In December 1953, the States Reorganization Commission was appointed to prepare for the creation of states on linguistic lines. The States Reorganization Commission (SRC) was not in favour of an immediate merger of Telangana region with Andhra state, despite the common language between the two.
Para 382 of States Reorganization Commission Report (SRC) said "opinion in Andhra is overwhelmingly in favour of the larger unit, public opinion in Telangana has still to crystallize itself. Important leaders of public opinion in Andhra themselves seem to appreciate that the unification of Telangana with Andhra, though desirable, should be based on a voluntary and willing association of the people and that it is primarily for the people of Telangana to take a decision about their future". The concerns of Telanganas were numerous. The region had a less developed economy than Andhra, but with a larger revenue base (mostly because it taxed rather than prohibited alcoholic beverages), which Telanganas feared might be diverted for use in Andhra. They also feared that planned dam projects on the Krishna and Godavari rivers would not benefit Telangana proportionately even though Telanganas controlled the headwaters of the rivers. Telanganas feared too that the people of Andhra would have the advantage in jobs, particularly in government and education.
The commission proposed that the Telangana region be constituted as a separate state with a provision for unification with Andhra state, after the 1961 general elections, if a resolution could be passed in the Telangana state assembly with two-third majority.
Chief Minister of Hyderabad State, Burgula Ramakrishna Rao strongly believed majority of Telanga people are against the merger.[4]
Prime minister Jawaharlal Nehru ridiculed the idea of merging Telangana with the Andhra State, fearing a “tint of expansionist imperialism” in it. Later, he compared the merger to a matrimonial alliance having “provisions for divorce” if the partners in the alliance cannot get on well.[5]
However, following the "Gentlemen's agreement, the central government, ignoring States Reorganization Commission Report , established a unified Andhra Pradesh on November 1, 1956 [2][6][7]. The agreement provided reassurances to the Telangana people as well to Andhra people in terms of power sharing as well as administrative domicile rules and distribution of expenses of various regions.
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