I believe Telugu should be classified as Indo-Aryan language. Telugu has more sanskrit words than dravidian and that is undeniable. I am presenting few facts here .
The word Telugu, some claim has originated either from the word talaing - few people who conquered Andhra region, or from tenunga - referring to white or fair-skinned people. However, Andhra is the old Aryan name for Telugu country.
In page 14 of the book- A History of Telugu Literature By Chenchiah, Bhujanga, he states -"
Telugus (may) have been in the remote past a Dravidian people possessing a non-Aryan culture, but they seem to have lost their Dravidian identity very early in their history. In historical times they were so completely Aryanised in religion, language and literature, that for all purposes they may be treated as Aryans.
In page 16- Telugu is Vikriti , that is a language formed my modification of sanskrit and prakrit. It would appear that Andhras adopted a form of Prakrit which, in course of development, became the immediate ancestor of Telugu.
Cholas are "aryans" not from dravida family. Even pallavas also aryans. They bring brahmins to south India. Ofcourse all kings are "Aryans" They speak Prakruth which is unrefined Samskrit. There is no king in India who is from Dravida family. Some kings were speaking telugu in prakruth way. which common people cannot understand. Prathistanapura(maharasthra)Pallavas, Cholas, K'Raya, nayakars Telugu is not same telugu which common people speaks. Telugu scipt Developed from brahmi script. So telugu which kings were speaking is written in brahmi script. Aryans language in dravida script is Telugu which was spoken by Kings. So Telugu sounds southern language when spoken in south, Sounds nothern when spoken in North. The language which bridges between south India and north India. Hence Telugu is best language in INDIA.
Now there are more sanskri words in telugu than Dravidian.
Sanskrit is the oldest next comes Telugu. The logical proof is.. The linguistic prakriya (Game) of Sanskrit Avadhana is existing only Telugu. From this the immediate next language of Sanskrit is Telugu. In other languages Avadhana disappeared. Obviusly son possesses more features of father than grand son , because son is more immediate.
I wish to see more telugu people here than Tamils(No Offense).
(1) B.C. 200 -- A.D. 500 : During the first phase, we only come across names of places and personal names of Telugu in Prakrit and Sanskrit inscriptions found in the Telugu country. Telugu was exposed to the influence of Prakrit as early as the 3rd century B.C.' From this we know that the language of the people was Telugu, although the language of the rulers was different. The first complete Telugu inscription belongs to the Renati Cholas, found in Erragudipadu, Kamalapuram taluk of Cuddapah district and assigned to about A.D. 575. Source: Revenue Department (Gazetteers)
As Velcheru Narayana Rao states in page 3 of his book Classical Telugu Poetry: "every Sanskrit word is potentially a Telugu word as well, and literary texts in Telugu may be lexically Sanskrit or Sanskritized to an enormous extent, perhaps sixty percent or more." As C.P Brown states in page 266 of his book A Grammar of the Telugu language: "Every Telugu rule is laboriously deduced from a Sanskrit canon". As David Shulman states in page 3 of his book Classical Telugu Poetry: "The enlivening presence of Sanskrit is everywhere evident in Andhra civilization, as it is in the Telugu language". Based on all these facts Telugu should be classified into Indo-Aryan group.
Nannaya Bhattarakudu’s Andhra Mahabharatamu produced around the 11th century is commonly referred to as the first Telugu literary composition (Aadi kaavyam). Although there is evidence of Telugu literature before Nannaya, he is still referred to as Aadi Kavi (the first poet) because he was the first poet to establish a formal grammar for written Telugu. 'Nannaya meticulously laid down the ground rules and semantics of writing in Telugu by borrowing from Sanskrit grammar and inventing original rules'. Telugu literature until then was Prakrit based and devoid of a grammar.
Inscriptions containing Telugu words dated back to 400 BC were discovered in Bhattiprolu in Guntur district. English translation of one inscription reads: “Gift of the slab by venerable Midikilayakha.
Primary sources are Prakrit/Sanskrit inscriptions found in the region, in which Telugu places and personal names are found. From this we know that the language of the people was Telugu, while the rulers, who were of the Satavahana dynasty, spoke Prakrit
Some other scholars associate Telugu as originating from a frequently used Sanskrit word Kalinga or Kling, which in Puranas and Ashok's inscriptionsdepicted people of Continental India as it is even today in the Malay language.
Onamaalu, or the Telugu alphabet consist of 60 symbols - 16 vowels, 3 vowel modifiers, and 41 consonants have almost 1-to-1 correspondence with Sanskrit alphabets, yet another proof of its influence on its evolution.
