The decision was taken by the state cabinet at its meeting here, chaired by Chief Minister Shivraj Singh Chouhan, official sources said.
The district will come into existence on August 16, the sources said.
The new district will be created by bifurcating Shajapur district; it will comprise the tehsils of Agar, Badoud, Susner and Nalkheda. Headquarters would be at Agar town.
Spread over 2,785 square km, Agar-Malwa will have population of 4.80 lakh.
IAS officer D D Agrawal and R S Parihar would be the first Collector and Superintendent of Police (SP) respectively of Agar-Malwa.
Apparently with an eye on Assembly polls, cabinet also decided to continue zero per cent interest short-term loan facility for farmers in 2013-14.
Further, 18,500 hectares of land would be given to the National Thermal Power Corporation to set up a power plant in Narsinghpur district.
