Telangana tops services sector growth, NITI Aayog credits BRS policy drive

Telangana has emerged as a national leader in the services sector, with NITI Aayog attributing its success to sustained policy efforts under the BRS government. The State’s GSVA in services rose sharply over the decade, driven by Hyderabad’s tech and innovation ecosystem.

Hyderabad: Telangana registered exceptional progress in the services sector over the past decade, with the latest NITI Aayog reports crediting the State’s sustained policy drive under the previous BRS government led by K Chandrashekhar Rao at the helm.

The State has emerged as one of India’s strongest performers in the services sector, with 34.8 per cent of its workforce which is around 6.2 million people employed in services as of 2023–24, significantly above the national average of 29.7 per cent.

According to the twin reports, ‘India’s Service Sector: Insights from Employment Trends and State Level Dynamics‘ and ‘India’s Service Sector: Insights from GVA Trends and State Level Dynamics‘, Telangana built a digitally driven, IT-centric economic model, pushing its Gross State Value Added (GSVA) share from 52.8 per cent in 2011-12 to 62.4 per cent in 2023-24, averaging 60.3 per cent over the decade.

This impressive leap underscores Telangana’s transformation into one of India’s top service-led economies, powered by rapid expansion in IT, professional services, finance, real estate and trade.

These reports noted that Hyderabad’s ecosystem of T-Hub, T-Works, WE-Hub, and IMAGE Tower positioned the State as a national leader in innovation and digital infrastructure.

Despite employing just a third of its total workforce in the services sector, the State’s contribution to overall output remains among the highest in the country, driven by Hyderabad’s thriving tech ecosystem. Real estate, professional, and urban services together contributed 34.1 per cent of GSVA, reflecting sustainable development and urban expansion, while trade and repair services (21.5 per cent) and education, healthcare and community services (12.9 per cent) underlined the State’s balanced economic base.

The IT and ITES sectors alone saw a five-fold rise in startups, from 400 in 2016 to nearly 2,000 by 2022. Hyderabad now hosts 1,500 IT/ITES companies employing over nine lakh people, with global giants such as Google, Microsoft, Amazon, Infosys, TCS, Accenture, Wipro and Tech Mahindra expanding operations during the BRS regime.

The NITI Aayog reports placed Telangana among the top-performing States in the first group with GSVA in services exceeding 55 per cent, alongside Delhi, Chandigarh, Karnataka, Kerala, Bihar and Maharashtra.

Employment growth has been equally robust with 34.8 per cent of Telangana’s workforce employed in services, well above the national average of 29.7 per cent.

These reports pointed out that 66.6 per cent of urban workers were engaged in services, compared to 18.9 per cent in rural areas, while 41.5 per cent of men and 23.9 per cent of women in Telangana were employed in the sector.

The agriculture sector remains the largest employer in Telangana, especially in rural areas with around 42.5 per cent population engaged in it. The sub-sectoral composition revealed that wholesale and retail trade (28.2 per cent), transportation and storage (16.1 per cent), and information & communication (12 per cent) together account for over half of Telangana’s service employment. Education (9.3 per cent) and public administration (5.9 per cent) were other significant contributors.

Experts attributed this success to sustained policy focus under the BRS government from digital infrastructure and startup incubation to global investor outreach led by former IT and Industries Minister KT Rama Rao. These initiatives not only drove economic diversification but also created lakhs of quality jobs across IT, logistics and allied sectors.

The report underscored stark urban concentration, with 66.6% of urban workers engaged in services compared to just 18.9% in rural areas. Women’s participation remains low at 23.9%, against 41.5% for men.

To bridge this gap, NITI Aayog recommended leveraging Tier-2 cities like Warangal and Karimnagar through ICT infrastructure expansion and targeted skilling under TASK (Telangana Academy for Skill and Knowledge).

The report also suggested harnessing the Hyderabad-Warangal Industrial Corridor and logistics parks to drive growth in transport-linked services.