https://www.in.gov/history/about-indiana-history-and-trivia/emblems-and-symbols/the-naming-of-indiana/

https://en.wikipedia.org/wiki/History_of_Indianapolis

Do people call Indiana Indy?

No, Indy Is Not Short For Indiana

No Hoosier is ever going to call their state Indy. That nickname is reserved for their capital city, Indianapolis.

The character was originally named Indiana Smith, after an Alaskan Malamute called Indiana that Lucas owned in the 1970s and on which he based the Star Wars character Chewbacca.