The decision was taken at the Cabinet meeting here, chaired by Chief Minister N Chandrababu Naidu.
A member of Ahmed's family will also be given a government job, a communication from the Chief Minister's Office said.
The Cabinet also paid homage to Ahmed during the meeting, it said.
Ahmed, who hails from Kurnool district of Andhra Pradesh, was one of the 10 Army personnel killed in the Siachen Avalanche earlier this month.