The theme in Monday’s election results of three of the four major states that went to the latest hustings was the same—anti-incumbency. Incumbents were sent packing in West Bengal, Tamil Nadu, and Kerala with the National Democratic Alliance (NDA) led by the Bharatiya Janata Party (BJP) holding ground in Assam and likely Puducherry.
When the euphoria peters out, the hard part will be in governing for all four major states. The challenges are different for each. While West Bengal and Kerala face stressed fiscs, Assam faces a structural problem of low per capita income. Tamil Nadu, though relatively healthier on the public finance front, has a challenge of a creeping welfarist state.
On results day, Mint takes a close look at the state of the economies of Tamil Nadu, West Bengal, Kerala, Assam, and tiny Puducherry—and what the winning party or chief minister will be faced with in delivering on promises in the next five years.
Vijay, a novice at Tamil Nadu’s helm
As of counting trends at 7.30pm, Vijay, who formed Tamilaga Vettri Kazhagam (TVK) a little over two years ago, was in a clear lead but looked like he will need outside support or have to cobble together alliances to become Tamil Nadu’s new chief minister.
Vijay’s surge marks the end of nearly six decades of Dravidian dominance. The two Dravidian majors, the Dravida Munnetra Kazhagam (DMK) and the All India Anna Dravida Munnetra Kazhagam (AIADMK), were trailing behind, with the closest being the DMK-Congress combine at 71 wins and leads at 7.30pm.
The bigger question now is governance. A political novice, Vijay will be judged on whether he can sustain momentum in a state that has consistently outperformed peers on growth and social indicators.
Tamil Nadu has long punched above its weight. With 6% of India’s population, it contributed 9.4% to the country’s gross domestic product (GDP) in fiscal year 2025 (FY25). The state’s economy has also outpaced the national growth rate of 6.5%. Even as foreign direct investment (FDI) into India has slowed, foreign investors have continued to back the state with inflows rising 54% in FY25.
Social sector spending has risen 40% over the past five years, while outcomes in health and other indicators have improved. Tamil Nadu has among the lowest levels of multidimensional poverty, and its per capita income of ₹3.62 lakh far exceeds the national average of ₹2.05 lakh.
Enviable growth: Tamil Nadu’s is a manufacturing story. It leads the country in the number of factories and remains a major investment destination, attracting ₹12.5 trillion between 2021 and 2026. Average state GDP growth rose to 8.63% in 2021–25, from 7.18% in the pre-covid period (2014-19). In five years, Tamil Nadu has become the fastest-growing state economy, with inclusive and distributed growth, T.R.B. Rajaa, industries minister in the outgoing DMK government, recently told Mint.
Social sector thrust: But the question is can this growth sustain welfare schemes like breakfast for school students, free bus travel for women, a ₹1,000 monthly cash transfer to women and support for women pursuing higher education. Tamil Nadu’s freebie culture started in 2006 when then DMK leader M. Karunanidhi promised and delivered colour TVs to voters.
This election cycle has seen an escalation. TVK has made expansive promises: ₹2,500 a month for women, six free LPG cylinders a year, restoration of the old pension scheme, unemployment allowances, support for jobless graduates and ₹15,000 annually to support girls studying up to Class 12. With Vijay an untested administrator, whether he can preserve Tamil Nadu’s growth-welfare balance remains an open question.
Can BJP reverse Bengal’s stagnation?
If there is one state in India that requires a restart, it is West Bengal. From ranked No.3 in India by per capita income in 1961-62, it is slipped to 24th nationally, as Relative economic performance of Indian states: 1960-61 to 2023-24, a paper by the Prime Minister’s Economic Advisory Council noted.
“But its growth failed to keep pace with national trends. As a result, its relative per capita income declined to 83.7% in 2023-24, falling below that of even traditionally laggard states like Rajasthan and Odisha,” the paper stated. In fiscal 2025, per capita income at current prices was ₹1,81,786, per India’s statistics ministry, far below the national average of ₹2,34,859.
