NEW DELHI, Dec 11 (Reuters) - India's plan to carve a new state out of southern Andhra Pradesh on Friday sparked statehood demands in other parts of Asia's third largest economy in a new challenge to the Congress party-led government.
The government said on Thursday that it would push for the formation of a Telangana state after a week of violent protests and a hunger strike by a leading politician shut down business in the state's high-tech Hyderabad city.
Since independence in 1947 India has had to balance the challenges of maintaining different peoples under one federal system as well as the relationship between central power in the capital Delhi and the states of the world's largest democracy.
The Gorkhas, ethnic Nepalis, in West Bengal called for an indefinite strike from Friday demanding their own 'Gorkhaland' to protect their heritage. Other groups also made statehood demands.
The Congress party, which heads the ruling coalition, returned to power for a second term by a wider-than-expected margin in May, freeing it from the communists who scuppered many reforms in exchange for their support to the last government.
But just a little over six months into office, it has been besieged by a slew of crises, undercutting the momentum from a resounding election victory and making it harder to carry through bold promises of policy change and economic reforms.
Political agitations, such as demands for new states, is only expected to slow the pace of economic reforms as political expediency takes preference over firm governance.
Congress leader Sonia Gandhi and federal ministers have agreed to hold meetings with Andhra Pradesh lawmakers after almost 130 out of the 294-member state assembly resigned in protest over the statehood move. The resignations have yet to be accepted by the local speaker.
PROTESTS MOUNT
Last month the government yielded to demands on sugar prices after tens of thousands of farmers marched to parliament, putting a halt to proceedings for two days.
'Congress has panicked on a number of issues and it is on the backfoot now,' Said Kuldip Nayar, a political analyst.
'They are doing everything in a haste and protests on every front are a result of their own doing.'
Others say the government is only following earlier pledges on splitting up Andhra Pradesh and ensuring support for Congress party's powerbase of farmers, not businessmen.
'The Congress wants development in Telangana and no two issues are similar,' Manish Tiwari, a Congress leader told Reuters in New Delhi, referring to the various demands.
But thousands of people marched in Andhra Pradesh on Friday, some supporting the decision for a separate Telengana, others vowing to fight it tooth and nail. Businesses were shut and public transport halted.
Investors fear protests will hurt Hydrabad, the main city in Andhra Pradesh and home to firms like Microsoft, Google and Dell. No decision has been taken as to which state Hydrabad will belong to.
'Congress has created a big mess for themselves. They could have taken more time and started a negotiation before announcing their decision on Telangana suddenly,' said N. Bhaskara Rao, chairman of Delhi-based Centre for Media Studies think-tank.
Twenty-one Gorkha leaders started a hunger strike on Friday to demand their own state.
At least 1,200 people died in a bloody Gorkhaland campaign in the 1980s, but protests ended after Gurkha leaders accepted limited autonomy.
New protests erupted in early 2008, but the communist-run state government and the federal government rejected the demand for a separate state, until the Telangana movement's success.
(Writing by Paul de Bendern; Editing by Sanjeev Miglani)
((bappa.majumdar@thomsonreuters.com; Reuters Messaging: bappa.majumdar.reuters.com@reuters.net, +91-11-41781000))Keywords: INDIA STATEHOOD/ (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2009 AFX News