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Mainstream, Vol XLVII No 12, March 7, 2009

Regional Disparities, Smaller States and Statehood for Telangana

Saturday 7 March 2009, by C.H. Hanumantha Rao


Growing Regional Disparities in Development

Regional disparities in development have been growing in India, especially in the post-reform period. For example, according to the Eleventh Plan, the per capita Gross State Domestic Product (GSDP) of Bihar—the poorest State in the country —which had steadily declined to a little over 30 per cent of the per capita GSDP of the richest State by 1993-94, dropped further to 20 per cent in 2004-05. (GOI, 2008) What is true of rising inter-State disparities in development would be true of regional disparities within some of the larger States, as the factors contributing to such disparities would be the same in both the situations. The neglect of agriculture, rural development and the social sectors in the post-reform period and the consequent rise in rural distress together with the concentration of private investment and proliferation of economic opportunities in the developed regions has brought into sharp focus the regional divide or the rise in inter-State as well as intra-State disparities in development.

Public investments in physical and social infrastructure have an equalising impact because they can be focused on backward regions. Further, public investment, in turn, induces private investment. But public investment has been falling over a period of time in the country. Public capital formation shrunk to five per cent of the GDP in the recent period from 10 per cent of the GDP in the early nineties. (Rao, 2006) According to the Eleventh Plan, over the past several years, the share of public investment in the overall investment has been declining reaching a little over 20 per cent in recent years. Therefore, according to the Planning Commission, there is “a very great limitation on the influence that fiscal quantities, allocations and strategy can directly exert on growth rates, especially at State level. States have, therefore, to focus on providing the necessary policy framework and supporting environment that makes economic activity possible and attractive enough for private sector investments.” (GOI, 2008)

But can such a policy framework be effective in larger States for bringing in adequate investments and other benefits to the backward regions? The role of the state has changed dramatically from that of the main provider of investment in infrastructure in the pre-liberalisation period to a facilitator of private investment in the post-liberalisation period. The earlier role had a moderating influence on regional disparities insofar as backward regions also benefited to some extent from investments in infrastructure, whereas the new role is fraught with adverse consequences for these regions within larger States. This is because private investment and technology flow basically to the regions where physical and social infrastructure is already well-developed. In Maharashtra, for example, which has been among the top few States attracting private investments on a large scale in the post-reform period, the developed Pune-Nasik belt has received disproportionately large investments when compared to the backward Vidarbha and Marathwada regions.

Smaller States: Potential for High Growth

It is generally believed that economic liberalisation increases the role of the market while reducing the role of the state in economic activity. This is only superficially true. The relative roles of the market and the state do change in respect of the direct allocation of resources. But the impact of the state policies on the economy may turn out be even greater if its role in influencing private sector investments is taken into account. The role of the government in awarding contracts, choice of locations for private sector projects and technical institutions, decisions about the number, type and location of Special Economic Zones, land acquisition and compensation policies, various kinds of patronage extended to different enterprises and activities, etc. could together make a greater impact on the economy than in the pre-liberalisation period.

Indeed, this is the unmistakable impression one gets in the post-reform period in India, especially at the state level. In general, the impact seems to be in the direction of increasing inequalities between different regions and income groups, as is borne out by the official statistics on changes in private consumer expenditure and growth rates in GSDP. This is basically because official patronage in bigger States tends to favour the regions and income groups already endowed with adequate resources, skills, power and influence. This clearly shows that backward regions run the risk of losing the race to bigger States in the post-liberalisation era. At the same time, it shows that certain back-ward regions, which can be constituted as viable States, may use this enormous potential offered by state power effectively for their development.

