Southern States should benchmark themselves against the world: CEA V. Anantha Nageswaran

CEA highlights Southern States' economic prowess, urging benchmarking against global standards and emphasizing need for skill improvement.

Chief Economic Adviser (CEA) V. Anantha Nageswaran on Monday (February 10, 2025) said it is about time that the Southern States benchmark themselves against the world and not just India, as the region is leading in many of the parameters when compared with the rest of the country.

Southern States contribute over 30% of India’s GDP, with Tamil Nadu and Karnataka emerging as standout performers with high compounded annual growth rates in Gross State Domestic Product (GSDP), he said. The region outperforms with a 6.3% annual growth in real terms compared with a little over 5% for the rest of the country. Per capita GDP is rising at over 5%, compared with the rest of India per capita GDP growth of 4.2%, Mr. Nageswaran said.

The South also fares better in terms of Average Labour Force Participation Rate and accounts for a higher share of Gross Value Added (GVA) across sectors including real estate, agriculture and allied services, manufacturing, services among others. The Southern States account for 37.4% in terms of total number of factories, 37% in terms of factories in operation, 25.6% in fixed capital investments.

Speaking on South India’s global economic competitiveness at the Confederation of Indian Industry’s ‘Mystic South - Global Linkages’ summit, the CEA said that though 33% of persons engaged in the manufacturing sector are in South India, the region’s output share is only 26%. “That kind of tells you there is scope for improvement in productivity because you have a higher share of workforce compared to share of outputs,” he remarked.

Classifying skill levels into four buckets, starting from basic (level 1) to higher order professional (level 4) skills like medicine, engineering, geology, the CEA said Tamil Nadu and other Southern States in general have a very high level of Skill 2 which is more than basic but in terms of Skill level 3 (associate and professional skills) and the highest order skill sets, there is still a lot of room to catch up.

“If the 21st century is going to be about high value-added manufacturing and artificial intelligence, then we need to improve on skill [levels] 3 and 4,” he added.