The UPA government will most probably begin the New Year with a firm 'no' to Telangana statehood citing lack of consensus among political parties over the demand in the state.

Sources said Congress president Sonia Gandhi will take up the issue at the core committee meeting in January to which both Chief Minister N. Kiran Kumar Reddy and PCC chief Botsa Satyanarayana will be invited for their 'final' views on Telangana, including their preparedness to face any situation that may arise due to the decision.

Highly-placed sources confirmed that the announcement would be made in January to put an end to the uncertainty that has been dogging the state for the last two years.

After weighing the pros and cons and obtaining views of coalition partners like Mr. Sharad Pawar, Ms Mamata Banerjee and Dr M.Karunanidhi, the Congress leadership had finally decided to reject the Telangana demand.

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Sources pointed out that though the Congress had been accused of dilly-dallying the issue, it was ready to effectively tackle the criticism that is bound to follow after the announcement by accusing the Telugu Desam for their inconsistent policy on the issue.

They said the Congress central leadership had come to a conclusion that even after announcing the 'No Telangana' decision, they would have almost two-and-a-half years to repair the damages and improve its image.

Apparently, Congress leaders had secretly parleyed with Telangana Rashtra Samiti chief K. Chandrasekhar Rao and revived their earlier condition that TRS should announce its merger with Congress if at all he was interested in a Telangana state.

Mr Rao rejected the proposal outright.

Following this, the Congress central leadership had met and reviewed the situation in November and decided on going against the Telangana statehood demand.