CCSAP Report - Ministry of Home Affairs

c) The division of the state will also have serious implications outside
Andhra Pradesh. It would not only give fillip to other similar demands but it
will be for the first time, after the re-organisation of states, that a political
demand for dividing a linguistically constituted state would have been
conceded by the Union Government with the creation of two Telugu speaking
states. The issue requires a most calm and dispassionate consideration of the
consequences. The matter should also be seen in the larger context of
whether a region can be allowed to decide for itself what its political status
should be, as that would only create a demand for a great number of small
states resulting in problems of coordination and management.
d) As noted in the Chapter on Economic and Equity Analysis, the
economic dimension is also not to be lost sight of. The world over, there is a
trend towards economic integration with economic blocs consisting of many
smaller nations being formed in the interest of enhancing economic
opportunities, markets and employment. It is normally believed that formation
of smaller states contributes to pre-existing barriers to inter-state and intra-
state trade and movement of goods and services. For example, a variety of
local entry taxes and cess may impede free trade and enhance cost of
business and increase prices of goods and services. There can also be local
laws restraining physical movement of goods and services between
neighbouring regions and between states. Such fears are very strong in
coastal Andhra and Rayalaseema and there is apprehension that Hyderabad
city as a market destination and also a source of supply will be out of bounds
on the creation of Telangana with Hyderabad as a separate state. Coastal
Andhra would also lose a major market inherent in the huge population,
business, and market concentration of the city of Hyderabad. On this count,
division of Andhra Pradesh can only be a negative factor which would inhibit
the economic growth of the newly formed states. Economically, the land
locked region of Telangana may also lose out on access and opportunities to
the eastern coastline which has a major port in Vishakhapatnam and many
other sea ports. With vast discoveries of oil and gas on the anvil and the
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