Good things come in small packages. It may be an effective ad line to sell consumer goods, but when it comes to serving the cause of the smaller states of the Indian Union, does it really work? Nearly five years after they were carved out of three large states in the country, India's youngest states-Chhattisgarh, Uttaranchal and Jharkhand-have a mixed story to tell. Once neglected regions of large and unwieldy provinces, now these states suddenly find that there is more money than ever for development. In smaller units, the planning is more focused and the pace of industrialisation is visibly faster. Yet, it seems the more things change, the more they remain the same. For the denizens of these fledgling but resource-rich states, the quality of life remains pretty much what it was when they were just a cluster of districts.

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62% of Uttaranchal villages are linked to pucca roads Uttaranchal is looking beyond religious tourism which brings in Rs 850 crore. It leads the other two new states in agriculture and health. Investment in the energy sector has gone up to Rs 60,000 crore. The deficit has risen to Rs 11 crore this year.

Uttaranchal, Chhattisgarh and Jharkhand came into being in November 2000 following the country's third experiment with state reorganisation, the other two being in the mid-1950s and the late '60s. Besides redrawing the internal boundaries, the creation of new states also recognised the parameter of ethnicity-and not just language-as a determining factor. The question has often been asked on whether small units function better after they are carved out of big entities. The data required for such comparisons are not available though the widespread notion is that it has been beneficial. Take Himachal Pradesh, which was formed in the late '60s. The hilly state is now nearing Kerala's standards in human development indices.

Can India's youngest states do better than their older cousins? What the three new states have in common is a budgetary allocation which is several times bigger than what they got as smaller but significant regions of big states. Take Chhattisgarh. Its allocation when it was part of Madhya Pradesh was a minuscule Rs 800 crore. Its plan outlay for 2005-6 is Rs 4,250 crore and may well cross Rs 6,000 crore by next year. Its receipts have grown manifold with sales tax alone netting Rs 1,900 crore. It gets Rs 800 crore from mining and Rs 500 crore each from forests and excise.

The pace of industrialisation has also picked up, for instance, in Jharkhand. The state, which has a developed industrial belt, seems to have gained from its severance from Bihar. Says Shaibal Gupta, secretary of Patna-based Asian Development Research Institute: "Steel czar L.N. Mittal would not have offered to set up a 10 million tonne capacity steel plant in Jharkhand had the Chhota Nagpur-Santhal Parganas region remained with Bihar." Investments-both existing and proposed-in Jharkhand now exceed Rs 1,00,000 crore and among those lining up for a piece of industrial action are the Jindals, Hindalco, Essar Steel and Ispat Group while mega companies like Tata Steel, Bokaro Steel, Usha Martin ACC, Birla Group, Bihar Caustic and Bihar Sponge Iron are making expansion plans. "This is a kind of industrial revolution that no other state has seen in recent years," says Jharkhand Chief Minister Arjun Munda.

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Chhattisgarh does relatively better on governance The plan outlay for the state is Rs 4,250 crore, up from a allocation of Rs 800 crore when it was part of Madhya Pradesh in 2000. It boasts an investment of Rs 9,500 crore this year. The debt burden of the state is Rs 10,000 crore.

Chhattisgarh, on the other hand, can boast of impeccable financial management. An RBI study on fiscal reforms places it in the category of "consistently improving" states, alongside Kerala, Uttar Pradesh, Goa and Sikkim. "We have avoided MoUs and gone in for real-term investment. We have an actual investment of Rs 9,500 crore this year," says D.S. Mishra, finance secretary. Like Jharkhand, Chhattisgarh gets investment mostly in the steel and power sectors but it is planning to expand its irrigation potential. "If Jharkhand has the Dhanbad-Ranchi-Jamshedpur industrial belt, then Chhattisgarh has a good network of irrigation," says D.N. Tiwari, vice-chairman of the state Planning Board, who believes that long-term rewards will come from the agriculture sector. So the state is investing Rs 850 crore to construct 30 small and big dams and bring more area under irrigation than it ever had. With an average of 150 inches of rainfall annually, Chhattisgarh can afford to experiment with its irrigation system and cropping pattern. "From a single crop state which offered employment for just 100 days a year we are trying to introduce double and triple cropping which will ensure more than 265 days of work," says Tiwari. The money certainly seems to be there. "As part of Madhya Pradesh we had only Rs 80-90 crore for maintenance and construction of roads. Now we pump in Rs 800 crore for the same," says Chhattisgarh Chief Minister Raman Singh.