Though no inscriptions in Telugu language (as it is written/ spoken today) have been found prior to the period 200 BC 500 AD, inferences to the existence of Telugu during that time can be made from the frequent use of words of that period found in the Telegu region found on Parakrit (Sanskrit)inscriptions and also in anthology of poems in Parakrit language, collected by the Satavahna dynasty King all point to existence of Telugu and Telugupeople in that period between the Krishna and Godavri rivers basin. Thus, we can safely presume Telugu to have originated earlier than 200 BC. (Source:Ostom Ray - Telugu The Language, People And The Land Through Ages)
“The country will not survive if the language and culture are not protected. Sanskrit, which is mother of Indian languages, Telugu and other languages are unique in the world in the sense that they are inter-twined with life. Whatever said in the literature like Satakams written in the olden ages determines our life. The Indian literature helps in personality development and determines the life”
Among the Indian languages, Telugu was the only language having closest relationship with Sanskrit and this was the reason for it continuing to be strong even now - Vedula Subrahmanya Sastry(Telugu and Sanskrit scholar)
Most of Andhras follow the Aryan Vaishnavite religion ( cf. the Tirupati temple ), in contrast to the Dravidians, who are Shaivite.
Andhra and Aandhra are ancient names used in Sanskrit literature to denote Telugu tribe/race/nationality/caste/people (hereinafter Nationality or Nationalities). According to Aitareya Brahmana composed in 600 BC, sage Viswamitra, a Kshatriya-an Aryan warrior tribal, adopted Brahmin Sunasyepa. However, fifty of Viswamitra's sons objected and didn't accept Sunasyepa as their brother. Enraged Viswamitra exiled those sons from Aryavarta (land of Aryans - probably North-Western part of the Indian Continent) and cursed them to mix with Dasya Nationalities such as Aandhra, Pundra, Sabara, Mootiba and Pulinda. This is the first ever description of non-Aryan (Mleccha) Aandhra Nationality in Sanskrit literature. These five Mleccha nationalities are considered to be the Dasya Nationalities living in the borders of Aryavarta. Andhra Nationality was a great Nationality respected and known to Europeans. Greek Ambassador Megasthanese visited Chandragupta Mourya's empire in 400 BC and wrote that the Andhras were a powerful Nationality and possessed several villages and thirty towns defended by walls and towers that supplied its king with an army of 100,000 infantry, 2000 cavalry and 1000 elephants. Aandhra Nationality was described in Mahabharat also. Andhras were fudators of Dharmaraja and in Kurukshetra war they fought against Dharmaraja. According to Manusmriti, Andhras were Nishadas and were born to a Karavara tribal woman(From a Nishada springs (by a woman of the Vaideha caste) a Karavara, who works in leather; and from a Vaidehaka (by women of the Karavara and Nishada castes), an Andhra and a Meda, who dwell outside the village) and Vaideha. In the beginning of Christian era, Bharata in Natyasastra prohibited the use of non-Aryan languages (non-Indo-European languages) like Aandhra, Kirata, Berber, Dramila etc. In Bhagavata, sage Suka, in his praise for lord Vishnu, describes how "bad people" (paapulu) like Kirata, Huna, Andhra, Pulinda etc. were rescued by the Supreme God when they converted to Vaishnavism and prayed to lord Vishnu.
In addition, various Andhra kings considered themselves related to Aryans and invited Brahmins from various parts of the Indian Continent to immigrate to the land of Andhra by providing incentives such as donation of villages and lands. Thus, the Andhra Nationality became a genetically hybrid Nationality when Sanskrit speaking Aryans mixed with them. And hence the non-Aryan (non- Indo-European) languages of these people also became hybridized. Also, Sanskrit influenced Telugu language tremendously because of the immense and rich literary contribution of Sanskrit speaking Brahmins, leading to the belief that Sanskrit was the mother of all languages.
People of Andhra Pradesh
Telugu / Andhra / Kalinga are all terms which refer to the native inhabitants of Andhra Pradesh.
Sanskrit writings from the 7th century BC describe the Andhra people as Aryans from the north who migrated south of the Vindhya Range and mixed with non-Aryans.
Anthropological surveys indicate that the Telugu are preponderantly mulatto ( Aryan and Dravidian Mix ). It thus would be natural to consider Andhri to be a creole which was gradually Sanskritized..
The ethnic composition of the people of Andhra Pradesh can be geographically categorised into 3 main regions: North-west, North-east and Southern. Racially, the early people of the Deccan Plateau (north-west Andhra Pradesh) were a hybrid race - a mixture of Dravidians, Scythians (Sakas), Parthians (Pahlavas), and Greeks (Yavanas). The people of North-east Andhra Pradesh, are predominantly a mixture of Aryans and Dravidians. The term Kalinga (India), has been historically relevant to this region, incorporating north-east Andhra Pradesh and modern day Orissa. People from the Kalinga region were responsible for colonizing Sri Lanka, spreading Buddhism and are ancestors to a large portion of the Sinhalese population. The inhabitants of Southern Andhra Pradesh are predominantly descendants of the Dravidian people, with mild admixture from the Aryan race.
