Mr Rao had submitted his resignation letter to chief minister Kiran Kumar Reddy after he was named the fifth accused by the CBI in the chargesheet filed in the VANPIC projects case in August last year. Mr Reddy had not accepted his resignation but Mr Rao has stayed away from cabinet meetings and other work in the secretariat.
The 177-page chargesheet had dealt exclusively with the irregularities in the implementation of the VANPIC project in Prakasam and Guntur districts in Andhra Pradesh.
The CBI said industrialist Nimmagadda Prasad, who floated the VANPIC project when YS Rajasekhara Reddy was the chief minister was allotted 15,000 acres for the project in lieu of which he invested Rs 506 crore in Jaganmohan Reddy-owned Jagathi Publications, which publishes the Telugu daily Sakshi. When the project ran into delays, Mr Prasad allegedly tried to sell portions of the land to private power companies.
"I did not allot the land on my own. It was done in accordance with the Cabinet decision," Prasada Rao had declared in his defence.
Prasada Rao was the minister for Revenue in the Rajasekhara Reddy ministry. Though questioned a couple of times, he was not arrested while his former cabinet colleague, Mopidevi Venkataramana, who held the infrastructure and investment portfolio at that time, was arrested and lodged in the Chanchalguda prison in Hyderabad in the same case.