With the government agreeing to create a new state Telangana out of Andhra Pradesh, the debate on whether ?small is beautiful? has got stirred up and demand for more such smaller states is rising. Historical data, however, shows no one-to-one correlation between the size of a state and its economic performance. While larger states do jostle with administrative problems and often fail to address the problems of a particular region amicably, there is no guarantee that the breakaway states will do well after the division. For instance, the performance of new states of Jharkhand and Chhattisgarh have not shown any remarkable feat?the GDP growth averaged between 7-9% since FY05?while Uttarakhand has grown an average 12%. Neither have UP and Madhya Pradesh gained remarkably from the downsizing. However, Bihar grew faster after the division. However, both UP and Bihar have in recent years approached the Centre for additional funds and Nitish Kumar even demanded a ?special? status for his state despite faster economic expansion. What really matters for the economic and social development is the leadership and governance. Change in leadership and improvement in governance has turned around growth in many large and medium size states such as Gujarat and Bihar.
10
