Telangana is on a strong growth path and is expected to achieve 12–13% annual real GDP growth between 2025 and 2034, according to Brickwork Ratings, one of India’s leading credit rating agencies. At this pace, the state is well positioned to become a USD 1 trillion economy by 2034.
The growth outlook is driven by Telangana’s expanding industrial base, a strong services sector, and sustained infrastructure investments. However, Brickwork Ratings noted that continued policy support and steady capital inflows will be critical to maintain this momentum.
Growth Above National Average
In FY2025, Telangana recorded a real GDP growth of 8.1%, which was significantly higher than the national average of 6.5%. This performance highlights the state’s strong economic fundamentals.
Importantly, Telangana also reported one of the lowest inflation rates in the country during the first seven months of FY26. Inflation averaged just 0.01%, compared to the national average of 1.91%.
According to Brickwork Ratings, this low inflation was supported by falling food prices, GST rate cuts, and strong supply-side conditions.
Highest Per Capita Income in India
Meanwhile, Telangana continues to lead the country in income levels. The state recorded the highest per capita income in India at ₹3.8 lakh in FY25, reinforcing its position as one of the most prosperous states.
Strong Outlook for 2026
Commenting on the outlook, Manu Sehgal, CEO, Brickwork Ratings, said Telangana enters 2026 with a resilient and promising growth outlook.
He added that government-led capital expenditure in infrastructure, IT, and pharmaceuticals continues to drive confidence. In addition, the services sector contributes nearly two-thirds of the state’s Gross State Value Added (GSVA), making it the main growth engine.
Proactive governance, business-friendly policies, and ease of doing business have further strengthened investor confidence. A skilled workforce and lower borrowing costs also support long-term growth.
India Credit Rating Trends
At the national level, India saw more credit upgrades than downgrades in H1 FY26. The infrastructure sector showed the strongest improvement, while export-focused sectors faced pressure.
Explaining this trend, K.H. Patnaik, Chief Rating Officer, Brickwork Ratings, said infrastructure projects generate strong cash flows once construction is complete. The rise of Infrastructure Investment Trusts (InvITs) has also reduced capital costs by 200–250 basis points.
However, export-dependent sectors faced challenges due to delays in the India–US trade deal. Despite this, trade discussions with Europe and Russia may help improve exports.
Key Drivers Impacting Credit Ratings
Drivers of Upgrades:
- Continued government infrastructure spending
- Strong domestic demand
- Healthier corporate balance sheets
Drivers of Downgrades:
- US tariffs affecting exports
- Global demand slowdown
- Rising commodity costs
Cautious Optimism Ahead
According to Rajeev Sharan, Head of Research, Brickwork Ratings, India’s economic momentum is expected to continue. Improved liquidity and recent RBI rate cuts support positive credit sentiment. However, geopolitical risks remain a key area to watch.
