So was it really a Two Nation Theory or just a bargaining chip that eventually lead to partition because of political brinkmanship by various players.
I would frame it somewhat differently. The question needs to be asked first, why many Muslims adopted their religious identity as their principal political identity? This conflation of the religious and political identities did not make Pakistan inevitable, but it was a pre-requisite to its creation, an enabling factor. Then secondly, why did the movement for Pakistan succeed and why it did emerge in the form it did in 1947?
In explaining the first question some weight needs to be given to the colonial impact and interaction - the communications revolution which knitted India together (better roads, the building of railways, the introduction of a national postal service, the growth of the telegraph system and the massive expansion of printed publications); the British perception of India as a religiously segmented society which led to them privileging religious identity; British institutions - the introduction of the census which for the first time led to a bureaucratically defined religious community bound by the state and which effaced diversity within religious communities and separate electorates which institutionalized a political Muslim identity; and finally the political structure and how this shaped certain responses from Indian elites. Local interests became soldered to provincial interests in the aftermath of the Montagu-Chelmsford reforms of 1919, which devolved power to the provinces. This increased provincial competition at the expense of co-operation. In addition the increase in the electorate forced politicians to become more responsive to the view ‘on the ground’ and more willing to manipulate divisions for political advantage. The emphasis on numbers led to a shift in focus from Muslim minority to Muslim majority provinces, strengthening provincial outlooks, which became intermeshed with communalism. Provincialism would later manifest itself as a core part of Muslim League program for weak centre in contrast to Congress’s insistence on inheriting the strong unitary centre. Devolution on a provincial basis also influenced the Congress. Centrifugal tendencies inherent in Dyarchy, as the reforms of 1919 came to be known were matched by a centripetal stance by Congress. Congress authoritarianism, which alienated many Muslims, therefore was partly a result of the structure of politics which the British constructed.
Some weight needs to be given to the impact on Hindu revivalism. Indian nationalism became suffused with Hindu symbolism. Components of cultural nationalism included, the Vedic myth, memories of Shivaji, the icon of Bharat Mata and the Kali cult, the symbol of the Cow and the river Ganges. In the nineteenth century one needs to pay attention to the movement to replace the Persian script with the Nagri script and the Cow Protection movements as well as the influence of the Arya Samaj, especially in the Punjab. In the twentieth century William Gould demonstrated how Hindu nationalism manifested itself in the level of local politics amongst the ostensibly ‘secular’ Congress party. Gould shows, firstly, how Hindu holy men intermeshed the language of nationalism with that of religion. He shows, secondly, that festivals and temples, laced with religious meaning, were often the arenas where nationalism was espoused. Thirdly, he points to the pervasive use of religious symbols, and indeed religious figures, in mobilizing the masses. Finally, he looks at how Hindu ideas of sin and pollution were used in ways, which marginalized Muslims.
Away from politics, Sudhir Chandra examined late nineteenth-century Hindi literature, to demonstrate how ‘communal consciousness’ was often fused with ‘national consciousness’ which excluded minorities whilst Charu Gupta in an original work “locates the growth of Hindu communalism in everyday sites and relationships through the prism of gender.”
Thirdly, attention needs to be paid to ideas in the Indo-Muslim tradition and how Islamic civilizational ideas, especially that of the umma interacted with modern nationalist ideals. As the distinguished historian of Muslim history in South Asia, Francis Robinson, says, for many Muslims, “being part of the Muslim community is a central part of being a Muslim.” Marshall Hodgson writes, “there has been a continuous pressure towards persuading Muslims to adopt like standards, like ways of living based on Islamic ideals prevailing at a given time...everywhere Muslims are noted for their keen consciousness of the Muslim community...and maintain in the most diverse geography not only the essential distinctiveness of Islamic rites...but also to some degree, a sense of common cultural heritage.”
Fourthly, there is the long history of Muslim revivalism. Although it pre-dates the colonial encounter, the entrenchment of British power particularly challenged Muslims. ‘As Western power grew’ wrote Francis Robinson, ‘the fundamental nature of its challenges became clearer. There was the challenge of defeat. How was it that the Muslim community, which the Quran described as the ‘greatest nation raised up for mankind’ and which had been throughout its history an expanding and dominant force, had come to be subjected to the power of the West?’ One response to British pre-eminence was that of the ulama of the Deoband. In the absence of state power, this movement emphasised individual conscience and knowledge of God’s word as the ultimate guarantor of Islamic society. Another response was that of the Ahl-I Hadith. Of similar background to the Deobandis, but more elitist and more extreme, they rejected even the decisions of the medieval law schools and were dedicated to purifying practices not in accordance with their interpretation of ‘proper’ Islam. Then there was the movement of the Barelvis, who called themselves the Ahl-i Sunnat wa Jamaat' and defended popular sufi practices under fire. Finally, there was Islamic modernism, which in late nineteenth century was symbolised by the Sayyid Ahmad Khan and the Aligarh movement that sought to recover the spirit of Islam within the context of contemporary needs. These movements drew sharper distinctions between Muslim and non-Muslim.
But even with the emergence of religion as the predominant political identity among many Muslims, it was not inevitable that a separate Pakistan state would emerge in the form it did. It was contingent on a number of factors especially between 1937-1946 and this explains the second question. World War II did much to boost the Muslim League’s standing as Britain turned to it because of the number of Muslims in the army and the opposition of the nationalist movement. The role of Congress has also come into sharp focus. Congress obduracy, refusal to countenance a confederal India, mistakes such as not sharing power with the Muslim League following its triumph in the 1937 elections are popular explanations for the eventual partition. Ayesha Jalal has powerfully argued that for the Congress partition was a price worth paying to inherit a strong state. The Congress understood that by accepting partition they were disencumbering themselves of the Muslim League and as such in the words of Joya Chatterji, India could inherit a strong centre “without weightages, reservations and other such devices.” Joya Chatterji has also pointed out that calls for partition came not just from Muslims but in Bengal the Hindu elite keen to restore their dominant position were vociferous in their demands that Bengal be divided. Jinnah’s leadership has also been highlighted, either for his ability to embody and articulate Muslims hopes and aspirations, or for his role as political strategist and negotiator with a fine eye for constitutional detail. Popular pressures should also not be ignored. Sumit Sarkar has argued that the Congress fearing social revolution in the 1940s wanted a settlement quickly and were prepared to accept partition as the price of suppressing popular forces that threatened a social revolution. From a different angle, Ian Talbot has pointed to the role of popular mobilisation in the 1940s in securing Pakistan. Jinnah’s call for a homeland would have translated into nothing had Muslims – ordinary Muslims – not been sincerely moved by it and had not participated in vast numbers in the movement. For Talbot Pakistan was not simply created by a few middle-aged men in ‘smoke filled rooms’.
So there are many factors that contributed to the creation of Pakistan.