In the face of uproar in Parliament, the Union cabinet on Friday cleared the Telangana bill, which will be tabled in the Rajya Sabha on February 12.
The controversial bill, which was rejected by the Andhra Pradesh assembly around a week ago, will be introduced in the Upper House in the present form and the government will move 32 amendments when it is taken up for consideration.
The proposed legislation does not provide for the grant of Union Territory status to Hyderabad despite demands, but the government will announce a special package for Rayalaseema and north coastal Andhra to address concerns of the people there.
The city will serve as the joint capital of both Seemandhra and Telangana for 10 years, TV reports said.
The cabinet cleared the Andhra Pradesh Reorganisation Bill aimed at carving out a separate state of Andhra Pradesh after a marathon meeting, which was followed by another meeting of the Congress core group headed by party president Sonia Gandhi.
AICC general secretary Digvijaya Singh, who is in-charge of Andhra Pradesh, was a special invitee at the meeting.
Read: No UT status for Hyderabad, Bhadrachalam division to be with Telangana
The tabling of the bill in Parliament, however, will be a challenge to the central government following uproar in both Houses over the issue in the extended Winter Session.
Parliamentarians from Andhra Pradesh are sharply divided over the bifurcation of the state. While public representatives from the Seemandhra region are against the move, politicians from the Telangana region have been demanding a separate state for long.
The tussle over regional sentiments has intensified in the run-up to the 2014 Lok Sabha elections. The first three days of the ongoing session were disrupted in the wake of protests over the matter.
On Friday, three no-confidence motions were moved in the Lok Sabha, including one from a Congress member from Andhra Pradesh, opposing the proposed state.
The Congress-led United Progressive Alliance (UPA) government at the Centre has asked all parties to settle the issue, but the ruling party itself has failed to keep its flock together. Andhra Pradesh CM N Kiran Kumar Reddy is a staunch opponent of Telangana.
Reddy even staged a sit-in here and met President Pranab Mukherjee to seek his intervention to stop the division of the state.
At the cabinet meeting, NCP chief and agriculture minister Sharad Pawar, who had earlier made a strong pitch for Telangana, questioned whether the law and order powers being given to governor are according to the constitution.
Although he endorsed the bill, he wanted to know what was being done for the new capital of Seemandhra, sources said. He was told all the cost will be taken care of by the Centre.
Union minister Pallam Raju, who, along with other colleagues from the Seemandhra region, has been opposing division of the state, unsuccessfully batted for UT status for Hyderabad.
With the current session being the last of the 15th Lok Sabha, the government wants that the bill be taken up for consideration and passage during the session.
A Group of Ministers formed on the issue considered the bill on Thursday. The ministerial panel is believed to have discussed the demands of the Union ministers from Seemandhra which include making Hyderabad a Union Territory for a limited period and incorporating Bhadrachalam sub-division with residuary Andhra Pradesh.
In the last-ditch effort to prevent Hyderabad from being a part of Telangana, Union ministers of Seemandhra region had on Wednesday urged the ministerial panel to make the city a Union Territory and divide its revenue among Telangana and residuary Andhra Pradesh.
They had also demanded that the Bhadrachalam sub-division in the state should be incorporated into Seemandhra region as this is the submerged area of Polavaram multi-purpose irrigation project, which will be part of residuary Andhra Pradesh.