Section 82(3) in The States Reorganisation Act, 1956
(3)The public debt of an existing State attributable to loans taken from the Central Government, the Reserve Bank of India or 343 any other bank before the appointed day, including in the case of Hyderabad the loan deemed to have been made by the Central Government under sub-section (1), shall pass to the successor State, or if there be two or more successor States, be divided between them in proportion to the total expenditure on all capital works and other capital outlays incurred up to the appointed day in the territories of the existing State included respectively in each of those successor States:Provided that for the purposes of such division, only expenditure on assets for which capital accounts have been kept shall be taken into account:Provided further that any loan taken from the Central Government by the Government of an existing State before the appointed day in connection with the construction of buildings, roads or other works for the capital of a new State or any State affected by the provisions of Part II or for purposes incidental thereto shall, to the extent of the expenditure so incurred until that day, be wholly the liability of the successor State in which the capital is included.
