Telangana, which was created last year after bifurcating Andhra Pradesh, currently has 10 districts including the capital city Hyderabad.
"As part of fulfilling our poll promise, the cabinet today decided to create some more districts. A committee headed by chief secretary has been appointed to make recommendations," Rao told reporters after the cabinet meeting.
He said on an average each district has 19 lakh population whereas average population per district in Telangana stands at 35 lakh making it a fit case for carving out new districts.
"We have received mixed response from public. So we have decided not to introduce cheap liquor this year," Rao said.
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Rao said the monsoon session of the Legislative Assembly will be convened from September 23 after he returns from his China tour.
Rao has been invited to attend the World Economic Forum's "Annual meeting of the New Champions 2015" in China on September 9.
On power front, the CM said the cabinet has decided to allot Rs 25,000 crore per annum in the budget for setting up power projects for a period of three years beginning 2016.
The cabinet also discussed the issues related to the concessions sought by the Indian Cellular Association.
The Greater Hyderabad Municipal Corporation (GHMC) will construct 20 multi-layer flyovers at various places with a cost of Rs 2,631 crore.