The BJP called the move an attempt to pander to minorities. Union Minister Venkaiah Naidu said it would be akin to creating "another Pakistan".
But the Chief Minister of Telangana, K Chandrashekhar Rao, said the decision was based only on economic factors, not religious ones.
Mr Rao said several commissions had found sufficient grounds to declare Muslims socially and economically backward.
Indeed, a 2007 report by the Andhra Pradesh Commission for Backward Classes found that 14 sub-groups within Muslims - not all - are socio-economically backward. This became the basis of the initial 4 per cent Muslim quota.
That same 2007 report listed 10 'elite' Muslim sub-groups that are to be excluded from the reservation basket.
But the new quota regime has expanded reservation for backward Muslims to 12 per cent, the size of the entire Muslim population of the state. The basis? Another report, released in 2016, by the Sudhir Commission which outlined a number of factors to argue for increased reservation.
The data it cites, however, belies its conclusions.
But the Commission also finds that Muslims have higher literacy rate - 77 per cent - compared to the state average of 66 per cent.
The study finds that Muslims have poorer living conditions: in urban areas, only 57 per cent of Muslims have their own houses against 73 per cent for Hindus.
But when it comes to other economic markers, Telangana's backward Muslims appear to do better. 51 per cent of backward Muslims have monthly income greater than Rs 10,000, versus 45 per cent for backward Hindus.
While the average monthly expenses of backward Muslims is Rs 6,513, compared to Rs 4,800 for backward Hindus.
To back its argument of Muslim financial weakness, the Sudhir Committee draws on national data quoted in the Sachar Committee report, which found the monthly per capita expenditure of Muslims has increased at a smaller rate (60 per cent) compared to tribals (69 per cent) and Dalits (73 per cent).
When asked about the conflicting data, a representative of the Telangana Government told NDTV they stand by their decision. They said Muslim representation in government workforce in Telangana is only 4 per cent and that the expanded reservation will remedy that imbalance.