The statehood demand for Telangana is back in limelight. The main point of contention is the lack of development of the districts that comprise Telangana in comparison to the districts of coastal Andhra and Rayalaseema regions. It is frequently pointed out that the waters of Krishna and Godavari flow through Telangana , but are mostly utilized by Coastal Andhra. Even in dams built in the Telangana region (like the Nagarjuna Sagar), most of the water stored goes to irrigate fields in the coastal districts. Apart from water, the other major dispute relates to jobs. Coastal districts traditionally had access to better education facilities. People from those areas are at a competitive advantage when it comes to securing jobs. The 1956 'Gentleman's agreement' between Andhra and Telangana leaders tried to do a balancing act on jobs by having a domicile provision for government jobs. More than 50 years after the agreement , the salient provisions of the agreement are observed more in breach.

Opinion divided...

Using this dissatisfaction as a fertile base, political parties have sprung up with the promise to make amends for the historical wrongs. This round of demand for the Telangana statehood is spearheaded by K Chandrasekhar Rao, who founded the Telangana Rashtra Samithi (TRS) party after quitting the Telugu Desam Party (TDP). The other party whole-heartedly supporting Telangana statehood is the BJP. The Congress is split right on the middle, with its leaders from Telangana supporting statehood, while its leaders from the other two regions opposing it. Telugu Desam's stand is unclear. It was in support of the statehood before and just after 2009 election; now it appears against it. Cine actor Chiranjeevi's Praja Rajyam party also seems to be in the same flip-flop mode as the TDP.

YSR kept the state united…

The demand for Telangana went into hibernation after the TRS fared badly in the 2009 elections. The death of YS Rajasekhar Reddy, the powerful chief minister of Andhra Pradesh and a staunch opponent of Telangana statehood, provided a opening for reviving the demand for statehood. Chandrasekhar Rao seized the opening and attempted arrest his rapidly declining relevance in the state politics by launching a "fast unto death" for Telangana statehood. On the advice of doctors he gave up his fast the next day, but the movement took a life on its own. Supported by the students of the Osmania university, the TRS president was cajoled into reviving his fast. On 9 December, the Central government made an announcement stating that Telangana will be created.

This announcement was followed by jubilation in Telangana and severe disappointment in the other regions. Agitations hotted up in coastal Andhra and Rayalaseema demanding the continuance of the unified state. Parliament was disrupted on more than one occasion and on 16 December the Central government put the Telangana issue again in the back burner.

Smaller states do better…

Dispassionate analysis seems to suggest that smaller states do better in terms of development. The average growth rates of the newly created Chattisgarh, Jharkand, Uttarakhand have been higher than their parent states.

How would Telangana fare ? The answer would depend on what happens to Hyderabad. If Hyderabad is carved out as a separate territory, Telangana may have a tough time in raising the taxes necessary to fund its growth. Huge investments would be needed for the irrigation schemes. Most of these schemes will necessarily be lift irrigation schemes as the rivers flow at a much lower level when compared to the lands that need to be irrigated. Lift irrigation schemes are expensive to operate as well. Telangana also needs investment in health and education spheres to improve the living standards of the general populace. Without Hyderabad, these investments cannot be funded. On the other hand using Hyderabad to fund these investments may lead to the people in Hyderabad asking the same questions that the supporters of Telangana are asking ie why their money should be diverted for helping others to develop?

The lesson from Telangana and other similar regional movements is that there needs to be greater autonomy for local and regional bodies. Spending power ( if not taxing power ) needs to percolate to the elected local bodies. This would, to a large extent, mitigate the clamour for division and re-division of states as each city/village gets better control over its destiny, while still maintaining a common legal and economic framework. A common economic framework and legal framework with free migration would mean that cities/regions that provide better governance/ or have natural resources will attract the best and develop faster than ones that squander resources.