With a population of 40 million, the proposed Telangana state comprises 10 of Andhra Pradesh's 23 districts, including the state capital and India's sixth most populous city, Hyderabad. A bone of contention is, of course, Hyderabad. Opponents of the move are unhappy that the city, home to major information technology and pharmaceutical companies, would become Telangana's new capital.
Nobody has forgotten the violent protests for and against the new state which rocked Andhra Pradesh last year. After a panicky federal government announced the setting up of a committee led by retired Supreme Court judge BN Srikrishna, the movement, many said, had lost its head of steam. Nothing could be further from the truth, activists say. "The movement didn't cease at all. We moved on quietly," Kodanda Ram, who heads several pro-Telangana parties and organisations, told me when I visited him in Hyderabad recently.
There have been many pro-state protests in recent months. Over 100,000 pro-Telangana petitions were submitted to the committee. Activists say that over the year the movement has mobilised grassroots support. People are hoisting a white and green Telangana 'flag' these days. In July by-elections, the regional Telangana Rashtra Samithi party, which leads the statehood demand, won 10 of the 12 assembly seats in five districts. TRS leader Chandrashekhar Rao went on a fast to draw attention to the cause in 2009.
Pro-Telangana activists feel they have a strong case. They say the accent spoken in the region is different from the rest of Andhra Pradesh; they insist that the food is different too. Most of all, they say, the region has been neglected by successive governments. Mainly a peasant society, Telangana depends on antiquated irrigation for farming. Ground water levels have fallen precipitously due to wanton extraction in absence of canal-fed irrigation. Of the 34 districts in India which face acute farm distress, nine are in Telangana. Hundreds of debt-stricken farmers have taken their lives here. The poorest of the poor in an intensely feudal state live in Telangana - the number of tribes-people and Muslims here is higher than the state average. Many social scientists I spoke to believe that the creation of Telangana will lead to significant social engineering in a state and society dominated by two major castes: Reddy and Kamma.
"Telangana will be a radically different state with a different set of welfare policies," said Mr Ram, when I asked him what exactly a new state would achieve. That's what they said about Jharkhand, a tribal-dominated state carved out of dirt-poor Bihar. Today, Jharkhand is synonymous with brazen graft and maladministration. India's experiment with newer, smaller states has met with mixed results: some of them have done well; others have failed miserably.
A member of the Telangana committee has told reporters that the new report would offer several options with pros and cons. Telangana activists will not be happy to hear that. "There can be no compromises," said Mr Ram. "If the government does not accede to our demand there will be protests and hunger strikes. The administration will come to a halt." So brace yourself for some New Year trouble in India.
PS: 2010 began reasonably well for India, but the end of the year leaves a number of its formidable institutions under a cloud.
The government, led by what many believe is the cleanest prime minister in the country's recent history, is facing a series of embarrassing scandals - ministers, bureaucrats and influential officials allegedly giving away cheap telecom licences and inflating Commonwealth Games contracts.
The army is facing allegations of corruption - and former senior soldiers have been accused of stealing homes meant for war widows.
The media is facing scrutiny after some star journalists were heard cosying up to a corporate lobbyist on leaked tapes.
The judiciary wasn't above reproach either with fresh allegations surfacing against judges and a former chief justice.
And the year ended with the conviction of leading public health specialist and human rights activist Dr Binayak Sen for helping Maoist rebels. Most believe the trial was "manufactured". "It is not Sen's ideology that threatens us," wrote independent scholar Shiv Vishwanathan. "It is his ethics, his sense of goodness. We have arrested him because we have arrested that very sense of justice in ourselves."
None of this will help make India the superpower it wants to be. Even when a host of world leaders descended during the year-end to stitch up big-ticket business deals, a sign of India's growing economic muscle, most people were unmoved. It is difficult to feel good in an atmosphere of grime.
But there are things to look forward to in the New Year. Will India lift the cricket World Cup, which it will host with Sri Lanka and Bangladesh? Will Sachin Tendulkar hunt down more glories and strengthen his case for being the greatest cricketer ever? Wishing you a very happy New Year!