This is borne out by the recent experience with the creation of smaller States like Chhattisgarh, Jharkhand and Uttaranchal. Their experience has been extremely encouraging in respect of the growth in Gross State Domestic Product (GSDP). The Eleventh Plan document, lately approved by the National Development Council, gives the following telling figures showing that these States achieved growth rates far exceeding the targets set for the 10th Plan period whereas the performance of their parent States, namely, Madhya Pradesh, Bihar and Uttar Pradesh fell considerably short of the targets(GOI, 2008):

StateTargeted Growth Rate (per cent per annum)Achieved
Chhattisgarh 6.1 9.2
Madhya Pradesh 7.0 4.3
Jharkhand 6.9 11.1
Bihar 6.2 4.7
Uttaranchal 6.8 8.8
Uttar Pradesh 7.6 4.6

These high growth rates in GSDP lend credence to the proposition that the growth potential of these backward areas remained suppressed for long and their constitution into new States has released the creative energies of the people. Better governance may have also contributed to attracting private investment from outside as well as to better planning and utilisation of resources. This experience shows that the political commitment necessary for a focused attention on the problems of growth and equity can be better ensured in smaller States which are relatively homogeneous.

Development versus ‘Sentiment’ for Telangana

By attributing the demand for separate Telangana to the ‘sentiment’ (for Telangana), some sections of the political leadership are only evading the real issue. There is no religious or ethnic ‘sentiment’, not even of language, at issue. One can, no doubt, read in this demand some assertion of ‘regional identity’, but this is not something which cannot be rationally explained. The simple and straight-forward explanation is that people have seen, through their own experience, that ‘development’ in the sense of equitable share in water resources, jobs, opportunities for enterprise and career advancement and adequate voice in political decision-making is not possible within the inte-grated State and that separate Statehood alone can ensure justice for them.

Therefore, what is at issue is not whether development has been taking place. Indeed, in a democratic polity like ours some development has to take place in different parts of the country including even the remotest areas. The issue really is about the rate and quality or pattern of development. Apart from equity, such as due share in investment allocations, quality also refers to the cost, risks, and sustainability of development.

There is a long-standing feeling that Telangana has not received its due share in investment allocations, and that the ‘surpluses’ from Telangana, that is, the difference between what ought to have been spent and what has actually been spent, have been diverted to the other regions. (Rao, 1969) For the Telangana region the per capita financial resources should be higher than the average for the Andhra Pradesh State, because, as for the Finance Commission transfer to States, 25 per cent of devolution is based on population and as much as 75 per cent is based on criteria like lower per capita income and other indicators of back-wardness. Planning Commission transfers too have a significant weightage to low per capita income.

But there is no way of ascertaining exactly how public expenditures, as a whole, are distributed between different regions in Andhra Pradesh. The relevant information is not being disseminated ever since the abolition of the Telangana Regional Committee in 1973, under the wrong notion that sharing of such information would breed regionalism. But experience has shown that withholding the relevant information would produce the opposite result of intensifying the feeling of injustice.

The growth that has been taking place in Telangana may be characterised as high cost growth. For example, the irrigation map of the region has changed completely. Tank irrigation occupied an important place a few decades ago. But now, over 70 per cent of irrigation is through ground water and deep tubewells in large parts of Telangana. (Subrahmanyam, 2003) This means for a unit output growth there has to be much greater investment now. Moreover, we do not have any information on such vital aspects as the quantity of water to be supplied for Telangana on account of the proposed irrigation projects including from ‘assured’ sources.

Further, farming has become highly risky in Telangana. For a given failure of rainfall, the fluctuations in output are much greater now when compared to the earlier decades. There is much greater distress being reported from the rain-fed regions dependent on groundwater for irrigation where the suicide rates for farmers are high. Telangana region accounts for as many as two-thirds of the total number of farmers’ suicides reported in the State between 1998-2006. (Galab,, 2009) The water crisis has affected sustainability: Land left fallow in Telangana has increased from 25 per cent of cultivable land in the early 1970s to as much as 40 per cent by 1999-2000. (Subrahmanyam, 2003) Pollution from industrial projects in certain areas has aggravated the crisis.

The feeling of injustice is greater among the educated classes, that is, students, teachers, NGOs and professionals in general. This is explained by the increasing awareness leading to greater sensitivity to ‘discrimination’ among such classes in respect of employment and promotions or career prospects, especially because of the rising importance of the services sector at higher levels of development. It is not surprising, therefore, that the separatist movement has gathered momentum in the post-reform period when the opportunities for such classes have proliferated in the services sector and the role of the state in influencing development and regional equity has vastly increased. For the same reasons, it should not also come as a surprise that the separatist sentiments are stronger in the relatively developed areas like North Telangana. Therefore, it can be concluded that far from ‘deve-lopment’ programmes—more precisely, welfare measures currently being implemented—countering separatist sentiments, the movement for separation may become stronger with the spread of development as long as the perception of injustices due to ‘discrimination’ in development within the integrated State persists.

