UPSC Mains 2018 GS Paper 1 Q12: model answer

In 2000, Chhattisgarh, Uttarakhand and Jharkhand were carved out of MP, UP and Bihar; Telangana followed on 2 June 2014. Each was justified partly by the promise of faster development.

Economic benefits

• Administrative proximity: decisions are taken closer to people and problems.
• Focused planning for distinct needs: hill development in Uttarakhand, tribal and mineral regions in Jharkhand and Chhattisgarh.
• Better use of local resources, such as minerals, forests and hydropower.
• Competitive federalism: smaller states compete for investment through reforms.

Economic costs

• Set-up costs: new capitals, secretariats, courts and bureaucracy.
• Division of assets and liabilities, including disputes over power, institutions and river waters (Krishna waters after 2014).
• Loss for the parent state: Andhra Pradesh lost Hyderabad, its main economic hub, and still struggles over a new capital.
• Resource curse: mineral-rich Jharkhand still shows weak human development, showing size alone is no cure.

Verdict

Outcomes depend on governance quality, political stability and fiscal management more than on size.

Way forward

• Use objective, economic criteria for any future reorganisation; a new States Reorganisation Commission is often suggested.
• Strengthen panchayats and urban local bodies, which bring government closer without new borders.

Evidence from the 2000 states

• Uttarakhand's per capita income rose sharply after 2000, helped by industrial incentives and tourism.
• Chhattisgarh improved its PDS and grew fast through power and mining.
• Jharkhand has seen political instability, with many chief ministers in its first two decades, which held back gains in health, nutrition and industrial investment.

Conclusion

New states can be beneficial for the economy, but only when smaller size is matched by better governance.