rigid caste structures, low literacy rates, and inadequate infrastructure. These factors cripple job creation, forcing large-scale migration. The study bluntly states, “Bihar represents a case of persistent underdevelopment.”

In contrast, Gujarat is one of India’s wealthiest states in per capita terms. Its prosperity stems largely from industrial growth, similar to its neighbour Maharashtra. However, Gujarat’s development has focused on infrastructure—roads, ports, and energy—rather than investments in human capital. The state's low education levels have prevented it from excelling in the IT sector, despite India's global reputation in this field.

Narendra Modi, who governed Gujarat from 2001 to 2014, promoted its economic model as a national blueprint. However, the study observes that this model, which relies heavily on capital-intensive infrastructure, has failed to reduce inequalities. The wealth gap persists, and Gujarat struggles to transition into a knowledge-driven economy.

Tamil Nadu, on the other hand, has built a robust industrial base while prioritizing small and medium enterprises (SMEs) and human resource development. The state boasts high education levels and relatively low inequality. Its success is attributed to the Dravidian movement, which challenged Brahminical dominance and fostered an egalitarian ethos.

By combining industrialization with a thriving service sector, Tamil Nadu presents a development model that balances growth with social equity.

The study underscores the diverse economic paths states have taken and the implications for foreign investors. While Gujarat and Bihar represent two extremes—one capital-intensive, the other underdeveloped—Tamil Nadu showcases a balanced approach that integrates industrial and human capital growth. As India seeks to establish itself as a global power, its economic future will likely be shaped by the strengths and weaknesses of these contrasting models.

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