The accused have been identified as Keshav Rao and Chandra, they said.
Class IV student Korubilli Damodhar, son of financier K Srinivasa Rao and resident of Chintalagraharam area, was kidnapped on September 8.
The victim's father had received phone calls from the abductors demanding a ransom of Rs 30 lakh, Deputy Commissioner of Police (Law and Order, Zone-II) Dr G Ramgopal Naik said.
"Around 150 police personnel were deployed near all coin box phones in Pendurthi and Gopalapatnam areas as the abductors were using the coin box phones to communicate with the parents of the boy," Naik said.
He told police that the boy was kept at a house near a temple on a hilly area of Pendurthi mandal in the district.
"Based on the information given by the accused during interrogation, two teams surrounded the hill while another posse of policemen climbed the hill and rescued the boy from the clutches of the kidnappers," the official said.
According to Naik, the kidnappers were local residents and the boy was unharmed.
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