Hyderabad will be shared for 10 years as the capital of both Telangana and Andhra Pradesh.
After the Cabinet meeting, Union Home Minister Sushilkumar Shinde told media, "The Cabinet approved the formation of GoM for creation of Telangana. Hyderabad will be the joint capital for 10 years."
Two cabinet ministers, Pallam Raju and KS Rao, registered their dissent on Thursday's meet.
Ahead of the meeting, protest broke out in front of Prime Minister's residence in New Delhi.
The protesters wanted a united Andhra Pradesh.
According to media reports, protests also broke out in Seemandhra region in Andhra Pradesh on Thursday.
Earlier, Andhra Pradesh Chief Minister N Kiran Kumar Reddy has said bifurcation of the state and carving a Telangana state out of it will be a big loss for the people.
"The party may win or lose an election, but the bifurcation will be a big loss for the entire state and all people," Reddy told CNN-IBN.
"There will be a severe power shortage. Naxal movement might see a return. Water distribution will be a problem."
"Hyderabad is a hub for health facilities and education. Bifurcation will be a loss for all regions in the state," he said.
India's ruling Congress party on July 30, approved a move to carve out the Telangana region of Andhra Pradesh as the 29th state of the country, giving in to a five-decade-long demand from supporters in a major decision ahead of 2014 elections.
Officially urging the government to take constitutional steps that will see the state's formation, the Congress Working Committee (CWC) passed a resolution following a meeting of the constituents of the ruling United Progressive Alliance (UPA).
The state, which is likely to take few months to be formed, is expected to have 10 districts, a population of 35.38 million and an area of 1.14 lakh square km and including Andhra Pradesh capital Hyderabad, which serve as a common capital for 10 years.
The Congress has 33 MPs from Andhra Pradesh.
As many as 19 of them are from the coastal Andhra and Rayalaseema regions to be included under Telangana state. They are opposed to the division of the state.
--IBNS (Posted on 03-10-2013)