The national economic survey report has been presented before the announcement of the Union Government Budget for the next financial year since 1957-58. The report outlines the key driving forces of the Indian economy during the past year. The Survey also dives deeply the candors of the key challenges faced in the domestic as well as the international economy. The survey provides a major sector-wise analysis with trends of growth and development, policy gaps, if any, and innovative ways to address sectoral issues at both national and regional levels for achieving national and regional aspirations.

With this background, this analysis shows the key best practices highlighted with references to the regional economy like Tamil Nadu state, which is the second largest in size at the regional level. This analysis also looks into some of the grave concerns highlighted in the National Economic Survey on the state’s specific issues.

At the national level, it is important to note what the Economic Survey emphasised: “India received credit rating upgrades from three credit rating agencies in 2025, starting with Morningstar DBRS in May, followed by S&P in August and R&I in September. S&P’s upgrade of India from BBB- to BBB was India’s first credit rating upgrade from a major agency in nearly two decades.” This is possible because of India’s macroeconomic performances, which are not only now fundamentally strong now but also the growth accelerated due to a slew of structural reforms and policy measures.

Employment, Factories and Higher Productivity

The Survey Noted that “in terms of geographic distribution, seven states contributed to around 60 per cent of the total employment in the manufacturing sector with Tamil Nadu (15 per cent) on top followed by Gujarat (13 per cent), Maharashtra (13 per cent), Uttar Pradesh (8 per cent), Karnataka (6 per cent), Haryana (6 per cent) and Telangana (5 per cent). States like Maharashtra, Madhya Pradesh, Tamil Nadu, Himachal Pradesh, Haryana, Uttarakhand, Karnataka and Uttar Pradesh displayed a higher share of larger factories. These states also registered a high productivity in terms of NVA per person engaged. Further, eight industry groups in the organised manufacturing sector contributed to around 60 per cent of the total employment (Chart XII.12).”

Growth and Development of Industries

It is interesting to note the observations of the Economic Survey on major regional economies, which are essentially “the entrepreneurial state complements this institutional integration by coordinating expectations and bearing risk in sectors where fragmented private actors would otherwise hesitate to act. In automotive components in Tamil Nadu, pharmaceuticals in Gujarat and Hyderabad, and more recently electronics manufacturing clusters in Noida and Sriperumbudur, public policy has not only regulated but convened and aggregated: facilitating cluster formation, underwriting early investment, shaping procurement and export pathways, and making global standards attainable for small and mid-sized firms. In renewables, space, defence manufacturing, and select digital infrastructure, public institutions have signalled technological direction in advance of market consensus.”

Further, the Survey noted that “in the area of building and development norms, Haryana, Madhya Pradesh, Odisha, Tamil Nadu, Uttar Pradesh, and Uttarakhand have liberalised building bye-laws, and simplified development norms relating to setbacks, Floor Area Ratio (FAR), parking restrictions, and minimum plot area. These measures have reduced land loss, enabled higher utilisation of urban land, and facilitated project execution, particularly for industrial and commercial developments.” Also, importantly, “for environmental clearances, Andaman & Nicobar Islands, Andhra Pradesh, Goa, Tamil Nadu, and Uttarakhand have enabled self-certification and third-party certification for Consent to Operate, reducing dependence on routine departmental inspections.”

Moreover, the Survey observed that for achieving balancing Growth and Green Initiatives…Some evidence shows that states like “Tamil Nadu, Kerala, and Andhra Pradesh have not only enhanced their business environments by integrating sustainability measures but have also, through the Business Reform Action Plan (BRAP), reduced the time taken for environmental clearances.”. Also, the “Tamil Nadu has enhanced the ease of doing business through single-window clearances, digitised approvals, and land reforms, while promoting solar parks, district-level decarbonisation plans, and energy efficiency programs.”

The construction sector is an important aspect of industrial growth and development keeping in view that the country is aiming to accomplish viksit Bharat@2047. The Survey mentions that “about 85 per cent of the cement industry is concentrated in the states of Rajasthan, Andhra Pradesh, Telangana, Karnataka, Madhya Pradesh, Gujarat, Tamil Nadu, Maharashtra, Uttar Pradesh, Chhattisgarh and West Bengal. The industry has adequate installed capacity to meet the domestic demand for cement. Domestic cement consumption in India is approximately 290 kg per capita, compared to a global average of 540 kg per capita.”

Few States have taken significant policy initiatives in the pharmaceutical sector, with “Scheme for Promotion of Medical Devices Parks: Final approval for financial assistance of Rs.100 crore each has been given to the states of Uttar Pradesh, Tamil Nadu and Madhya Pradesh. Under the scheme, the land has already been allotted to 184 manufacturers.”

