One hundred people have been convicted in the case.
Witnesses said bodies were strewn in and around the tent where protesters gathered.
Officials said that at least eight people had either been killed at the scene or died from wounds sustained in the shooting.
“We have ordered an inquiry in to the incident and we will take action if the police are found guilty of excessive use of force,” Reddy said in the state capital, Hyderabad.
Saturday’s protest followed a similar rally on Friday in which police clashed with demonstrators, prompting the communist and other opposition parties in Andhra Pradesh to call a general strike, closing businesses and emptying roads across the state.