Ramachandra Guha says Telangana isn’t scary. From the Wikipedia article on Telangana :
"The States Reorganization Commission (SRC) was not in favour of merging the Telangana region with the then Andhra state. Para 382 of States Reorganization Commission Report (SRC) said "..opinion in Andhra is overwhelmingly in favour of the larger unit, public opinion in Telangana has still to crystallize itself. Important leaders of public opinion in Andhra themselves seem to appreciate that the unification of Telangana with Andhra, though desirable, should be based on a voluntary and willing association of the people and that it is primarily for the people of Telangana to take a decision about their future...". The concerns of Telanganas were manifold . The region had a less developed economy than Andhra, but with a larger revenue base (mostly because it taxed rather than prohibited alcoholic beverages), which Telanganas feared might be diverted for use in Andhra. They also feared that planned dam projects on the Krishna and Godavari rivers would not benefit Telangana proportionately even though Telanganas controlled the headwaters of the rivers. Telanganas feared too that the people of Andhra would have the advantage in jobs, particularly in government and education. Para 386 of States Reorganization Commission Report (SRC) said "After taking all these factors into consideration we have come to the conclusions that it will be in the interests of Andhra as well as Telangana area is to constitute into a separate State, which may be known as the Hyderabad State with provision for its unification with Andhra after the general elections likely to be held in or about 1961 if by a two thirds majority the legislature of the residency Hyderabad State expresses itself in favor of such unification."
The central government decided to ignore the SRC recommendations and established unified Andhra Pradesh on November 1, 1956. However, a "Gentlemen's agreement" provided reassurances to the Telangana people as well to Andhra people in terms of power sharing as well as administrative domicile rules and distribution of expenses of various regions. This agreement is known as Gentlemen's agreement of Andhra Pradesh (1956)."
From Gentlemen's agreement of Andhra Pradesh (1956):
"1. There will be one legislature for the whole of Andhra Pradesh which will be the sole law making body for the entire state and there be one Governor for the State aided and advised by the Council of Ministers responsible to the State Assembly for the entire field of Administration.
2. For the more convenient transaction of the business of Government with regard to some specified matters the Telangana area will be treated as one region.
3. For the Telangana region there will be a Regional Standing Committee of the state assembly consisting of the members of the State Assembly belonging to that region including the Ministers from that region but not including the Chief Minister.
4. Legislation relating to specified matters will be referred to the Regional committee. In respect of specified matters proposals may also be made by the Regional Committee to the State Government for legislation or with regard to the question of general policy not involving any financial commitments other than expenditure of a routine and incidental character.
5. The advice tendered by the Regional Committee will normally be accepted by the Government and the State Legislature. In case of difference of opinion, reference will be made to the Governor whose decision will be binding.
6. The Regional Committee will deal with following matters:
--Development and economic planning within the framework of the general development plans formulated by the State Legislature.
--Local Self Government, that is to say, the Constitutional powers of Municipal Corporations, Improvement Trusts, District Boards and district authorities for the purpose of Local Self Government or Village Administration.
--Public health and sanitation, local hospitals and dispensaries.
--Primary and secondary education.
--Regulation of admission to the educational institutions in the telangana region.
--Prohibition—Sale of agricultural lands.
--Cottage and small scale Industries, and Agriculture, Cooperative Societies, Markets and Fairs. Unless revised by agreement earlier this arrangement will be reviewed after ten years.
7. Domicile Rules : A temporary provision be made to ensure that for a period of five years, Telangana is regarded as a unit as far as recruitment to subordinate services is concerned; posts borne on the cadre of these services may be reserved for being filled up by persons who satisfy the domicile conditions as prescribed under the existing Hyderabad Mulki Rules. ( 12 years of Stay in Telangana area)
8. Distribution of expenditure between Telangana and Andhra Regions--- Allocation of expenditure with the resources of the state is a matter which falls within the purview of the State Government and the State Legislature.. Since , however, it has been agreed to the representatives of Andhra and Telangana that the expenditure of the new state on central and general administration should be borne proportionately by the two regions and the balance of income should be reserved for expenditure on the development of Telangana area, it is open to the state government to act in accordance with the terms of agreement in making budgetary allocations. The Government of India propose to invite the attention of the Chief Minister of Andhra to this particular understanding and to express the hope that it will be implemented.
9. The existing educational facilities including Technical Education in Telangana should be secured to the students of Telangana and further improved---
10. The cabinet will consist of members in proportion of 60:40 percent for Andhra and Telangana respectively, out of 40 % of Telangana ministers, one will be a Muslim from Telangana. If the Chief Minister is from one region the other region should be given Dy Chief Ministership."
It seems that at least some of these conditions have not been met, hence the continuing agatation.