Under the National Green Hydrogen Mission, “three Green Hydrogen Hubs designated: Deendayal Port Authority, Gujarat; V.O. ChidambaranarPort Authority, Tamil Nadu; and Paradip Port Authority in Odisha.”

Moreover, for enhancing Private Participation in the Space Sector,“establishment of a dedicated launch pad and integration facility at Kulasekarapattinam, Tamil Nadu, is underway, which will strengthen India’s launch infrastructure”.

Despite the huge potentials in the coastal area developments in the state of Tamil Nadu, the state has not given due importance for a long time, but it has now realised to bridge the gaps and explores with mission mode approach. As per the Economic Survey, “Tamil Nadu’s Coastal Restoration Mission: Tamil Nadu has a 1,069 km coastline, home to 14 coastal districts that are vulnerable to impacts such as shoreline erosion, storm surges, and sea level rise. The Tamil Nadu Sustainably Harnessing Ocean Resources and Blue Economy Project employs a multi-pronged approach to enhance coastal biodiversity, improve coastal protection, enhance livelihoods, mitigate pollution, and enhance project management.”

Key Drivers of Agriculture

In the agriculture sector, value addition has been declining steadily over the years. However, some of the crops like groundnut production have increased with “the adoption of improved varieties, the presence of two crop cycles in some areas, and sustained policy focus on oilseeds, particularly in Gujarat, Karnataka, and Tamil Nadu, have together contributed to notable productivity gains”.

Similarly, it is evidently shows the increase of the “shift towards horticulture is further reinforced by region-specific success stories across states, ranging from banana cultivation in Maharashtra and Tamil Nadu to horticultural diversification in the North-Eastern and hill states, highlighting the sector’s role in promoting income diversification, nutritional security and more resilient agricultural growth.”

With regards to the services sector of major regional economies, the “diversity is mirrored in state-level performances. Karnataka, Maharashtra, Tamil Nadu and Telangana together account for nearly 40 per cent of services output, driven by modern, high-productivity services such as IT, finance and professional services, resulting in a concentration of output in highly urbanised states, particularly in southern India.” However, the percentage of distribution of GenAI Startups by major States economies varies significantly -Karnataka-39%, Maharashtra- 14%, Telangana- 7% and Tamil Nadu- 5%.

According to the “NIRF 2025 data “South India and Delhi have a concentration of top-ranked institutions, while northern and central states lag, with few in the top 100”. Tamil Nadu has 17, Delhi has 8, Karnataka has 6, Telangana has 5, and Kerala has 4. All these states together comprise 40% of the institutions in the top 100 in terms of overall ranking.

About fifteen years ago, Gujarat State had implemented a pilot scheme called Skill Voucher for the promotion of skills development. It is interesting to see states like Tamil Nadu and Maharashtra adopting the idea of skill vouchers. The Economic Survey highlights that “the Adi Dravidar and Tribal Welfare Department of the government of Tamil Nadu launched a skill voucher scheme in 2024 for Adi Dravidar, Tribal, and Christian Adi Dravidar students who pass their graduation, post-graduation, and technical courses with 60 per cent or more marks.153 Under the scheme, eligible students received vouchers valued at ₹12,000, ₹15,000, or ₹25,000 to enrol in training programmes in emerging fields, offered by training institutions listed on approved platforms.”

Some of the major concerns observed in the Economic Survey

In the internationalisation of higher education, “State-wise, earlier hubs such as Karnataka and Tamil Nadu have seen declines in international student enrolment, while Punjab, Uttar Pradesh, Gujarat, and Andhra Pradesh have emerged as hosts, suggesting that sub-national policies, institutional capacity, and outreach significantly shape inflows.”

Similarly, on the Suicide death rates and within-district connectedness are concerned, the survey noted that “the SDR for these states is very low, being 0.7 for Bihar and 3.9 for UP. Conversely, Kerala and Tamil Nadu (Chart XI.14c & d) exhibit densely woven networks of chords radiating across districts, indicating that their online social fabric is highly dispersed and geographically diffuse, and hence lower in person-to-person social connection. This is reflected in the relatively higher SDRs of 30.6 in Kerala and 25.3 in Tamil Nadu.”

To sum up, the Survey has timely stresses “extensively with state finances than usual, as concerns over fiscal populism, the crowding out of capital expenditure by cash transfers, and the rise of revenue deficits in states have increased in recent times.” Moreover, the Survey warned that “with Indian government bonds now globally indexed and investors increasingly assessing general-government finances, weak fiscal discipline at the State level can no longer be treated as locally contained—it increasingly affects the cost of sovereign borrowing.”

B.Chandrasekaran is an Senior Economist and Founder Chairman of the AgaPuram Policy Research Centre, Erode.

Views expressed by the author are personal and need not reflect or represent the views of the AgaPuram Policy Research Centre.