Telangana’s stunning rise and its unhinged growth
Telangana is the richest among major Indian states with the highest per capita income. In 2022-23, the last year for which data is available for all States, Telangana’s figure stood at 3.54 lakh (at current prices).
For Karnataka, the figure was ₹ 3.44 lakh, Haryana ₹ 3.24 lakh, Gujarat ₹ 3.1 lakh, Tamil Nadu ₹ 3.09 lakh, Kerala ₹ 2.9 lakh and Maharashtra ₹ 2.89 lakh.
This is an impressive achievement as these States were ranked higher in 2013-14 when Telangana was formed in June 2014. Using Gross State Domestic Product (GSDP) and District Domestic Product (DDP) data, the State’s performance can be evaluated in terms of regional concentration and sectoral spread. These two issues were at the heart of the demand for a separate Telangana State. Neighboring Andhra Pradesh serves as the comparator for this purpose.
Economic size of Telangana
In 2004-05, Telangana’s economic size was nearly three-fourths (74%) of Andhra Pradesh. At the time of the bifurcation, the difference was almost negligible (96% in 2013-14). Since then, the State’s relative size has remained stable (96.5% in 2024-25). The same goes for per capita figures.
The chart below shows Telangana’s GSDP and per capita income (pcGSDP) as a percentage of Andhra Pradesh (at constant prices).
Telangana’s per capita income was slightly higher than that of Andhra Pradesh (6%) in 2004-05. It rose steadily to 1.3x in 2013-14 and has remained stable since then (1.35x in 2024-25).
Sectoral composition:
At the sectoral level, the relative decline in agriculture and industrial (and manufacturing) sectors in Telangana has been faster than the national average. The services sector was about 1.25 times that of Andhra Pradesh in 2013-14. This rose steadily to 1.47 by 2024-25. The chart below shows the sectoral performance of Telangana as a percentage of Andhra Pradesh (at constant prices).
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Components of the service sector: Which part of the service sector led to this? ‘Real estate, residential property and Business services’ (Real Estate and IT) and ‘Trade, Hotels and Restaurants’ (THR). Compared to Andhra Pradesh, the former sector increased from 2 times to 2.7 times in 2013-14 and 2024-25. The chart below shows the two major components of Telangana’s service sector as a percentage of Andhra Pradesh (at constant prices)
This performance closely coincides with the second subsector. Due to this impressive performance, these two sub-sectors account for nearly two-thirds of services sector output in Telangana in 2024-25: real estate and IT (35.3%) and THR (29.6%).
What about the geography of economic growth? Undivided Andhra Pradesh had 23 districts, of which 10 were separated to form Telangana. Soon after, in October 2016, Telangana was divided into 21 new districts and two more regions were created in 2019. Hyderabad was the only district left undivided.
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To gain some perspective, we have been tracking the production shares of the original 10 districts since 2004-05. For clarity, only two leading districts are shown in the image: Hyderabad and Ranga Reddy (RR). None of the other eight districts has contributed more than one-tenth to the economy of the State since its inception. In 2022-23, the range was 4.4% (Nizamabad) to 8.9% (Medak).
Metro Hyderabad’s dominance: Hyderabad, along with its neighboring RR district, is the economically dominant region of the state. The graph shows the share of Rangareddy and Hyderabad economy in Telangana economy over the years (at constant prices)
These two regions (Greater Hyderabad) account for nearly half of the State’s economy (47.5% in 2022-23). They cover less than a tenth of its surface area (8.7%) and are home to just over a quarter of its population (27.9% according to the 2011 Census). Metro Hyderabad’s economic share has remained roughly constant over the last decade.
Rise of Ranga Reddy district: The RR region was separated from Hyderabad in 1978 and covered mostly rural areas.
In its original creation, it surrounded Hyderabad from all sides. In 2016, as part of a Statewide strategy, the RR region was divided into three regions. The smaller RR region covered Hyderabad from the south and Medchal-Malkajgiri from the north; The western part became Vikarabad and Metro Hyderabad became an infectious zone.
In 2014, RR region emerged as the leading economic region in the metropolitan region, surpassing Hyderabad, especially due to the booming IT sector. It is a historical irony that the RR region (then an undivided region) was among the 250 most backward districts of India (among 640) in 2006. This region is now one of the richest regions in India, with a per capita income of ₹ 9.5 lakh in 2023-24.
On the other hand, Vikarabad (which was part of RR district until 2019) currently has the state’s lowest per capita income (₹1.8 lakh).
Telangana’s engine
Telangana’s rise is stunning. Metro Hyderabad is the locomotive driven by two sub-sectors namely real estate-IT and commerce, hotels and restaurants, contributing almost half of the State’s output. But the engine remains cut off from the rest of the state; for example, its neighboring district, Vikarabad, lags behind Telangana with only 1.5% of its production. Given the state’s long history of popular movements and violent struggles, such an uneven growth process in a deepening democracy could lead to social and political backlash. This requires policies to spread the fruits of growth across the state to correct serious spatial imbalances.
R. Nagaraj was previously working at the Indira Gandhi Development Research Institute. Vikash Vaibhav teaches at the School of Liberal Arts and Humanities, OP Jindal Global University, Sonipat
Also read:To analyze the macro-fiscal health of Indian States
It was published – 26 January 2026 07:00 IST
