The TDP is second-largest party after the Bharatiya Janata Party (BJP) in the National Democratic Alliance (NDA).

In the Lok Sabha, the TDP has 16 members and in the Rajya Sabha six. It is the first pre-poll partner of the BJP to pull out of the Modi government after being part of it for nearly four years.

His announcement came hours after Union Finance Minister Arun Jaitley in New Delhi told the media that granting of special status to Andhra Pradesh was not possible after the 14th Finance Commission recommendations.

Jaitley did not make any new commitment except for reiterating that the Centre had extended all possible help to the bifurcated state.

Granting special category status was a promise made by the previous UPA government at the time of bifurcation of Andhra Pradesh and creation of Telangana, which all the parties in the state are seeking now.

Naidu said a decision on TDP's continuation in the NDA would be decided after talking party-to-party (BJP and TDP). "This (quitting the cabinet) is the first step," he said.

"They (the Centre) are predetermined not to help the state. In the interest of our state, we have taken the decision," he said. I tried to inform the PM for courtesy's sake. But, he did not come on line. My OSD informed the PM's OSD."

The drastic decision of the TDP may not have come as a shock to the BJP, which has already conveyed to its two ministers in the Andhra Pradesh cabinet to be ready to quit any moment.

Dr. Kamineni Srinivas (Medical and Health) and P. Manikyala Rao (Endowments) may quit Naidu cabinet on Thursday morning, hours before the budget presentation by Finance Minister Y. Ramakrishnudu in the assembly.

Naidu held consultations with the party's MPs, ministers and important leaders before taking the decision and making it public.

The MPs, including the two ministers, expressed a unanimous opinion that Jaitley's statement on the demands of Andhra Pradesh was disappointing and discouraging.

All parties in the state, including the ruling TDP and the main opposition YSR Congress Party, have been agitating in Delhi demanding grant of special status. Agitations are also going on across the state.

Naidu said at the time of making the alliance, the BJP had said it backed the demand for grant of special category status for Andhra Pradesh but now it was singing a different tune.

He said the promises on statehood and other financial demands of the state have not been honoured by the BJP and he could not make any compromise on the state's interest.

"TDP is not for power but for self-respect. We decided there is no point in continuing in the government," he added.

Naidu said Jaitley's comments suggest that Andhra Pradesh is asking for too much. He also slammed the Finance Minister for saying "sentiments will not decide the quantum of funds".

He said he made 29 trips to Delhi, met the Prime Minister and other ministers and tried to do his best to do justice for the state. "I am not angry with anybody," he added.