Out migration: Anecdotal evidence suggests agricultural wages are lower in West Bengal compared to the richer states. No wonder then that Bengalis are crowding out the low-skill job markets, from Kashmir to Kanyakumari. Jobs are plenty, claims the state government. It forgets to point out that they are low-yielding and the prospects for upward mobility are limited. In other words, while the unemployment rate, according to Periodic Labour Force Surveys, is lower than the national average, they don’t reflect the underemployment or the state’s wage crisis.
Umi Daniel, director of migration and education at Aide et Action International, a non-profit, said the new government must focus on retaining migrant workers. “The first thrust should be to provide jobs under MGNREGA to low-wage workers. Otherwise, it would be a challenge for the government to retain these people within the state,” Daniel told Mint.
Second, the state needs an entrepreneurial hub and third, more government jobs over the long run.
In its manifesto, the BJP promised unemployed youth ₹3,000 a month and an additional ₹15,000 to prepare for competitive examinations. It also promised 10 million jobs and self-employment opportunities.
Economist Arun Kumar said that even though a double engine government may mean the state is not left with tussling for resources with the Centre, it remains to be seen whether the promises made are delivered. “The major challenge is the BJP’s focus on the organized sector. If it has to create 10 million jobs, the government will need to promote agriculture and micro-sectors,” he said.
People working in the information technology (IT) sector told Mint that job opportunities have not picked up in the past 15 years and that there are limited options for them in the state. Even skilled white-collar workers migrate to cities like Bengaluru and Gurugram for better opportunities.
Struggling rural economy: Outgoing chief minister Mamata Banerjee is not responsible for the decline in the state’s economic fortunes. But she is responsible for not taking measures to arrest the trend. A destroyed rural economy is a case in point. The Jyoti Basu communist government fragmented land in 1977. It brought temporary equality. Today, the small land parcels have become uneconomic.
Strict land ceiling and share-cropper rule limits prospects of land consolidation. The poor give land to the rich on an annual lease. The rich, in the absence of ownership, do not make major capital expenditures. Crop diversification and value creation prospects suffer.
The Buddhadeb Bhattacharjee government of Communist Party of India (Marxist), or CPI(M), tried to reverse the trend by allowing the entry of corporates. His party blocked it. Mamata Banerjee didn’t want to break the status quo. The BJP has some firm promises for the farm sector—key ones are ₹3,100 per quintal minimum support price (MSP) for paddy, identical to Food Corporation of India (FCI) procurement rates from Punjab, and a fair price for potato farmers.
Politics minus industry: Industry has been quitting Bengal since the end of the 1960s. The arrival of the Left in 1977 escalated the process. Buddhadeb Bhattacharjee tried to turn the wheel. Mamata Banerjee rose to power at the sacrifice. She turned down even a prized IT special economic zone investment. The last decade was exceptional, as industrialisation practically vanished from political discourse before BJP revived the agenda in its 2026 manifesto.
The party has promised to build industrial hubs on ready lands available in the steel city of Durgapur, the port city of Haldia, and the Tata Nano-famed Singur. This is surely doable but not easy, as investors would take time to return to a state that chased them down in phases. Any positive impact could take at least a decade to reflect, said experts.
In 2024-25, West Bengal had the lowest share of industry in the economy among the four states that went to the polls. At 21.6% share at current prices, the state’s industry pie is lower than Assam (36.3%), Tamil Nadu (33.4%) and Kerala (23.9%). Between 2011 and 2025, over 6,688 companies have shut shop or relocated their offices from West Bengal, data from the ministry of corporate affairs shows.
Empty state coffers: In a bizarre decision in 2025, West Bengal retrospectively scrapped all industrial incentive schemes offered to businesses over the last three decades. The trigger lies in a lack of resources. Lack of industries and low income have limited the scope of the central tax share. The own-tax collection (approximately 45%) is disproportionately dependent on liquor sales for growth. And own revenue buoyancy, an indicator of the state’s revenue-generating capacity, is low.
