NEW DELHI—India's ruling Congress party agreed Tuesday to carve a new state out of a larger one, bowing to a decades-old demand by advocates who argue the region hasn't received adequate government resources.

The area currently lies within the large southern state of Andhra Pradesh. Supporters of statehood say they are neglected by the Andhra Pradesh government, arguing that the region suffers from high poverty and unemployment, and a lack of proper infrastructure and irrigation facilities.

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