Andhra Pradesh Chief Minister and Telugu Desam Party (TDP) president N Chandrababu Naidu held a crucial meeting with the party MPs, senior MLAs and leaders in Amaravati on Sunday.
The meeting was reportedly called to review the party's ties with its ally Bharatiya Janata Party (BJP).
Naidu is apparently upset with the saffron party over the poor allocation for the state in the Union Budget 2018 that was presented on February 1 by Finance Minister Arun Jaitley.
"We are discussing about budget, political alliance is different and state government development is different", said K.Rammohan Rao told media.
"Whatever the Chief Minister decides we will stand by it, but we are not happy with the BJP budget, not happy with the budget allotted to Andhra Pradesh. We MPs are ready to resign, but we are bound by the Chief Minister's decision," said Pandula Ravindra Babu TDP MP Amalapuram told ANI.
An upset TDP pitched its senior leader and union minister Y S Chowdhary to tell the media in no uncertain terms that it was unhappy over no monetary allocation for Andhra Pradesh on many issues such as Polavaram project, funding for the new state capital of Amravati, making Visakhapatnam a zonal railways headquarters and clearance for the Kadappa steel plant project.
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Chowdhary, on February 1, had warned that the TDP had three options before it, namely, (1) either try and continue the alliance (2) make their MPs resign and (3) simply terminate an association with the BJP and the NDA.
He had said that the TDP executive would in all probability meet on Sunday to take a final decision on the matter.
Last week, Naidu had issued an ultimatum to the BJP chart its own course if the BJP did not wish to continue with the alliance.
The TDP is the BJP's largest political ally in southern India. Its warning came shortly after another disgruntled ally, the Shiv Sena, publicly slammed the BJP for treating its allies improperly and threatened to sever the partnership.
The TDP had branded the 2018 Budget proposals as 'anti-people and corporate friendly', and a betrayal of the interests of Andhra Pradesh. It had said that its concerns were of a serious nature and need to be addressed effectively and promptly.
The TDP, which has been an ally of the BJP and a member of the NDA between 1998 and 2002, and again since 2013 to the present, is reportedly looking at a political alternative in the run-up to the 2019 general elections. It is being reported that the party and Chief Minister Naidu have already carried out an assessment of the pros and cons of a split with the BJP.
Meetings have reportedly been taking place between the leadership of the two parties, but as of now, the options are few and far, and if the TDP's demands are not met, it could withdraw its members from the union cabinet as a first step.
To improve his vote share, Naidu is eyeing the sizeable minority vote in the state. Last time, the Muslim vote had gone to the YSR Congress as the Congress party was seen as a weak rival to keep the BJP away.
The TDP and the BJP had contested the 2014 elections in alliance and the BJP has two MPs and five MLAs from Andhra Pradesh.
The BJP is reportedly concerned about gaining a toehold in South India. It wants to have allies in Karnataka, Andhra Pradesh and Tamil Nadu.