The state government has decided to focus on accelerating total factor productivity (TFP), a measure of economic efficiency reflecting how well the economy can produce output from its inputs such as labor and capital, as the main engine of growth on its way to becoming a $3 trillion economy in the next few decades.
TFP captures how efficiently labor and capital can be converted into output, and its expansion depends on how quickly a country advances in technology, innovation and knowledge creation. Telangana’s growth decomposition model shows that TFP contributes nearly 30% to the state’s GSDP expansion and the state will focus on accelerating this growth engine to reach the USD 3 trillion milestone, says Telangana Rising – See Paper 2047.
The state believed that relying solely on capital deepening through domestic or foreign savings could not deliver the scale of growth needed to reach the US$3 trillion target. The only viable path is human capital enhancement and rapid TFP growth driven by an unprecedented focus on R&D, technology adoption and institutional excellence.
“In doing so, Telangana will lead India’s next frontier of growth, turning innovation into prosperity and determination into a $3 trillion reality,” the paper said.
The vision recognizes the importance of innovation as an engine of productivity growth as it increases both capital and labor productivity through the enhancement of human capital. Realizing the transformative potential in the state’s growth story requires sustained investment, institutional adaptability and political readiness, pointing to perhaps the only path to achieving the $3 trillion vision.
A three-pronged strategy will be needed for the state to realize its dream. The TG will therefore focus on sustained investment in human capital, sustained increases in total factor productivity, and capital deepening through domestic savings and foreign direct investment. A steady stream of scientific discoveries, applied research and entrepreneurial experimentation is the only sure path to sustained gains in TFP and subsequently to sustained prosperity for Telangana.
Published – 27 Nov 2025 19:10 IST