Ashok Banerjee, director, Indian Institute of Management, Udaipur, said that debt per se isn’t bad. “Debt to GSDP (gross state domestic product) ratio of West Bengal is comparable with that of Uttar Pradesh. But it is the productive use of debt that defines prudence in financial management. The real worry for West Bengal is the decline in state own tax revenue (in real terms) over the past five years,” he said.
Mamata Banerjee tried to run her dole economy on limited resources. Moreover, competition with the Centre saw her replacing central schemes like Ayushman Bharat with her own. This added to the pressure on public finances. In the run up to the elections, Trinamool increased the dole offers while BJP has doubled down on them. This implies continued pressure in the days to come especially given that the state government’s outstanding liabilities are a good 10 percentage points more than those of a relatively healthier state like Tamil Nadu.
The new government, the new chief minister and the new finance minister would have their hands full, balancing aspirations with fiscal prudence. “The challenge for the new government would be to generate more state own tax revenue, possible only through higher economic activities. In the medium term, it could control fresh borrowing,” IIM-Udaipur’s Banerjee, said.
Cong, allies infighting trumps anti-incumbency
Under normal circumstances, the All India N R Congress (AINRC)-led National Democratic Alliance (NDA) should have lost power in Puducherry. The Union territory had an average state GDP growth of 9.5% in the last five years, yet unemployment, price increases, and cost of living had voters unhappy.
But, late evening, the AINRC-led NDA was ahead in 16 of the Puducherry’s 30 seats—exactly the majority needed. If it holds to the slender lead, Congress and its allies would have paid the price of in-fighting in the alliance that includes DMK. AINRC leader N Rangaswamy is set to continue as the chief minister.
Kerala’s fisc set to get worse under UDF
With United Democratic Front (UDF) set to form the government in Kerala, the biggest challenge it will face is on shoring up the state’s battered finances.
But the Congress-led UDF has muddied the water even before it won the elections. It has offered five guarantees to voters: free bus travel for women, ₹1,000 a month for college going girls, increase in monthly welfare pension to ₹3,000, health insurance for up to ₹25 lakh a family, and an interest-free loan up to ₹5 lakh to small businesses.
Experts estimate the fiscal impact of these sops at ₹25,000 crore.
To say Kerala government’s finances are in a mess is an understatement. Its ability to raise revenue is impaired. Its borrowings are high and so is its interest burden. It is struggling to create jobs for its educated youth. An ageing population is fuelling healthcare and pension costs. Remittances that account for 20% of the gross state GDP are thinning. “The state’s financial position is pitiable,” development economist K.P. Kannan recently told Mint.
Rich people, poor government: Kerala is a state of rich people and poor government. One in four households in the state have at least one car; for India it is 8% (one in 12), Kannan pointed out.
But higher consumption does not translate into higher taxes. Between 2017–18 and 2023–24, the state’s own tax revenues grew by an average 6.5% per year, even as its GSDP grew by 8.5% annually.
V.D. Satheesan, leader of the opposition in the Kerala Assembly and a leading candidate for chief ministership, blamed this on poor administration and high leakages. “The state’s tax from gold was ₹500 crore when gold price was ₹4,000 for 8gm. Now the price is over ₹1 lakh but tax collection is still ₹500 crore,” he said.
Lower revenue, higher expenses: The inability to raise resources is compounded by the state’s high committed expenditure—payments for salaries, pension and interest. Nearly 70% of its revenue receipts go to funding the committed expenditure. The state’s capital expenditure is just 1.4% of its state GDP and is among the lowest in the country.
Debt trap: Almost half of its borrowings go towards meeting its revenue expenditure. Not surprising that its revenue deficit is a high 2.5% of its GSDP in 2024-25.
Jobs, jobs, jobs: By not investing for the future, the state has not been able to create enough jobs, especially for its educated youth—forcing them to leave the state. “In the last five years we have brought in investments worth ₹3.3 trillion and close to 15 lakh jobs have been created,” said Rajeeve P., minister for law, industries and coir in the Left Democratic Front. (LDF_) government, a claim dismissed by the opposition.
