The World Bank’s recently released ‘Country Income Classifications’ report has unveiled a striking new dimension of India’s economy. While India as a whole continues to be classified as a ‘Lower-Middle Income’ country, several individual states have internally transformed into ‘Upper-Middle Income’ economies by international standards.
According to the report, India’s current average per capita income stands at $2,760 (approximately ₹2,63,179). While this figure keeps the country in the lower-middle income bracket, it does not fully reflect the actual economic reality on the ground, because certain states have surpassed the national average and are rapidly approaching the level of internationally developed economies.
By international benchmarks, a region or country with an average per capita income of $4,636 or above is classified as an ‘upper-middle income’ economy. Notably, five leading Indian states have already crossed this prestigious threshold to become affluent states. This list is topped by the national capital Delhi, along with states from the southern and western regions.
Delhi leads this list of affluent states with a remarkable per capita income of $6,217 (approximately ₹5,92,933). Karnataka, shining as an IT and industrial hub, follows in second place with $5,579 (approximately ₹5,31,986). The report noted that these two regions are functioning as key engines of the country’s economic growth.
The newly formed state of Telangana has created a sensation in economic progress, ranking as the country’s third-richest state with a per capita income of $5,407 (approximately ₹5,15,583). A strong services sector and Hyderabad’s metropolitan infrastructure have propelled Telangana to this level. Close behind, neighboring Tamil Nadu ranks fourth with $5,329 (approximately ₹5,08,131), while industrial powerhouse Gujarat holds fifth place with $4,734 (approximately ₹4,51,363).
Meanwhile, several other key states are on the cusp of joining this ‘upper-middle income’ club. Maharashtra, known as the country’s financial capital, stands just eight dollars short of the target with a per capita income of $4,628. Haryana ($4,627) and Kerala ($4,610) are also extremely close to the World Bank’s threshold of $4,636. It appears certain that these states will join the list of affluent states in the coming financial year.
However, there is another, more troubling side to this coin. As economic growth has been confined to certain regions, income inequality among states has widened significantly. The Gini Coefficient, a measure of economic disparity, has risen from 0.230 previously to 0.261 currently — direct evidence of this regional inequality. This suggests that the fruits of development are not being distributed evenly across the country.
According to the report, the income gap between the country’s richest and poorest states previously stood at 2.38 times. But current figures show that gap has widened sharply to 3.73 times. Additionally, over the past three decades, per capita income in middle-income states grew 36.7-fold, while the growth rate in poorer states was only 26.6-fold. Reflecting this regional disparity, Bihar remains at the very bottom of the list nationally. Bihar’s average per capita income is just $984 (approximately ₹93,824). The World Bank expressed concern that this figure is not only far below India’s national average but is also worse than neighboring Nepal and some sub-Saharan African countries.
Though marginally better off than Bihar, Uttar Pradesh and Jharkhand also show severe backwardness. Uttar Pradesh’s per capita income stands at $1,403 (approximately ₹1,33,776), while Jharkhand’s is $1,470 (approximately ₹1,40,165). Analysts attribute this poor condition in these three states to population burden and slow industrialization.
The report also analyzed the changes in India’s economic landscape over the past 30 years. In 1994, not a single major Indian state was even at a middle-income level. But following the 1991 economic reforms, as the services, technology, and industrial sectors gained momentum over three decades, several states have today grown to a level competitive with international nations.
Notably, the current per capita income of fast-growing states like Karnataka and Telangana exceeds that of strong Southeast Asian economies such as Indonesia ($5,120) and Vietnam ($4,970). Furthermore, India’s top states have nearly matched the economic levels of countries holding key positions in the global market, such as South Africa ($6,270), Fiji ($6,230), and Mongolia ($6,210).
Unexpected shifts have also occurred in the internal economic leadership among states over the past three decades. Some regions once counted among the country’s most backward states are now growing rapidly. For instance, Odisha has overtaken Uttar Pradesh through progress in the industrial and mining sectors. Odisha’s per capita income is currently 75% higher than that of Uttar Pradesh.
Similarly, the northeastern state of Assam has also made unexpected progress, moving ahead of Jharkhand. Assam’s average income is currently 48% higher than Jharkhand’s. The report noted that these states have entered a growth trajectory by shifting local policies rather than relying solely on traditional resources.
Another interesting development is that Punjab — which shone as the country’s number-one richest state during 1994-95 thanks to the Green Revolution — has gradually lost its former glory. Due to stagnation in agriculture and a lack of industrialization, Punjab has now fallen to the level of Rajasthan. Notably, it now lags behind as many as seven other states in the current nationwide growth rate.
Overall, the key message of the World Bank’s 2026 report is this: while it is true that India is emerging as an economic superpower on the international stage, there is a responsibility to ensure that this growth is not confined to just a few states. India will become a fully developed nation only when it uses the experiences and strategies of the affluent states that have reached ‘upper-middle income’ status to lift backward states like Bihar and Uttar Pradesh forward equally.