Economic effects of new state formation: Telangana

Abstract

The demand for a new state of Telangana is not new. It can be traced back to the time of Independence of India. In history, multiple times the demand to separate the Telangana surfaced and the governments of that time tried to solve the issue or rather postpone the issue by various means. Recently, again the issue surfaced and it triggered the idea to study this highly controversial issue as our CCS topic. Firstly, we tried to understand the general thumb rule to form a new state in India after the independence. Major reasons given to form a new state could be summarized as follows: General rationale to form new states in India after the independence: • The states should be so created that they should have linguist compatibility. • There should be some cultural homogeneity. • There should be some visible mass support for creation of the state.i • Presence of a strong popular movement in favor of the new state, a history of systematic neglect of the region and the existence of a distinct socio-cultural identity. After that, we have tried to examine the demand of the people of Telangana by analyzing their current position in the unified state of Andhra. We have also tried to analyze the potential of Telangana as a state and what burning challenges on short and long term, it would face, if it is separated today. Major question to be answered can be enlisted as follows: 1. What would be the potential of development in the new state of Telangana?. 2. How much Central Government funds would be needed to support the operations of new state?. 3. Is it going to be self sufficient in terms of revenue, government machinery to smoothly run the government operations?. 4. How the Central Government funds and central tax collection would be divided between Telangana and Coastal Andhra?. 5. How the burning issue of division of Hyderabad is going to be solved?. 6. Is it viable to keep Hyderabad as the capital of both Andhra and Telangana?. 7. How the current economic development in Hyderabad would be affected by state division?. 8. How much benefit the other backward districts of Telangana would be able to get by this new arrangement?. 9. Already there are so many cases in India to divide natural resources between states. How the government of Telangana and Andhra could peacefully solve these issues especially division of water and minerals?. 10. What would be the effect on the interests of common man and industrial confidence in the new state of Telangana?. 11. Will it trigger demand for new states in many other parts of the country?. Our study is an attempt to answer these questions. This is an exploratory study to analyze the process and potential of Telangana as a new state. We have tried to understand the process followed in the creation of the state of Uttarakhand, Jharkhand and Chhattisgarh and what the current situation of development in these newly created states. Objective of the study is to understand the process followed in the earlier state bifurcations in India. What useful learning we can draw from them and how it can be successfully applied in the case of Telangana.