Indiana's Flag History
The state flag (formerly called banner) was adopted by the General Assembly in 1917 as part of the commemoration of the state's Centennial, after a competition sponsored by the Daughters of the American Revolution. The prize-winning design was submitted by Paul Hadley of Mooresville, IN.
On a field of blue, the flag displays a torch, colored gold or buff, surrounded by an outer circle of thirteen stars and an inner circle of five stars. The torch in the center stands for liberty and enlightenment; the rays represent their far-reaching influence. The outer circle of stars stands for the original thirteen states and the inner circle of stars for the five states next admitted to the Union. The larger star stands for Indiana, the nineteenth state. Originally described as the state "banner", the name was changed to "flag" by the 1955 General Assembly.
The state flag is "regulation in addition to the American flag, with all of the military forces in the State of Indiana and in all public functions in which the state may or shall officially appear". The state colors are always carried or displayed on the observer's right of the Stars and Stripes.
Link here to the Indiana State Historical Society for facts, figures, and history of Indiana.