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UID: EC-20241110-IN-01
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Net State Domestic Product (NSDP) represents the total value of goods and services produced within a state’s borders minus depreciation. It reflects the state’s economic performance by measuring the income generated from production activities, excluding wear and tear on capital assets such as machinery, equipment, and infrastructure. NSDP is crucial for understanding the real growth potential of a state’s economy, as it focuses on the net value created.
Unlike Gross State Domestic Product (GSDP), which includes depreciation, NSDP provides a more accurate picture of sustainable economic output by accounting for the decline in asset value over time. It helps policymakers and analysts assess the financial well-being of residents, as it closely correlates with the income available for spending, savings, and investment. By tracking NSDP, governments can plan policies to enhance economic development, improve resource allocation, and promote efficient use of capital assets.
Maharashtra has maintained its status as India’s economic superpower, with the highest NSDP of any state over the course of the period. Although the state’s economic output has grown remarkably, it saw a notable decline in 2020–21 due to the COVID-19 pandemic. After Maharashtra, the next tier of economic contributors, such as Tamil Nadu, Karnataka, Gujarat, and Uttar Pradesh, have also demonstrated the concentration of economic activity in western and southern India. The different growth patterns among developed and developing states are clearly evident from the data. Some northeastern states like Manipur, Mizoram, and Nagaland have seen relatively modest growth, whereas states like Gujarat, Karnataka, and Tamil Nadu have demonstrated strong and steady growth trajectories. This suggests that despite overall national development, regional economic disparities persist. The COVID-19 pandemic had a major impact in 2020–21, as evidenced by the data, which shows that the NSDP shrank in practically every state during this time. Nonetheless, the majority of states have shown remarkable recovery in 2021–2022 and 2022–2023, indicating strong economic resilience. States with strong post-pandemic recoveries included Gujarat and Karnataka. An interesting observation is the emergence of Telangana as a significant economic force after its separation from Andhra Pradesh. Both successor states have shown strong growth trajectories, indicating that the bifurcation has maintained their financial progress. The services-driven economy of Telangana, particularly around Hyderabad, has contributed to its rapid growth. The data also highlights the growing economic significance of previously smaller economic states like Uttar Pradesh and Rajasthan, which have shown consistent growth over the years. This suggests a gradual shift towards more balanced regional development, though significant disparities remain. While showing growth, smaller union territories like Puducherry and Andaman & Nicobar Islands maintain relatively more minor economic outputs, reflecting their size and population limitations. It’s worth noting that the transition from constant to current prices shows the impact of inflation on the nominal growth of state economies. When adjusted for inflation (constant prices), the growth rates appear more modest but still indicate natural economic expansion across most states. This dual presentation helps understand nominal and real economic growth patterns across Indian states.
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