Socially Inclusive Telangana

Statehood for Telangana is a national issue and not just a regional one. This is because it represents the ongoing social change in the country for the empowerment of people through decentralised governance by broadening and deepening the working of our democratic system. Such empower-ment and governance would enable articulation of the real problems of the people and their solution. This would inevitably result in ‘Samajik’ or ‘socially inclusive’ Telangana.

Inclusiveness could not be achieved so far in a bigger State because the voice of the disadvantaged sections remained fragmented. Experience shows that the traditionally entrenched interests are perpetuated in bigger and heterogeneous States because of their easy connectivity arising from their access to large resources, power and influence. The weaker sections, on the other hand, can come together, organise themselves and raise their voice effectively in a relatively homogeneous State because of common history and traditions and hence easy communicability.

For illustration, tribals are the most disadvantaged section socially and economically with negligible political voice. They live in remote areas and are subjected to land alienation on a large scale. Hardly any initiative has been taken so far in Andhra Pradesh to restore their lands despite the strong recommendations made by a High-Level Committee headed by a Minister constituted by the present government. (Government of Andhra Pradesh, 2006; Rao, 2007) There, the administration is alienated from the people and has been a breeding ground for extremist activities. But this has been treated not as a socio-economic issue, but mainly as a law and order problem. Because of this, the plight of the Girijans has been perpetuated and the extremist activities have been surfacing time and again, notwithstanding the claims of success in this regard by the authorities.

According to the 2001 Census, the Scheduled Tribes population constitutes around nine per cent in Telangana as against five per cent in the rest of the State. Thus, as much as 60 per cent of the ST population of the AP State is concentrated in Telangana. Their voice can be expected to be more effective in separate Telangana, not the least because their representation in the State Legislature and other elected bodies at different levels would be proportionately greater.

Similarly, the population of Muslims is as high as 12.5 per cent in Telangana when compared to 6.9 per cent in the rest of the AP State. As many as 61 per cent of Muslims of AP live in Telangana, of whom 60 per cent are spread over in different districts other than Hyderabad. They too can be expected to have greater political clout in separate Telangana in determining their fortunes as they can more easily relate themselves with the rest of the disadvantaged sections of the society in the struggle for a better and more secure livelihood. It must be noted in this context that social harmony between people professing different religions and speaking different languages has been proverbial in Telangana because of their shared history and traditions spanning over centuries.

The SCs account for about 16 per cent of population in Telangana as well as in the rest of AP. The census does not give the figures of BCs. But we know from different sources that socially and economically disadvantaged sections, including SCs, STs and BCs, constitute not less than 85 per cent of the population in Telangana. Radical land reforms were the prime agenda for the peasant movement in the 1940s. However, not enough time was available for this process of agrarian reforms and radical social transformation to run its course. In fact, it was interrupted with the integration of Telangana with the Andhra region, so that it still remains an unfinished revolution or an unfinished task. In a larger and heterogeneous State like AP there is no adequate perception of this problem by the dominant political leadership which hails basically from the developed parts of the State.

Thus the weaker sections constituting a large majority of population in Telangana and, for that matter, in Andhra would be better able to articulate their problems and politically assert themselves in separate, smaller and relatively homogeneous States. The formation of a Telangana State would thus strengthen the forces of social inclusion and secularism in both the States.