Sanskrit writings from the 7th century BC describe the Andhra people as Aryans from the North who migrated South of the Vindhya Range and mixed with non-Aryans. They are mentioned again at the time of the death of the great Mauryan King Ashoka in 232 BC. This date has been considered to be the beginning of the Andhra historical record. Various dynasties have ruled the area, including the Andhra (or Satavahana), Shakas, Ikshvakus, Eastern Chalukyas, the Vijayanagar Kingdom, the Qutb Shahis of Golconda, and the Nizams (princes) of Hyderābād.
The people of Andhra Pradesh were also called Andhri. In certain times they ruled over the kingdoms of Magadha, Anga, Asmaka, Mulaka and Kalinga.
They are also mentioned in the Vayu and Matsya Purana. In the Mahabharata the infantry of Satyaki was composed of a tribe called Andhras, known for their long hair, sweet language, and mighty prowess. They lived along the banks of the Yamuna river. Andhras and Kalingas supported the Kauravas during the Mahabharata war. Sahadeva defeated the kingdoms of Pandya, Dravida, Odra, Chera, Andhra, and Kalinga while performing the Rajasuya yajna. Chanoora was killed by Krishna in Mathura. Hari Vamsa Purana corroborates the fact that Chanoora was the king of Karoosa Desa (to the North of the Vindhyas and on the North Bank of the Yamuna river) and was an Andhra. Buddhist references to Andhras are also found.
In Ancient times Telugu, the language of the Andhras, seems to have been spoken as far north as the mouth of the Ganges. This appears both from the geographic limits which the Greeks have assigned, to the territory of the Andhra race and from many of the names and places mentioned by Ptolemy up to that delta being found to be Telugu. Telugu is a name mentioned by the Greek geographers as that of a nation dwelling on or near the Ganges. In respect to antiquity of culture and glossarial copiousness, it is the oldest of the Dravidian languages, but this has been disputed as it has a large Sanskrit influence and has a different structure to that of other Dravidian languages. It is also named as the Italian of the East as most words in Telugu end in a vowel, as in Italian.
Southern Indo-Aryan Languages
Marathi and Vidarbhi are the languages directly derived from the Deccani Vibhasa with minimal external influences. Old Gujarati was known as Sauraseni, and was later displaced by Gujjari ( Khazari or Middle Gujarati ). Later this language was Sanskritized to become Gujarati ( Modern Gujarati ).
Andhri is included in this family, and not the Dravidian family for the following reasons :
1. Andhri contains a much higher percentage of Sanskrit loans than the other Dravidian languages.
2. Andhras follow the Aryan Vaishnavite religion ( cf. the Tirupati temple ), in contrast to the Dravidians, who are Shaivite.
3. Anthropological surveys indicate that the Andhras are preponderantly mulatto ( mixed white Aryan and black Dravidian ). It thus would be natural to consider Andhri to be a creole which was gradually Sanskritized.
Source : http://www.geocities.com/Athens/Ithaca/1335/Lang/prakrit.html#decc
A recent genetic study in Andhra Pradesh state of India found that the upper caste Hindus were closer relatives to Eastern-Europeans than to Hindus from lower castes.  However, a study conducted by the Centre for Cellular and Molecular Biology in 2009 (in collaboration with Harvard Medical School, Harvard School of Public Health and the Broad Institute of Harvard and MIT) analyzed half a million genetic markers across the genomes of 132 individuals from 25 ethnic groups from 13 states in India across multiple caste groups. The study asserts, based on the impossibility of identifying any genetic indicators across caste lines, that castes in South Asia grew out of traditional tribal organizations during the formation of Indian society, and was not the product of any Aryan invasion and "subjugation" of Dravidian people.
The Telugu script is derived from the Brāhmī script of the Mauryan Empire. Telugu has been subjected to prolonged, enormous influence from Sanskrit and also from the Prakrits, the spoken Indo-Aryan languages of medieval North India. Consequently, the vocabulary of Telugu is heavily Indo-Aryan.
Telugu is not related to Tamil, it is related to Sanskrit. Tamils will never accept /never Agree with evidence against Tamil.
If i start saying we are all brothers,then Tamils interpret as "we Tamils are big brothers"( No Offense)
Telugu is not derived from Tamil, 99.9 % of telugu words are exactly same as Sanskrit, but later few words are taken from Tamil, Tamil also adopted few words from telugu. Telugu is the most nearest language of Sanskrit. No where tamil maps with telugu.
1. Telugu and Tamil don't belong to the same group.
2. Telugu split from Proto-Dravidian between 1500-1000 BC. So, Telugu became a distinct language by the time any literary activity began to appear in the Tamil land.
This is a universal fact but (No offense) but some Tamils language fanatics always try to categorize Telugu with Tamil leaving no room for discussion.