How does a state, born as a political afterthought, forge a destiny of its own?

This is the central question for one of the most vital Indian states, Haryana. On November 1, 1966, the new state of Haryana did not emerge with a popular bang. Its creation was a political settlement, a weary compromise that concluded  the long and divisive Punjabi Suba movement. There was no singular, visionary blueprint for a new society.

This division established Haryana as a separate state comprising districts such as Hisar, Rohtak, Gurgaon, Karnal, Ambala, Faridabad, and parts of Sangrur.

The reorganisation was grounded in linguistic and administrative considerations, marking the transfer of Hindi-speaking regions from Punjab into the new state.

However, the story of the state’s very origin contains a paradox that continues to define Haryana even now: few could have predicted that a state born of a political compromise would soon rise to become one of India’s wealthiest state – and, in the process, also one which witnesses widespread inequality.

The state's economic trajectory, stands as a case study in hyper-acceleration. A modest per-capita income of Rs. 608 in 1966 rocketed to an estimated Rs. 3,25,759 by 2023-24 at current prices, placing it among India's elite. Its GSDP, projected at a robust 8% for 2023-24, consistently outpaces the nation. An economy that was once 60% agrarian has become dominated by industry (30.7%) and a massive 49.8% services sector as of 2022-23.

This transformation was no accident.

It was the result of a unique geographic windfall gain. Haryana's proximity to the National Capital Region (NCR) made it an inevitable magnet for capital investment and a real estate boom.

This "proximity premium" turned Gurugram, the "Millennium City," into a testament of this model, hosting over half of  Fortune 500 companies, built on "borrowed growth".

And yet, this macro-success masks deep and persistent micro-fault lines. While corporate towers glitter in Gurugram, the state's traditional engine of mass employment, its MSME clusters in Panipat, Ambala, and Faridabad, spanning textiles, light engineering, auto components, and allied manufacturing are under visible strain.

According to the Diagnostic Report for MSME Sector in Haryana (2020), these industries face a mix of credit constraints, obsolete machinery, infrastructure gaps, and skill shortages that have slowed growth outside the NCR.

This duality creates Haryana’s central paradox: the coexistence of high wealth and high unemployment. In 2022-23, the state's unemployment rate stood at 6.1%, nearly double the national average.

This is the direct, measurable consequence of a severe academia-industry disconnect. The state’s conventional education system is simply not producing graduates with the high-value skills its modern economy demands, leading to a structural crisis of "jobless growth."

The 2025 Access (In)Equality Index (AEI), a comprehensive analysis by the Centre for New Economics Studies at O.P. Jindal University, ranks Haryana 7th overall, ahead of Gujarat, but reveals sharp contrasts: strong amenities (4th) but weak health access (19th).

This critical failure to translate immense wealth into human well-being is not just a statistical anomaly. It is a lived reality.

The economic boom, driven by the NCR, was never a tide that lifted all boats. Instead, it created a state of stark contrasts, cleaving the region's geography and society. This development model has drawn a new, internal border, separating the prosperous from the bypassed. It has, in effect, created a deeply uneven map.

The uneven map

To understand Haryana is to understand that it is effectively two states, not one. There is the Haryana of the NCR which is global, cosmopolitan and wealthy. Then there is the other Haryana, the rural, agrarian and left behind. This spatial inequality is a profound chasm, not merely a minor gap.

Gurugram’s per-capita income is over eleven times that of neighbouring Nuh (formerly Mewat). This economic divide is layered over a deeply changing social fabric. The traditional dominance of the Jat community, around one-fourth of Haryana’s population, has been steadily eroded by shifts in the agrarian economy and the rise of new social groups.

Neoliberal reforms, declining farm incomes, and rural-to-urban migration have fragmented the old agrarian order, empowering backward castes, Dalits, and sections of younger Jats now seek non-farm livelihoods.

Moreover, the state’s female Labour Force Participation Rate (LFPR), has improved, rising from 13.7% in 2017–18 to 26.3% rural areas and 20.8% in urban areas by 2023–24, but it still lags far behind male participation (around 72–74 per cent).

Furthermore, the state’s unemployment rate is not just a number; it represents a systemic failure in human capital translation. This figure quantifies the deep mismatch between the low-skill, low-wage jobs available in the agrarian hinterland and the high-skill, high-wage service sector jobs concentrated in Gurugram. This structural bottleneck for regional mobility and opportunity is the human cost of Haryana's lopsided development model.

Lessons and a roadmap for a second dawn

The path forward for Haryana requires a radical shift in vision. Other states can learn from Haryana's success in leveraging geography and focusing relentlessly on delivering basic amenities.

However, Haryana itself must pivot. First, it must address severe spatial disparities by stopping its treatment of lagging districts as charity wards and starting to treat them as investment zones. It must aggressively fund and implement policies like PADMA (Programme to Accelerate Development for MSME Advancement) to build robust industrial ecosystems beyond the NCR.

Second, it must bridge the human capital chasm.

The 6.1% unemployment rate should be treated as a public crisis (the state also has one of the highest youth unemployment rates amongst higher GSDP states).

This requires mandating industry-linked apprenticeships, overhauling university curricula to be demand-driven, and linking vocational training directly to clusters in Panipat (textiles) and Ambala (light engineering).

Third, it must revitalise the MSME sector as an engine of employment. This requires a three-pronged push to link them to formal credit, create common facility centres for technology adoption, and build platforms for export market access.

Finally, it must commit to social infrastructure investment. A state this rich has no excuse for ranking 19th in health. It must leverage its fiscal capacity to launch a public health mission, strengthening primary healthcare in rural belts and ensuring its "human development" catches up to its economic development.

The promise for the next decade in Haryana and for Haryanivis must be about opportunity and mobility. Haryana has already proven it can create wealth especially for land owning communities; its next, and more difficult challenge is to build a more equitable, distributive space for inclusive growth for all, including those with limited endowments and resources.

With contributions from Aditi Lazarus and Ankur Singh, Research Analysts with CNES and members of the InfoSphere initiative.

Deepanshu Mohan is a Professor of Economics, Dean, IDEAS, and Director, Centre for New Economics Studies. He is a Visiting Professor at London School of Economics and an Academic Visiting Fellow to AMES, University of Oxford.

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