India's ruling Congress Party announced July 30 it would carve up the southeastern coastal state of Andhra Pradesh to create a land-locked Telangana state.
Telangana would be India's 29th state and have a population of more than 35 million within its 44,300 square miles, a 2011 census indicated.
Parliament would have to pass legislation for the state to come into existence. No time frame has been laid down yet.
Under the Congress Party's proposal, Andhra Pradesh's capital and India's sixth-biggest city, Hyderabad, will be included in the new state and serve as joint capital for at least a decade.
Hyderabad, as the capital of a mostly agricultural new state, will remain a magnet for IT research and pharmaceutical investment dollars.
Those in favor of the new state -- home to ethnic Telangana people speaking Telugu -- say the state government would have a better chance, as part of Andhra Pradesh, to attract investment in what many say has been a neglected region.
India's state boundaries have changed several times since the subcontinent gained independence from British colonial rule in 1947.
Andhra Pradesh was created in 1956 during a major reorganization of states based along linguistic lines. The old Hyderabad state was divided into Andhra Pradesh, Bombay state -- since divided further -- and Maharashtra, now called Karnataka.
Indian media are speculating the creation of Telangana might create a domino effect and lead to another flurry of boundary changes, the business newspaper Mint reported.
The Hindustan Times said demand for a Telangana state has been around for 60 years and it will be the same as the old Hyderabad state before it merged with the Andhra state in 1956.
"This is going to be a fractious and expensive proposition," a Hindustan Times editorial said. "Much will depend on the success or otherwise of the Telangana experiment. But having conceded on Telangana, the Center [New Delhi] has no choice but to ensure a fair hearing for similar demands from other states."
The Times of India reported the most important political repercussion will be in other states where regional groups are demanding statehood for the proposed states of Gorkhaland, Bodoland, Vidharbha, Poorvanchal and Vindhya Pradesh.
Andhra Pradesh is a leading state for information technology, pharmaceuticals, health services and infrastructure.
"It is essential to ensure that a break-up would spur and not whittle down these achievements," The Times of India said.
"Business in coastal Andhra Pradesh will lose easy access to the large market in Hyderabad, while those in Telangana will be unable to easily access the large ports and tap the advantage of the huge gas reserves in Godavari basin."
India's strength since statehood has been its ability to accommodate political aspirations of the country's myriad linguistic cultures, Louise Tillin, a lecturer in politics at King's College, London, said.
Writing for the BBC, Tillin said many regional parties, which are part of federal coalition governments, have their political support from regional but nationalist groups set apart by language.
"Rather than promoting the break-up of India, the ability of the central government to create new states has in many, though not all, cases helped to accommodate regional aspirations," she said.
"This is the first time that the central government has moved to create a new state in the face of such opposition from the parent state.
"The creation of Telangana has been prompted by short-term electoral maneuvers. But it reflects longer term histories of political decentralization and economic change," Tillin said.
The states of Chhattisgarh and Jharkhand were created in 200 in regions with sizable tribal populations, and following a decades-long movement for a tribal state in Jharkhand. The hill state of Uttarakhand was created in the Himalayan districts of Uttar Pradesh.