By Rajani Sinha
Maharashtra has topped the CareEdge state rankings for 2025, followed by Gujarat & Karnataka. Fiscal, economic & financial development were the strong points for the western states while southern states stood out for their governance, environment & social outcomes, writes Rajani Sinha
How composite rankings are determined
The second edition of CareEdge State Rankings presents a quantitative assessment of the performance of states on seven key pillars —economic, fiscal, infrastructure, financial development, social, governance and environment — together covering 50 indicators. The indicators are normalised and assigned weights based on which the pillar scores are derived. The composite score is calculated as a weighted average of the pillar scores. The economic pillar captures aspects related to the states’ growth and inflation dynamics, its structural characteristics and investment-related performance. The fiscal pillar tracks metrics related to the states’ debt and deficit, revenue generation capacity and quality of expenditure. These two pillars cumulatively have been assigned a weight of 45%. Large states have been grouped into one category while north-eastern, hilly and small states have been grouped into another category.
However, the CareEdge state rankings of 2023 and 2025 are not comparable due to changes in methodology.
Physical and social capital parameters
The objective of this assessment is to capture the states’ holistic performance covering aspects of sustained growth as well as its investment attractiveness. The investment in physical and social infra-structure is critical to augment the states’ long-term growth potential while financial development ensures penetration of credit, financial products and boosts financial inclusion. Both these pillars have been assigned a weight of 15% each. Furthermore, the social pillar (10% weight) assesses the states’ progress in areas of health, education, labour and poverty which are critical for attaining sustainable and inclusive growth. The governance and environment pillars have a weight of 10% and 5%, respectively. Thus, the rankings aim to benchmark the performance of states indicating the best practices that can be emulated by others.
Top-performing large states
Maharashtra led the composite rankings, among large states. Its strong overall performance was supported by its leading position in the financial development pillar on account of better scores for credit disbursements (by banks and non-banking financial companies), penetration of mutual funds and health insurance. Strong performance across the economic, fiscal and social pillars also helped its score.
Gujarat occupied the second spot. It topped the economic rankings on the back of favourable scores in per capita gross state domestic product (GSDP), foreign direct investment (as percentage of GSDP) and gross fixed capital formation to gross value added (GFCF as percentage of GVA) of industries. Furthermore, Gujarat also benefitted from favourable outcomes in the fiscal and infrastructure pillars. Karnataka’s strong performance in the economic, fiscal, governance and environment pillars contributed to the state occupying the third spot in the composite rankings.
What keeps Bihar & Jharkhand down
Bihar (at 17th spot) and Jharkhand at 16th, lagged the composite rankings among the large states. Bihar fares poorly across most pillars, particularly the financial development and social pillars. Within the financial development-related indicators, Bihar scored poorly in terms of bank credit disbursement, loans by self-help groups, penetration of mutual funds, health and life insurance. Among social indicators, the state lags in gross enrolment ratio (higher secondary), multi-dimensional poverty and literacy rate.
Poor performance across most pillars weighed on the composite score of Jharkhand. The state specifically lagged in infrastructure and environment pillars. Within the infrastructure pillar, the state lagged in per capita power availability, road density, pupil-teacher ratio and net irrigated area (% net sown area). Within the environment pillar, the state fared poorly in air quality, renewable energy and access to potable water. The above represent areas of relative shortcomings for the two states.
Goa leads among smaller states
Among the small, hilly and north eastern states, Goa led in composite rankings. It fared well in terms of credit disbursements and penetration of financial products, per capita power availability, road and railway density, air passenger traffic and doctor availability. Better outcomes in infant mortality, multi-dimensional poverty outcomes and gross enrolment ratio (higher secondary) supported its social rankings.
Uttarakhand followed Goa to rank second. The state’s fiscal rankings were supported by better scores for fiscal deficit, own tax revenues, outstanding liabilities and guarantees, and relatively better spending by the government on health and education. Business environment, completion of court trials, strength of judges and public e-service delivery aided its governance scores.
Sikkim, Himachal Pradesh and Assam were the other three in the top five list.
The writer is chief economist at CareEdge Ratings.
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