India’s journey over the past seven decades has been shaped by two foundational principles: democracy and federalism. These are not just constitutional concepts, but living realities that give the nation both resilience and direction. Democracy has ensured that citizens participate in governance, hold institutions accountable and shape the country’s destiny through their collective voice. Federalism, on the other hand, has allowed governance to adapt to India’s vast diversity—linguistic, cultural, economic and social— cross 28 states and eight union territories. Together, they form the architecture within which India must now pursue its most ambitious goal: becoming a developed nation by 2047.
India’s aspirations for 2047 are anchored in three interconnected goals—growth, inclusion and sustainability. Each represents both a promise and a challenge, requiring the coordinated effort of the Union and the states.
Growth remains the first pillar. The vision is bold: to build a $30 trillion economy by the centenary of independence, with per capita incomes between $14,000 and $18,000. Such targets cannot be achieved without states playing a central role. Already, many states—Andhra Pradesh, Telangana, Uttar Pradesh and Tamil Nadu among them—have announced their own roadmaps, some aiming to reach developed status by 2030. This competitive spirit among states is not a weakness but a strength, for it channels diversity into a shared national momentum.
Inclusion is the second pillar. Growth by itself is not enough unless it translates into quality jobs, access to health care, education, housing and social protection. Inclusive growth demands that every citizen, regardless of region or background, experiences the benefits of prosperity. Life expectancy, infant mortality and other human development indicators must converge across states. The aspiration is not just to create wealth but to distribute opportunity more fairly and expand human capabilities.
Sustainability forms the third pillar, ensuring that progress does not come at the expense of future generations. India has pledged to achieve net-zero emissions by 2070, while already securing half of its energy capacity from renewable sources. Beyond policy, the vision extends to individual lifestyles—emphasising that the choices of citizens, when aligned with environmental goals, are equally important. Growth that erodes the planet’s foundations cannot be considered true development; sustainability makes Viksit Bharat both durable and ethical.
The role of states is central to this transformation. They account for nearly 60% of public expenditure and are responsible for delivering essential services such as education, health, agriculture, skill development and urban infrastructure. The nation’s progress, therefore, is inseparable from the performance of its states. If every state becomes an engine of robust, inclusive and sustainable growth, India’s aspiration of becoming a developed nation will naturally follow.
Over the decades, the federal framework has undergone significant evolution. In the early decades after independence, centralis ed planning through the Planning Commission dominated policy, often imposing a top-down approach. With economic reforms in the 1990s, however, the role of states expanded dramatically. They became the principal actors in attracting both foreign direct investment and domestic capital, while also gaining more fiscal space through successive Finance Commissions. The replacement of the Planning Commission with NITI Aayog in 2015 symbolised this shift—towards collaborative, cooperative federalism rather than centralised control.
The creation of the GST Council was another milestone, representing how Union and state governments can come together to design and manage a nationwide taxation system. Far from eroding federalism, such institutions have strengthened it by ensuring that diverse voices shape common rules.
The creation of the GST Council was another milestone, representing how Union and state governments can come together to design and manage a nationwide taxation system. Far from eroding federalism, such institutions have strengthened it by ensuring that diverse voices shape common rules.
Yet India’s diversity has also produced sharp economic disparities across states. While some regions have surged ahead, others have lagged, creating divergence in per capita incomes. Evidence shows that richer states such as Maharashtra, Gujarat and Karnataka have grown faster than poorer states like Bihar and Uttar Pradesh. The result is widening interstate disparities in economic output.
However, human development has shown a more encouraging trend. Indicators like life expectancy and infant mortality are converging, with less-developed states gradually catching up to leaders like Kerala. This convergence is expected, as improvements in basic services yield faster gains in poorer regions. It reflects the potential of inclusive policies and targeted interventions.
Demographics add another layer of complexity. While states such as Kerala will see 17% of their population in the elderly category by 2036, Bihar’s figure will remain closer to 8%. Younger populations in Bihar, Uttar Pradesh and Madhya Pradesh represent a demographic dividend that, if harnessed through education and job creation, could transform India’s growth trajectory. The challenge is to ensure that this potential does not go unrealised.
The fiscal health of states has emerged as one of the most critical factors shaping their ability to deliver development. A recent NITI Aayog Fiscal Health Index highlighted wide variations. Odisha, Chhattisgarh, Goa, Jharkhand and Gujarat were among the top performers, demonstrating effective revenue mobilisation, expenditure management and fiscal prudence. By contrast, states such as Punjab, Kerala, West Bengal and Andhra Pradesh struggled, burdened by rising deficits and growing off-budget liabilities.
These fiscal imbalances are not just bookkeeping issues—they directly affect the capacity of states to invest in infrastructure, social programs and sustainable growth. Transparent and consistent fiscal management, therefore, is not optional; it is the foundation upon which the aspirations of Viksit Bharat rest.
Among the many institutions shaping India’s federal framework, the Finance Commission occupies a unique place. Tasked with recommending the distribution of tax revenues between the Union and states, it has consistently tried to reduce inequalities across regions. Its use of the “income distance” criterion ensures that poorer states receive more funds to improve services in health, education, water and sanitation.
This approach, however, creates tensions. Richer states argue that they are penalised for their efficiency, receiving less in return for their stronger performance. The Finance Commission must constantly balance the need for equity with the demands of efficiency, ensuring that the federation remains both fair and functional. Without such balancing, disparities could widen further, threatening social cohesion.
Studies of economic growth across states highlight several key drivers. Infrastructure development, investment in social sectors, urbanisation and the balance between credit and deposits all play vital roles. States that combine physical infrastructure with human development tend to perform best. The lesson is clear: progress requires a holistic approach, not just roads and factories, but also schools, hospitals and skill-building initiatives.
India’s size and diversity mean that contradictions are inevitable. The British economist Joan Robinson once observed that whatever is true about India in one region, the opposite is likely to be true in another. In Kerala, social indicators may be high, while in Bihar, demographics provide the advantage. In Punjab, challenges in agriculture persist, while in Gujarat, industrial growth thrives. Rather than viewing these contradictions as weaknesses, they can be harnessed as strengths, encouraging states to innovate, compete and learn from each other.
Decentralisation within states is as important as cooperation between states. Empowering panchayats and municipalities ensures that development reaches every community. Local governance can address unique needs more effectively than distant state capitals, making democracy truly participatory at the grassroots level.
The example of GST reform illustrates the promise of cooperative federalism. Union and state governments, despite differences, crafted a consensus-driven framework to manage one of the world’s largest taxation systems. This spirit of collaboration must extend beyond taxation to other areas—health, education, infrastructure and climate action.
India’s ambition to become a developed nation by 2047 is bold, but achievable. It demands growth that is fast and inclusive, development that is sustainable and governance that strengthens democracy and federalism. States must rise to the occasion, competing and cooperating, innovating and learning, so that the sum of their progress becomes greater than its parts.
In the end, India’s diversity is not a barrier to development—it is its greatest asset. When harnessed with fairness, fiscal responsibility and cooperative spirit, it becomes the driving force behind a Viksit Bharat. Democracy provides the voice, federalism provides the framework and together they chart the path to a future where prosperity is shared, sustainable and enduring.
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Inclusion is the first magazine dedicated to exploring issues at the intersection of development agendas and digital, financial and social inclusion. The magazine makes complex policy analyses accessible for a diverse audience of policymakers, administrators, civil society and academicians. Grassroots-focused, outcome-oriented analysis is the cornerstone of the work done at Inclusion.
