This article explores the impact of the police action and the anti-communist struggle in Hyderabad on the formation of the Indian state in the first years after independence. Because of its central location and diverse cultural heritage, the absorption of the princely state of Hyderabad into the Indian Union was an important goal for Nehru's government. However, the task of bringing Hyderabad into the Union was not an easy one. As it entered Hyderabad, the government of independent India had to come to terms with the limitations of the police, military and bureaucracy, which it had inherited from the colonial state; and as it took over the governance of the state, it had to find ways to manage relations between Hindus and Muslims, even as the social order was being transformed. It also had to fight communism in the Telangana region of the state, whilst trying to ensure the loyalty of its new citizens. This article examines the ways in which India's first government confronted these complex problems. The following pages argue that these early years must be seen as a time of great dynamism, rather than as a period of stability inherited from the colonial state.