Economic factor is the crux of regional politics. India is a developing country. The resources are limited while the demand for resources for the development of various regions is unlimited or disproportionate to resources.
Economic policies have led to regional imbalances and wide economic disparities among various regions resulting in discontentment among them. It may be recalled that most of the demands for constituting new states were primarily based on allegedly unfair and unequal distribution of development benefits and expenditure in multi-lingual states.
Movement for a separate Uttarakhand state in the hill districts of U.P., a Jharkhand state carved out of parts of Bihar, Orissa and a state of Bodoland comprising a part of Assam are examples of this type. The demands for separate states in these instances are mainly on the belief that these regions have been economically deprived by their respective states. Economic factors have usually assumed prime importance in regional politics.