Growth in most southern States is concentrated in a few districts: Data

High unemployment rates and slower growth rates in southern States are causes for concern too.

Various southern States have tabled their Budgets and Economic Surveys this year. An analysis of their Surveys shows that economic growth in all of these States lagged behind India’s economic growth in 2023-24. And despite having a significant proportion of the population in the labour force, the rates of unemployment in these States remain a point of concern.

Tamil Nadu’s economy grew at 8.2% and Telangana’s at 7.4%. Karnataka, Kerala, and Andhra Pradesh have each grown at over 6%. The Indian economy grew at 9.2% in 2023-24 (First revised estimates) according to the latest data (Chart 1).

Despite these States having higher per capita incomes than the Indian average, the economic advantages are highly concentrated in a handful of districts within the States. Only eight of the 38 districts in Tamil Nadu had a higher per capita income than the State average of ₹2.8 lakh in 2022-23. Income levels in the Chengalpattu district were more than double the State’s figures. Only three of the 33 districts in Telangana, which has the highest income level in all the southern States, had a higher per capita income than the State average of ₹3.1 lakh. The per capita income of the Rangareddy district is more than thrice the average of Telangana’s. Similarly, just four districts of Karnataka had higher income levels than the State average of ₹3 lakh. Kerala is the only southern State with a more equitable distribution — seven of its 14 districts had a per capita income that was above the State average, while the rest fell below it (Table 2).

Charts 3 and 4 show that despite a huge chunk of the population seeking work, unemployment is a pressing concern for the southern States. Though the unemployment rates of all these States declined compared to 2017-18, barring Karnataka they all had an unemployment rate higher than the Indian average in 2023-24.

The average labour force participation rate (LFPR) in India in 2023-24 was 60.1%. While Andhra Pradesh and Telangana had an LFPR of more than 60% in 2023-24, the LFPR of Tamil Nadu, Karnataka, and Kerala was 58.8%, 56.8%, and 56.2% respectively.

In general, across the southern States, there has been a sizeable shift out of casual labour and an increase in the share of those in self-employment — mostly because of an increase in those working as helpers in household enterprises. There was barely an increase in the share of those working in regular salaried jobs between 2017-18 and 2023-24. For instance, in Tamil Nadu, the share of casual labourers fell from 33.5% in 2017-18 to 31% in 2023-24, while the proportion of self-employed workers rose from 32.8% to 34.2%. The share of those in regular employment remained unchanged at 34%. In Telangana, the self-employed category grew by 8 percentage points to 55.9%, while the share of casual labourers declined by 5.7 points to 18.7% in the same period.

Table 5 shows the sectoral composition of the States’ economies. It is evident that the services sector, which contributes over 50% of the economic output in these States, is playing a larger role in driving the economies of the richer southern States. The only exception is Andhra Pradesh where the contribution from the services sector declined in the decade between 2014-15 and 2023-24. The contribution of agriculture to Andhra’s economic output increased in the decade under consideration from 30% to over 34%.