i) On the initiative of the Union Government, the leaders of both sides met in Delhi and reached what was called "Gentlemen's Agreement" on 20th February 1956.
ii) They basically agreed on 14 points. This paved the way for the merger of the two states though conditional and subject to satisfaction of Telangana people.
iii) Thus, the new state of Andhra Pradesh with its capital in Hyderabad was formed.
The most important points in the agreement were:
1. Expenditure on Administration was to be borne proportionately by the two regions and surplus revenue from Telangana region would be spent only for the development of Telangana
2. The existing educational facilities in Telangana would be reserved for the students from the region only.
3. It was agreed to continue the Mulki rules under which only those with a minimum of 12 years of residence in Telangana were eligible for jobs and admission to educational institutions in Telangana
4. It was agreed to set up a Regional Council, a statutory body consisting of 20 members from the Legislative Assembly to oversee the needs and development of Telangana.
5. Sale of agricultural land in Telangana would be controlled by the Regional Council
6. The Andhra Pradesh ministry will consist of 40 percent members from Telangana and 60% from Andhra.
7. If the Chief Minster was from Andhra, the Deputy Chief Minister would be from Telangana and vice versa.