Hyderabad: According to Brickwork Ratings, a home-grown credit rating agency of India, the state of Telangana is projected to expand at an average real GDP growth rate of around 12-13% annually between 2025 and 2034, reflecting strong momentum in its industrial base, services sector, and infrastructure investments. Sustaining this trajectory will hinge on continued policy support, capital inflows, and structural reforms to mitigate external and domestic risks. Telangana recorded a real GDP growth of 8.1%, well above the national average of 6.5% that India recorded in FY2025. The state has also maintained one of the lowest inflation rates in the first seven months of FY26. The state’s inflation averaged 0.01% during the period, lower than the national average of 1.91%. The low inflation is on account of downward trajectory in food prices, GST rate cuts, and strong supply-side conditions, as per Brickwork Ratings. Furthermore, at INR 3.8 lakh in FY25, Telangana is also the state with the highest per-capita income in the country.
On the growth outlook for Telangana for the year 2026, Manu Sehgal, CEO, Brickwork Ratings, said “Telangana is a very promising market for us and we see tremendous opportunities for ratings business growth here. The state enters 2026 with a strong and resilient growth outlook, supported by sustained government-led capital expenditure across infrastructure, IT, and pharmaceuticals, and reinforced by rising global investor confidence. The services sector continues to be the backbone of the state’s economy, contributing nearly two-thirds of GSVA and acting as the primary engine of growth. Proactive governance, business-friendly policies, and a strong focus on ease of doing business have further strengthened Telangana’s investment appeal, supported by steady capital inflows. Further, the availability of a skilled and young workforce, along with a favourable financial environment marked by lower borrowing costs, positions the state well for sustained and inclusive economic growth.”
Credit Ratio of India
With upgrades continued to exceed downgrades, India has witnessed improved credit ratings in H1FY26. Among the sectors, infrastructure recorded the strongest momentum, whereas export-dependent sectors showed weakness.
Explaining the optimism in the infrastructure segment, K. H. Patnaik, Chief Rating Officer, Brickwork Ratings, says “Challenges in the infrastructure segment are during construction stage, the projects turn into cash cows once construction is completed. The advent of InvITs has also helped lower the cost of capital for road, power, and transmission projects by a sizeable 200-250 basis points versus traditional sources. Finally, the earlier twin balance sheet problem is now twin balance sheet advantage as balance sheets of both banks as well as corporates, are now strong.”
On the weakness in the export-dependent sectors, “It comes on account of the delay in the India-USA trade deal,” says Patnaik. “That said, developments in India’s trade agreements with its European partners and countries like Russia should help boost exports and reduce trade deficits,” he adds.
Below are the key drivers for the upgrades and downgrades in credit ratings for companies across credit rating agencies:
Key drivers of upgrades
· Sustained government-led infrastructure spending supporting long-term growth visibility
· Robust domestic demand driving revenue growth across key sectors
· Healthy corporate balance sheets with improved leverage and liquidity
Key drivers of downgrades
· US tariffs impacting export competitiveness and sectoral profitability
· Global demand slowdown affecting volumes, pricing power, and revenues
· Elevated commodity costs and margin pressures impacting cash flows
As per Rajeev Sharan, Head of Criteria, Model Development, and Research, Brickwork Ratings, “India’s economic momentum is expected to carry into the coming year, supported by a resilient GDP growth outlook. Improved liquidity conditions, alongside the RBI’s recent rate cut, are providing a positive impetus to credit sentiment across sectors. However, geopolitical uncertainties continue to remain a key downside risk and warrant close monitoring as they could influence trade flows and the financial markets.”