Hyderabad’s GST Hangover vs Andhra’s Consumption Comeback: Why Telangana’s Growth Story Needs Urgent Repair

Andhra Pradesh’s GST grows steadily as consumer confidence drives spending, while Telangana struggles with weak urban demand, Hyderabad slowdown, and cautious buyer sentiment.

For many years, Andhra Pradesh and Telangana moved almost together in economic growth. Their markets behaved similarly, and people’s spending patterns also looked alike. But now, GST numbers are showing a clear split. Andhra Pradesh is seeing stronger spending, while Telangana — especially Hyderabad — is struggling with weak consumer confidence.

GST grows only when people feel safe about their income and future. And right now, Hyderabad doesn’t have that feeling.

AP’s Consumption Engine Still Moving Strong

Andhra Pradesh has surprised many with steady GST growth this year.

Up to November 2025, AP recorded 5.80% growth in net GST collections and already reached 74% of the annual revenue target. This clearly shows that people in AP continue to spend on daily goods and essential items.

GST 2.0 made many products cheaper — small cars, bikes, milk, paneer, ghee and other household needs. These lower prices increased purchasing even in small towns and villages. AP also tightened tax monitoring using technology, which prevented leakage and ensured better collection.

Though Andhra Pradesh is financially stressed with high debt, its people are still spending confidently. That everyday consumption is keeping the economy active.

Telangana’s Slowdown: From Confidence to Caution

In Telangana, the scene looks very different.

September 2025 was a turning point when GST fell 5% compared to last year, while India overall grew 7%. Only three other states in the country showed negative growth.

The fall didn’t stop there. Telangana’s GST revenue kept dropping for three months:

• July 2025: ₹5,417 crore
• August 2025: ₹5,103 crore
• September 2025: ₹4,998 crore

And then came the November 2025 data, which confirmed that the weakness is continuing.

Telangana collected ₹3,910 crore in November 2025, which is only around 1% growth from last year — far below what a strong state should show. Normally, states target at least 8–12% growth.

This means one thing: the spending mood in Telangana is still low.

The main reason is Hyderabad.

The city’s IT sector and startup ecosystem are facing uncertainty — layoffs, slow hiring and fear of AI job losses. When people are unsure about their job security, they immediately reduce big purchases like cars and houses. Telangana depends heavily on high-value urban spending. So when Hyderabad becomes cautious, the whole state feels the impact.

Floods Revealed Telangana’s Hidden Weakness

Floods in mid-2025 disturbed transport and halted local business for weeks. But floods only exposed a deeper issue. Telangana invested more than 61% of its capital expenditure into irrigation projects. While this helps agriculture in the long run, it doesn’t create enough jobs immediately.

Agriculture in the state still depends heavily on weather. When floods strike, rural income drops, and buying power falls — pulling GST down as well.

GST Reform Shock: Temporary Pause or Warning Sign?

The new three-slab GST system — 5%, 18% and 40% — began on 22 September 2025.

During such big tax changes, people and businesses usually delay purchases until they understand the new structure. Telangana got hit harder because its economy was already sensitive.

The state fears a ₹7,000 crore loss this year due to the new GST structure. But an SBI report says Telangana may actually gain revenue in the long run once everything settles.

October brought a bit of relief as GST grew 10%, but the weak November number (₹3,910 crore) shows the recovery is shaky. December data will tell the real story.

Too Much Dependence on Hyderabad Is Now a Risk

Around 80% of Telangana’s revenue comes from its own taxes — especially GST.

But when GST falls, the state suffers immediately. Development projects slow down, welfare schemes get delayed and financial pressure increases.

The main problem is over-dependence on:

• One mega city — Hyderabad
• One high-income group — tech and urban professionals

This model worked beautifully when the tech sector was booming. But now, when tech sentiment is down, it has become a weakness.

Why Andhra Pradesh Is Performing Better Right Now

AP’s economy is broad-based. Spending happens in villages, towns, small shops, dairy networks and among middle-income families. This creates a stable consumption pattern. AP is collecting tax from confidence — the belief that life will continue without major shocks.

Telangana is collecting tax from hesitation — people waiting, thinking, and worrying before spending.

The Next Few Months Will Decide Telangana’s Future

If GST shows improvement in December and January, the September fall can be seen as temporary. But if GST stays around 1% growth, Telangana must rethink its economic plan.

The state needs to:

• Build job growth outside Hyderabad
• Invest more in manufacturing, logistics, health and housing sectors
• Develop tier-2 towns to create new spending centers

Without this diversification, Telangana will feel every small shock in Hyderabad.

Andhra Pradesh Runs on Hope, Telangana on Hesitation

Right now, Andhra Pradesh looks stronger because its people are confident enough to spend. Telangana is slowing down because people are more cautious.

Economic growth depends not only on policies, but also on emotion.

If people feel safe, they buy.

If they fear tomorrow, they stop.

These GST numbers are simply reflecting those emotions.

For Telangana to rise again, it must restore confidence — in jobs, in stability, and in the future.

Only then will GST rise, and with it, the state’s growth.

Disclaimer: The opinions expressed are solely those of the author and do not reflect the views or stance of the organization. The organization assumes no responsibility for the content shared.