Background
The Gentlemen's agreement of Andhra Pradesh has a precedent in the Sribagh Pact of 1937 which was between the leaders of Rayalaseema and Coastal Telugu speaking districts of Madras State to provide assurances for Rayalaseema in return for their willingness to join Andhra State. This unbinding pact was largely forgotten probably because of the large political representation the region has had in the state governments since independence.
When the Hyderabad State was freed from the Nizam of Hyderabad by police action, there was a debate in the Telugu speaking districts of the state(also known as Telangana) on whether to join the newly formed Andhra State, carved out of Telugu speaking districts of Madras state. To convince the leadership of Telangana to join the new state, an agreement was reached between the leaders of both sides. This came to be known as the Gentlemen's agreement. The agreement allowed the formation of the state of Andhra Pradesh in 1956 itself, against the recommendations of States Reorganisation Commission (SRC), which recommended "the Telangana area is to constitute into a separate State, which may be known as the Hyderabad State with provision for its unification with Andhra after the general elections likely to be held in or about 1961 if by a two thirds majority the legislature of the residency Hyderabad State expresses itself in favor of such unification(para 386)".
Read more about this topic: Gentlemen's Agreement Of Andhra Pradesh (1956)
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