Inclusive Governance feasible in Smaller States

The population of Telangana is over three-and-a-half crores now—much more than three crores for the whole of Andhra Pradesh at the time of its formation. The demands on governance have multiplied over this half-a-century. Apart from commitment to the development of the region, a smaller State being more easily accessible to the common people can intelligently and speedily grapple with their problems. Moreover, governance at the grassroots can be improved in a smaller State by strengthening the Panchayati Raj Institutions which have been deprived of their functions, finances and functionaries. It is indeed ironical that the ruling party in Andhra Pradesh, which owes allegiance to Rajiv Gandhi, who visualised the 73rd and 74th Amendments to the Constitution, has not taken any initiative to revitalise these institutions. On the contrary, every attempt has been made to undermine these institutions by floating several top-down schemes and parallel implementation structures, even naming some of these schemes after Rajiv Gandhi! In smaller and relatively homo-geneous States like Telangana and Andhra, the empowerment of these local, elected institutions can be expected to be high on the agenda, among other things, because of the greater pressures these elected representatives can bring to bear on the new establishments.

Consensus for Telangana

The Committee headed by Pranab Mukherjee is supposed to be engaged in due consultations for ascertaining whether there is consensus for Telangana State. But the Congress Party’s own position on Telangana is not made clear to this Committee. Even if the Second SRC were to be constituted, as per the Congress Election Manifesto of 2004, the party could not possibly have remained non-committal on the issue, as most of the parties would have made their position clear to the SRC.

If the Congress supported Statehood for Telangana, there would have been a majority in Parliament in favour of such a Bill. But, if the Bill could not have been introduced because of lack of consensus in the United Progressive Alliance, or the government running the risk of losing power, then people would have understood the constraints, provided the Congress’ own position was made clear. Spelling out its position as a party did not, by itself, pose any risk to the government.

The real explanation for the Congress not taking a stand is the ‘veto power’ being exercised by a few leaders in power in the State, which in fact is the genesis of the formation of Andhra Pradesh. This demonstrates how a few individuals representing numerically small social groups can manipulate the levers of power in a large and heterogeneous State by dint of the huge resources and power at their command. Yet, they have been telling the people, time and again, that they will abide by the decision of their ‘High Command’. But the fact of the matter is that these individuals are able to mislead and overpower their ‘High Command’ by dint of their resources and numbers in Parliament.

All the major political parties in Andhra Pradesh, except the Congress and the CPM, have unequivocally come out in favour of the formation of a separate Telangana State. Even within the Congress party, there is a consensus in its favour among the leaders, legislators, ministers in the state as well as the centre belonging to Telangana.

The demand for the Telangana State is not opposed by the common people from the rest of the State of Andhra Pradesh, notwithstanding hostility from certain sections of business and political elite. This is amply borne out by the stand taken in favour of separate Telangana state by parties like the Telugu Desam headed by Chandrababu Naidu, CPI, BJP, Praja Rajyam Party headed by Chiranjeevi, and others.

But then what does one mean by consensus? The first States’ Reorganisation Commission (SRC), which recommended in 1956 formation of the separate Hyderabad State consisting of Telangana, defined consensus as the one reached among the Telangana people themselves. This is clear from its recommendation that after five years Telangana could be merged with Andhra only if two-thirds of the Telangana legislators opted for it. But consensus now has come to mean among every one at the national and State levels, except the people of Telangana!

This is not quite fair because, in the first place, Telangana was merged with the Andhra region in 1956 without ascertaining the wishes of the people of Telangana through their elected representatives as recommended by the SRC. Secondly, when there is a clear opposition to Statehood for Telangana from sections of the power elite belonging to the dominant region of the State, it is not fair to insist upon consensus among all the constituent regions when the issue concerns a particular region only. Pandit Jawaharlal Nehru, the then Prime Minister, had openly stated that there should be a divorce between Andhra and Telangana, if the latter so desired at any future date

The demand for the Second SRC to settle the issue could have some basis if the first SRC recommended the formation of composite Andhra Pradesh State, and disrupting such an arrangement, it could be argued, would require re-examination of the whole issue by a similar high level expert and quasi-judicial body. But the First SRC had recommended the formation of Telangana State after examining all the relevant aspects and their recommendation was not honoured.