Shrinking remittances: The nature of remittances to the state from its diaspora is changing. Earlier, migrants predominantly went to West Asia. With little scope to buy property or settle down there, they sent in their savings as remittances to India. Today’s migration is to countries like the US, UK, Europe, Australia and New Zealand where people opt to settle down.
Congress’ solution: Satheesan told Mint earlier that the state’s tax administration will be restructured. “Post-goods and services tax (GST) most states restructured their tax administration, but Kerala did not do it,” he said..
Continuity in poor Assam offers reform opportunity
When the NDA forms government in Assam with current chief minister Himanta Biswa Sarma at its helm, it will face a familiar economy full of contradictions—high economic growth and low income but, for once, blended with the opportunity for change.
Experts pointed to the benefits of continuity and the opportunity to push ahead with institutional reforms.
Structural reforms: With a stable government in place, Assam should opt for reforms, felt economist Joydeep Baruah. “With the economy growing at a good rate and the government having a clear mandate, it can go for long term institutional reforms like land reforms, reforms in agriculture, irrigation, power sector, developing infrastructure like roads and focus on industrialization so that more jobs are created.”
High growth, low income: Assam has emerged as one of the fastest-growing economies of the country, growing by 7.8% per year on average in the last five years in real terms, much due to growing from a low income base. Among the four states and one Union territory that polled in April, Assam had the lowest per capita income: ₹1.77 lakh in 2024-25, lower than even West Bengal ( ₹1.82 lakh). State GDP was ₹6.4 trillion in 2024-25, ranking it 16th among Indian states.
“Even if Assam is showing high economic growth, whether that is percolating to the bottom of the pyramid, remains the question,” economist Debarshi Das told Mint. Assam’s Human Development Index in 2023-24 was at 0.65, lower than the national average of 0.68. It doesn’t help that employment generation is at a low ebb.
Welfare schemes: One of the ways to support the poor has been a plethora of beneficiary schemes aimed at the rural women and students like Orunodoi, Mukhya Mantri Mahila Udyamita Abhiyan, Mukhya Mantri Nijut Maina, and Chief Minister Atmanirbhar Asom Abhiyan. Such schemes may have helped NDA win as political scientist Vikas Tripathi said, “In the long run, it creates fiscal imbalance and is not good for the overall economy.”
High public debt and fiscal deficit: Projected at ₹2.06 trillion at the end of this financial year, Assam’s outstanding liabilities might give sleepless nights to the new government. In fact, the public debt has jumped from 21.2% of GSDP in 2019-20 to a projected 27.9% in 2025-26. Assam’s fiscal deficit, meanwhile, was 5.6% of its GSDP for 2024-25, which is on the higher side.
Agriculture in crutches: Assam is known as an agrarian state with more than 85% people of the state, as per the 2011 census, engaged in agriculture. However, the Agriculture and Allied Sector has shown a moderate rate of growth, averaging around 3.2% per annum over the past decade (2013–14 to 2022–23), thus contributing less than 25% to the state’s GSDP.
Announced investments galore: There has been a massive spike in announced investment projects, jumping from roughly ₹32,500 crore in 2023-24 to over ₹1.23 trillion in 2024–25, data compiled by the Centre for Monitoring Indian Economy shows. Among these, the biggest is the ₹27,000 crore semiconductor plant in Jagiroad, which is already under construction. However, there is some doubt whether all these announced investment projects will be completed, as many of these projects are violating environmental and other norms. For instance, a ₹11,000 crore cement plant to be set up on an area of almost 1,000 acres is currently stalled by the Gauhati High Court as it was displacing tribals in the Dima Hasao area, which is a 6th Schedule district.
Nabarun Guha, an independent journalist from Guwahati, reported on Assam’s challenges. Pramit Bose, a senior journalist and public policy analyst, and Ritwika Mitra, an independent journalist based in Kolkata, wrote on West Bengal.