Making small states in India is good or bad?

Yes, small states will perform better. Now Chattisgarh, Jarkhand and Uttarakhand are growing like super past train, if look its growth rate in last 10 years (formation date). their growth rate is more than the Indian growth rate and its parent state.

Our democracy works like this - one head of the state, then other elected members, run the state with the help of IAS officers and bureaucrats.
When the state is big, those officers and elected politicians, law makers are not able to watch carefully every project and how the money is utilized by everyone in every project.
Today budget of Government is becoming so big that common people find it difficult to understand, and even studied accountants find it very difficult to understand and find out the mistakes.
If common man does not understand the budget How he can participate and keep watch on the politician to stop the frauds and mistakes done by politician
When state is small, if any government employee or law maker or politician will do the fraud, immediately it will show the effect on the other projects as it will become very difficult for that chief minister to bring new funds or hide his black deeds.
Just take the example of classroom of 100 students and classroom of 25 students, so in this case which classroom will be easy to manage and give the results.
Today as our states are big, many times villagers from remote places even find it difficult to reach the place of district court, forget about the High court of state.
When small state will be created it will give easy access to high court.
Small state means small government, small budget, and small departments, very less chance to show fingers on each other by saying that, that department is not doing the work so file is pending.
Small states will create competition among each other; this competition will be with the same mother tongue speaking language population.
Because of big nature of states today indirectly the law maker, politician has become the king of that particular area.
Because of this honest people will rarely get chance to rule the state or to get elected.
Small states will not give chance to politician or law maker to hide his failure or fool the people by saying that this time we have given funds to west or north, as small state means the population will know in real what is happening in every part of his state.
Big states does not benefit towards saving money ,but the nature of big states help to waste the money as well as it gives unlimited scope to do corruption which benefits to the law maker or politician.
In small state if any politician will amass wealth, the people of that state can easily notice that and will know how he is earning and making the money, this will help to expose the wrong contracts and his hidden property.
Even Indian constitution has article 3 which favors and talks about the creation of new state. It states that -
. Parliament may by law admit into the Union, or establish, new States on such terms and conditions as it thinks fit.
If party who support the creation of small state does not win the election this does not mean that the people of that district do not want separate state. The election is held to choose leader ,MP or MLA and they do not vote for the creation of state. Even if when there is not 100% voting how can it become the will of that district ?
Our constitution of India does not have this provision, to get the peoples vote to decide regarding the creation of small state . The ball is ,power is with the parliament.