As the 29th state of India came into existence, predictions started emerging about the economic developments of the new states.
According to A.K Srivastava, Chief Policy Advisor, Ernst & Young, the bifurcation of Andhra Pradesh will have a significant impact on the resource flow to two new states.
“The Andhra Pradesh bifurcation will have significant implications on resource flow to the two new States – Telangana and new Andhra Pradesh – and on their economic development. In the long run, both of the regions are likely to benefit, but both of them will face considerable uncertainty in the immediate future,” he said.
He further added, “Hyderabad will be the common capital of new Andhra Pradesh and Telangana for an initial period of 10 years, after which it will be the capital of Telangana. The special position of Hyderabad gives rise to considerable complications in working out both revenues and fiscal transfers for both of the new states. Being the centre of economic activities and a source of Government finance, it will critically define the fiscal prospects of the two states. The bifurcation will impact a wide range of relevant aspects, including the division of assets and liabilities, water resources, land resources, and the division of pensioners and existing government employees and public sector enterprises.”