New Delhi, October 3
The Union Cabinet tonight cleared the formation of the new state of Telangana by bifurcating Andhra Pradesh. Hyderabad, the former city of Nizams, will be the joint capital of the two states — Telangana and Seemaandhra — for 10 years.

“The Cabinet has approved the creation of Telangana. Hyderabad will be a joint capital for 10 years," Union Home Minister Sushil Kumar Shinde said after the Cabinet meeting.

A Group of Ministers will decide on issues such as drawing the boundaries of the two states and sharing of revenues and resources.

After 10 years, Seemandhra will have to establish its own capital with Central funding. The decision of the Cabinet is in line with what the Congress Working Committee had okayed at its meeting on July 30. The CWC had asked for creation of a mechanism to share resources. The setting up of GoM is an outcome of that meeting, sources said. It will sort out nitty-gritty of boundaries, besides looking into sharing of revenues, river waters and power generation. Shinde signed the Telangana Cabinet note on Thursday despite protests from Seemandhra leaders, including AP Chief Minister N Kiran Kumar Reddy. An immediate fallout is likely that Congress MPs, MLAs and ministers in both AP and at the Centre could resign. There are 17 Lok Sabha and 119 Assembly seats in Telangana, while the Seemandhra region has 25 Lok Sabha and 175 Assembly seats.

“After the creation of the new state, the security and guarantees, including fundamental rights of the people of coastal Andhra, Rayalaseema and Telangana will be ensured,” said Shinde.

Congress general secretary Digvijaya Singh, who is in charge of the party affairs in Andhra Pradesh, said the process of bifurcation would begin with the adoption of resolution by the cabinet. The resolution would then be sent to the President with a recommendation to refer it to the Andhra Pradesh Assembly. The Constitution empowers Parliament to create new states.

Earlier on July 30, the Congress had accepted the demand of creation of Telangana.