The government’s expectations in the budget on Thursday that there would be significant improvement in the Gross State Domestic Product (GSDP) in the coming financial year owed to several high frequency indicators about State’s economy, which was on the path of a rapid V-shaped recovery.
A V-shaped recovery is characterised by a quick and sustained recovery in economic performance after a sharp decline.
The socio economic outlook presented to the Assembly during the budget presentation said, on an overall level, high frequency indicators suggested that economic activity had been on the rebound in recent months. As the vaccine implementation programme for COVID rolled out, the State’s rebound was likely to strengthen. This will allow it to build on its strong fundamentals and propel its economy forward.
The COVID-19 shock had adversely impacted economic growth all over the world but Telangana’s economy had shown impressive resilience and recovery was already under way.
The resilience was led by agriculture and allied sectors, which grew by 20.9%, dwarfing the three per cent growth at the national level. Although industry and services sector contracted by 5.6% and 4.9% respectively, they still fared better than the much steeper contractions nationally.
Due to its high growth rate, the agriculture and allied sector contributed a higher share to overall GSDP than in any year since formation. However, at an aggregate level, the services sector continued to contribute the highest share.
The service sector contributed 60.3% share in GSDP, higher than the 54.3% contribution of the sector at the all-India level in 2020-21. Sub-sectors within services included trade and repair, private software and IT, real estate, financial, transportation and incidental.
The annual growth rate of services had outpaced the growth rate of the sector nationally. Further, financial, real estate and professional services contributed more to the growth of services in the State than the country. IT was the largest sector in this group and a key driver of growth in the State with Hyderabad emerging as one of the world’s leading IT hubs.
The government had attracted several large service sector firms through focussed investment promotion efforts. Google, Microsoft and Amazon had their India headquarters in Hyderabad and other companies such as Facebook and IBM had set up offices in city.