Yes this is how decentralization was done, however the story of mp is much different from the other states. If I quote the words of my professor, mp was born with the leftovers of other states i.e. other states demarcated themselves depending upon the language and culture, and then what was left was named mp.
This is the reason why mp is in itself much diverse. The state is composed of different princely states and territories of british times. While gwalior, rewa and bhopal had their separate kingdoms, indore, jabalpur and sagar belonged to distinct british provinces. Hence, this decentralization in mp is no gift from the state government, rather a consequence of time.