Odisha Leads Post-Pandemic Economic Recovery with Manufacturing Boom

Odisha has emerged as one of India’s top performers in post-pandemic economic recovery, achieving a compound annual growth rate (CAGR) of over 6% in its gross state domestic product (GSDP) between FY20 and FY25, according to a recent report by India Ratings.

The eastern state has made remarkable progress in manufacturing, with its share increasing to 26.7% of real GSVA (Gross State Value Added) in FY24, up from 22.8% in FY20. This significant growth positions Odisha among the elite group of states—including Assam, Tamil Nadu, and Karnataka—that have outpaced the national recovery rate of 5.3% CAGR.

Manufacturing Transformation
Odisha’s impressive economic performance stems from a strategic focus on industrial development. While the state has traditionally been a manufacturing base for basic metals and petroleum products, recent years have seen the state benefit from an upcycle in commodity prices. This favorable market condition created ripple effects, accelerating production across these sectors.

More importantly, the state has begun diversifying its manufacturing base beyond its traditional strengths. This diversification strategy is particularly significant as it reduces economic vulnerability to sector-specific downturns and creates a more balanced industrial ecosystem. The gradual expansion into new manufacturing areas suggests a forward-looking approach by state policymakers and industrial stakeholders.

Comparative Performance
The report highlights that half of India’s 28 states have outperformed the national recovery rate, demonstrating remarkable resilience in the face of pandemic challenges. Within this high-performing group, Odisha stands out alongside Assam, Tamil Nadu, and Karnataka as states that achieved over 6% CAGR in their GSDP.

A second tier of strong performers includes Gujarat, Rajasthan, Andhra Pradesh, Uttar Pradesh, Jharkhand, and Chhattisgarh, which recorded CAGRs between 5% and 6%. This widespread growth across diverse geographical regions indicates a broad-based economic recovery throughout India.

Regional Manufacturing Success Stories
While Odisha’s manufacturing growth is exceptional, other states have also seen significant sectoral shifts:

• Assam witnessed its manufacturing sector’s contribution increase to 18.4% of real GSVA in FY24 from 15.8% in FY20, driven by phenomenal recovery in fabricated metal products, chemicals, petroleum products, and beverages.
• Jharkhand, Punjab, and Andhra Pradesh also recorded notable increases in manufacturing shares during this period, each developing strengths in specific industrial segments.

In contrast, states like Uttarakhand, Maharashtra, Uttar Pradesh, and Madhya Pradesh experienced a decline in manufacturing’s contribution to their economies, with these states seeing their manufacturing sectors lose share at a sharper pace (more than 1 percentage point) during FY20-FY24.

Sectoral Dynamics
The national economic landscape shows interesting sectoral patterns:

• The agricultural sector’s share in India’s GVA declined overall, though states like Uttar Pradesh and Bihar bucked this trend with significant agricultural growth.
• The services sector emerged as the leading growth engine for Uttarakhand, Himachal Pradesh, Chhattisgarh, Karnataka, and Telangana during FY20-FY24.
• Manufacturing showed varied performance across states, with Odisha’s success story standing out as particularly impressive.

Implications for Odisha’s Future
Odisha’s strong performance in manufacturing and overall economic growth positions the state favorably for continued development. The diversification of its manufacturing base suggests a strategic pivot that could yield long-term benefits in terms of economic stability and job creation.
As India continues its post-pandemic recovery journey, Odisha’s example demonstrates how states can leverage their traditional industrial strengths while simultaneously expanding into new sectors. This balanced approach to economic development offers valuable lessons for other regions seeking to enhance their resilience and growth potential.
The India Ratings analysis emphasizes the importance of understanding sub-national growth dynamics to appreciate India’s broader economic revival, with Odisha standing out as a prime example of successful industrial transformation and resilience in the post-pandemic landscape.