The Union Cabinet also decided to place under suspended animation the Andhra Pradesh Assembly whose term is slated to end on June two.
Along with this decision, the Cabinet gave approval to proposals for Seemandhra region, including setting up of three Kendriya Vidyalaya schools and premier National Institute of Design. The NID was earlier planned to be set up in Hyderabad in the Telangana region.
The decision to impose the President's Rule in Andhra Pradesh was necessitated by Reddy's resignation as the Chief Minister on February 19 as he was opposed to division of the state to carve out Telangana.
Governor E S L Narasimhan had recommended central rule in the state after the resignation.
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The bill to create the country's 29th state, by splitting Andhra Pradesh, was passed by Parliament on February 20 in the just-concluded Winter Session.
Sources said the NID was originally proposed by the Ministry of Industries to be set up in Hyderabad but at today's Cabinet meeting, Ministers from Seemandhra insisted that it should be established in "appropriate location" in their region. Finally, Vijayawada was identified for this.