In a situation like this, the will of the people of Telangana, as expressed by the large majority of the legislators from the region, can alone be the guiding principle. This has been expressed time and again in favour of separate Statehood in the last four decades through the democratic process vindicating the position taken by the SRC. Even in the by-elections held in May 2008, it is common knowledge that the major political parties, including the Congress, approached the voters pledging themselves in favour of Statehood for Telangana. Therefore, in the case of this last election, the rallying slogan of different parties favouring Telangana should be taken as an index of support for separate Statehood.

Despite this background, the recent decision of the State Government on the last day of the final session of the State Assembly to constitute a Committee, consisting of the representatives of both the State Assembly and the Legislative Council, for examining the issues connected with Statehood for Telangana will not carry any credibility whatsoever. This has only strengthened the suspicion that it is a diversionary move on the eve of the general elections, especially in the light of the past experience that even the recommen-dation made by a high level body like the SRC favouring Telangana was ignored by the powers-that-be. This move is virtually a non-starter as major political parties have declined to nominate their representatives on this Committee.

Broadbased, Non-partisan Movement

Leaders from Telangana have been going to Delhi for making representations in most rational terms; they have even been called to Delhi occasionally by the ‘High Command’, but basically, it is the power structure in AP that has become decisive in determining the outcomes. Therefore, the focus of action for achieving separate Telangana has not been Delhi alone; it has been backed by the peaceful and democratic movement in villages and towns in the Telangana region.

Political parties espousing separate Telangana have been engaged in electoral battles. This is understandable because the decision to carve out a separate state is ultimately a political one involving Parliament and governments at the Centre as well as the State. But the movement for separate Telangana itself has not been ‘engineered’ by political parties as some people would have others believe. Rather, the political parties supporting separation have been receiving sustenance from the deep-seated and widespread sentiment for separate Statehood for Telangana nurtured by various movements—political as well as non-political, including the ‘mulki’ agitation—since the times much before the formation of AP The demand for separation is far more widespread now than in 1969 when the agitation for separate Telangana was first launched. It has now engulfed farmers, youth and women on a much lager scale.

It is, however, true that some political parties have displayed opportunism by building up their political fortunes using this sentiment and betraying the cause once their narrow purpose was fulfilled. But despite such betrayals, the broad political movement for separate Statehood itself has survived and gained strength, beyond electoral considerations, because of its genuineness and deep-seated social base.

Such an independent movement has been complementary to electoral politics and served to ensure the accountability of the elected represen-tatives

The experience of Uttarakhand has been instructive in this respect. After getting disgusted over repeated betrayals by the political parties, the intelligentsia there took charge of a broadbased, non-partisan movement, led and nurtured it by educating and building awareness among the people at large, and ultimately succeeded in achieving separate Statehood.

[This article is based on the Seventh Prof B. Janardhan Rao Memorial Lecture delivered by the author at the Kakatiya University, Warangal, on February 27, 2009.]


Galab, S., E. Revathi,and Prudhvikar Reddy, “Farmers’ Suicides and Unfolding Agrarian Crisis in Andhra Pradesh”, in D. Narasimha Reddy and Srijit Mishra (ed.), Agrarian Crisis in India, Oxford University Press, 2009, New Delhi.

Government of India, Planning Commission,(2008): Eleventh Five Year Plan (2007-2012),Vols. I and III, New Delhi.

Government of Andhra Pradesh, Report of the Land Committee, 2006.

Rao, C.H.H., “Budgetary Surpluses of Telangana”, Economic and Political Weekly, October 18, 1969.

Rao, C.H.H., (2006): “Growing Regional Disparities in Development in India—Post-Reform Experience and Challenges Ahead”, Lecture dedicated to the Memory of Professor A.M.Khusro, the 88th Annual Conference of the Indian Economic Association, held at Visakhapatnam,December 27-29,2005; published in, The Indian Economic Journal, Vol. 54, No. I, April-June.

Rao, C.H.H., ‘Land Reforms in Andhra Pradesh’, The Hindu, September 13, 2007.

Subrahmanyam, S. ‘Regional Disparities: Causes and Remedies’, in C.H.H.Rao and Mahendra Dev (eds.), Andhra Pradesh Development-Economic Reforms and Challenges Ahead, 2003.

The author is an Honorary Professor and Chairman, Centre for Economic and Social Studies, Hyderabad.

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