Sectoral Contributions and Economic Growth in Telangana: A Detailed Analysis
Sectoral Contributions to Telangana’s Economy
Telangana’s economy is divided into three primary sectors: Agriculture & Allied, Industry, and Services. Since the state’s formation, the Services sector has consistently been the largest contributor to Telangana’s Gross State Value Added (GSVA). For the fiscal year 2023-24, the Advance Estimates indicate that the Services sector accounted for a substantial 65.7% of Telangana’s GSVA at current prices. The Industrial sector, including mining and quarrying, contributed 18.5%, while the Agriculture & Allied sector contributed 15.8%. Figure 1.1 illustrates the sectoral composition of Telangana’s GSVA for 2023-24.
Per Capita Income and Rising Debt
Telangana has experienced a significant increase in per capita income, rising from Rs. 1,24,104 in 2014-15 to Rs. 3,47,299 in 2023-24. However, this period also saw a dramatic surge in the state’s total debt, escalating from Rs. 72,658 crore to Rs. 6,71,757 crore, marking an increase of over 824.5%. Consequently, per capita debt rose from Rs. 20,251 to Rs. 1,76,360. This sharp rise in debt compared to income growth suggests a heavy reliance on borrowing to fund expenditures, potentially threatening fiscal sustainability. Without stringent fiscal reforms, Telangana’s economic health could be at risk, necessitating measures to balance expenditure with revenue generation and reduce dependence on borrowing.
Economic Growth and Macroeconomic Trends
Despite global and national economic challenges, Telangana has demonstrated resilience and consistent growth. The state’s Gross State Domestic Product (GSDP) at current prices for 2023-24 stands at Rs. 14.64 lakh crore, reflecting an 11.9% increase over the previous year. This growth rate surpasses the national average, indicating Telangana’s robust economic performance.
Sectoral Growth Highlights
- Agriculture & Allied Sectors: This sector, which employs 47.3% of Telangana’s population, saw a year-on-year growth in Gross Value Added (GVA) of 4.0% between 2022-23 and 2023-24.
- Industrial Sector: The industrial sector achieved a growth rate of 10.1% in 2023-24.
- Services Sector: As the primary driver of Telangana’s economic growth, the Services sector witnessed a remarkable 14.6% increase in GVA at current prices in 2023-24.
Macroeconomic Resilience Amidst Global Uncertainty
Despite uncertainties arising from geopolitical developments and expansionary fiscal measures during the COVID-19 pandemic, the Indian economy has maintained healthy macroeconomic fundamentals. The International Monetary Fund (IMF) projects global growth to remain steady at 3.2% in 2024. Factors influencing this projection include high central bank policy rates to combat inflation, withdrawal of fiscal support amid high debt levels, and low underlying productivity growth. Global headline inflation is expected to decline from an average of 6.8% in 2023 to 5.9% in 2024.
Telangana’s GSDP Performance
Telangana’s economy has shown rapid and robust growth, positioning itself for a promising future. The state’s GSDP at current prices for 2023-24 is valued at Rs. 14.64 lakh crore, reflecting an 11.9% growth over the previous year. This performance surpasses the national economy’s growth rate of 9.1% during the same period, highlighting Telangana’s superior economic resilience.
Comparison with National and Other States
Figure 1.2 shows the growth rates of Telangana and the national economy at current prices. Telangana experienced a nominal GSDP growth rate of 16.4% in 2022-23 compared to All-India’s 14.2%. For 2023-24, Telangana’s nominal GSDP growth rate is projected at 11.9%, compared to All-India’s 9.1%. This indicates a consistent outperformance of the state economy over the national average.
GSDP Growth Among General Category States
Figure 1.3 illustrates the GSDP growth rates for General Category states in 2023-24. Tamil Nadu leads with a growth rate of 14.2%, followed by Uttar Pradesh at 12.8%, and Telangana at 11.9%, positioning it third among General Category states.
Contribution to National GDP
Telangana’s contribution to India’s GDP has shown a steady increase over the years. In 2021-22, the state accounted for 4.80% of the national GDP. This share rose to 4.90% in 2022-23 and further to 5.0% in 2023-24, reflecting Telangana’s growing economic significance and enhanced role in the national economy.
GSDP at Constant Prices
Based on the Advance Estimates for 2023-24, Telangana’s GSDP at constant (2011-12) prices increased by 7.4% over the previous year. During the same period, national real GDP increased by 7.6%. Figure 1.5 shows the growth rates of Telangana and All-India for 2022-23 and 2023-24, indicating a close alignment with the national growth trajectory.
Conclusion
Telangana’s economy has demonstrated resilience and consistent growth despite global and national economic challenges. With robust sectoral contributions and a steady increase in GSDP, the state is well-positioned for future economic success. However, the rising debt levels necessitate stringent fiscal reforms to ensure long-term economic sustainability. As Telangana continues to navigate economic challenges, maintaining a balance between expenditure and revenue generation will be crucial for its sustained economic health.