Is There a Case for Re-Organisation of States?

This is a revised version of a Background Note, prepared for the seminar on the question of the re-organisation of the States in India. We review at the outset the Constitutional Provisions for re-organisation of States in India and the principles adopted by the States Re-organisation Commission, 1955, to address this question. We recall the Commission’s recommendations particularly in the context of Vidarbha and Telangana, and the Amendments to the Constitution, made to pacify the demands for separate statehood for these two and other regions. Taking the position that the problems in promoting balanced regional development is at the ischolar_main of demands for separate States, we examine in detail the extent to which imbalances in regional development have been ameliorated particularly in Maharashtra and Andhra Pradesh. Stressing the importance of ensuring economic and financial viability of the States in the interest of their autonomy, we consider the prospects of the above two regions in particular emerging as financially viable, taking into account the approach to devolution of funds laid down by the Thirteenth Finance Commission.We also evaluate the receipts and expenditure patterns of the newly created States of Chhattisgarh, Jharkhand and Uttarakhand and their mother States with a view to assessing the positive and negative impacts of creation of the new States on the finances of both the newly created as well as the mother States. Finally, we make a few observations about the political considerations underlying the question of the re-organisation of States.