Subject: Post-Independence India

India's experience with the formation of new states has been a mixed bag of successes and challenges, reflecting the complex interplay between regional aspirations and economic development. The creation of states like Telangana in 2014 has sparked debates about the economic implications of smaller administrative units.

Economic Benefits of New State Formation

• Enhanced Economic Growth: Telangana demonstrated remarkable economic progress with 12.7% average annual GSDP growth between 2014-2023, surpassing India's national average of 10.5%, showcasing the potential of new states.

• Improved Resource Allocation: Smaller states enable better targeting of development programs and efficient utilization of resources through focused administrative attention (e.g., Uttarakhand's success in hydropower development).

• Regional Development: New states can address regional imbalances by implementing area-specific policies (e.g., Chhattisgarh's mining sector development).

Challenges and Concerns

• Initial Economic Strain: Division of resources, infrastructure, and institutions poses immediate challenges (e.g., Andhra Pradesh-Telangana water sharing disputes).

• Infrastructure Development Costs: Establishing new administrative infrastructure requires significant capital expenditure from the central allocation of Rs 11.5 lakh crore for infrastructure development.

• Inter-State Coordination: Economic activities spanning multiple regions face coordination challenges (e.g., Krishna River Management Board).

Economic Impact Assessment

• Per Capita Income Growth: Positive trends observed in newly formed states - Andhra Pradesh's per capita income rose to ₹2,37,951 in 2023-24 from ₹2,19,917 in 2022-23.

• Investment Attraction: Smaller states can focus on sector-specific development and attract targeted investments through customized policies.

• Administrative Efficiency: Compact geographical units enable better governance and faster decision-making processes.

The formation of new states has demonstrated potential for accelerated economic growth while presenting temporary administrative challenges. Success depends on effective governance mechanisms, robust infrastructure development through initiatives like the Asset Monetisation Plan (2025-30), and strategic economic planning focused on regional strengths and opportunities. The key lies in balancing regional aspirations with economic viability and national integration.