The cabinet Thursday formally cleared the formation of Telangana state by breaking up Andhra Pradesh, Home Minister Sushilkumar Shinde announced.
"The cabinet has decided to bifurcate Andhra Pradesh to create the new state of Telangana," Shinde told reporters after a two-hour cabinet meet presided over by Prime Minister Manmohan Singh.
He said a Group of Ministers (GoM) would study the modalities of creating the 29th state in the Indian union.
The minister said Hyderabad would be the joint capital of both Andhra Pradesh and Telangana for 10 years.