For decades, Uttaranchal's main source of revenue has been religious tourism, with some of the holiest Hindu shrines in Hardwar, Badrinath, Kedarnath and Gangotri. The industry earns Rs 850 crore for the hilly state, but of late the Government has been looking at alternative ways to augment its revenue. The vast hydroelectric potential helps, attracting players like Reliance and L&T. The investment exceeds Rs 60,000 crore in the core sector and state Energy Secretary N. Ravishankar is confident that by 2007 every village will be electrified, and by 2009, Uttaranchal will be exporting power to Delhi.

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Only 9% of sown area in Jharkhand is irrigated The proposed and existing investments now exceed Rs 1,00,000 crore. With Maoists operating in 16 of the 22 districts, law and order is a cause for worry in Jharkhand. The state has a budget deficit of Rs 965 crore.

Is it then all rosy for the young states? Far from IT. More money has meant more corruption, a new set of leaders and a class of nouveau riche. The malaise is not limited to politics alone. Bureaucrats who would be languishing in insignificant postings in large states have gone on to become chief secretaries, DGPS and chairpersons of corporations. There is no dearth of spending on luxuries by this new power set. Jharkhand, for instance, spent Rs 16 crore on 89 luxury cars. There is an inordinately huge spending on government officials in the name of constructing and decorating offices. Despite state capitals Ranchi, Dehradun and Raipur inheriting huge office complexes, precious funds have been spent on new buildings.

Jharkhand and Chhattisgarh also seem to exist under the impression that they are states with surplus resources. Chhattisgarh, for instance, paid the Central Power Ministry Rs 150 crore which it could have avoided and used for its own expansion. Jharkhand, meanwhile, went a step further by offering Rs 1,500 crore to the Railways for additional railway lines. Distribution of state funds in the form of free books, school bags, salt, cows and even chappals has meant non-productive expenditure. Alarmingly, all these states spend more on their legislators-giving them high salaries, laptops and houses-than bigger states do. The end result: Jharkhand, which had a Rs 2,000 crore surplus budget in 2001-2 after it was formed, ended up with a Rs 965 crore deficit budget this year, while the much smaller Uttaranchal has a Rs 11 crore deficit. The debt burden, which was in the manageable limit of Rs 1,000 crore, is close to Rs 10,000 crore for both Chhattisgarh and Jharkhand.

The biggest challenge, though, is not funds, employment or corruption, but law and order. "There is no government beyond 150 km of the state capital," says a senior IPS officer in Raipur, confirming that 70 per cent of police stations in Bastar and Sarguja are without officers in-charge. He also points to the Naxalites who run a parallel government right from Korba in the north to Kanker in the south. The administered area in Chhattisgarh is effectively the plains belt of Durg-Raigarh, with higher altitudes both north and south of Raipur occupied by Maoists and Naxalites. IPS officers don't want to serve in Chhattisgarh, the state cadres cling on to political leaders for safe postings and the Government does not seem to have a plan of action. "We have made new recruitments to the State Armed Forces and are training our men to effectively counter the extremists," says Raman. But even he knows that a social offensive almost always works better.

Jharkhand is no different. When the state was formed, Maoists operated in 13 of its original 18 districts. Now their presence is visible in at least 16 of the 22 districts. New policing budgets and demand for Central forces have had little impact.

The political leadership in small states will perhaps do well to remember that good things delivered in small packages will get lost if not handled with care.

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