According to information reaching the family Friday night, Y. Raghu, said to be a relative of the victims, kidnapped Saani Venna after murdering her grandmother Satyavathi Venna, 61.
The family was shocked on hearing the news of the infant's tragic killing by Raghu, who had demanded a ransom of $50,000.
According to information reaching the family in Guntur, about 300 km from here, Philadelphia police cracked the case with the arrest of Raghu, who confessed to killing both the child and her grandmother.
Dispute over property reportedly led to the ghastly crime. The family was initially suspecting the involvement of African Americans.
Satyavathi was slain and Sravani was kidnapped at a suburban apartment in Philadelphia, Pennsylvania state on Monday afternoon. The woman had gone to the US in July this year to look after her granddaughter. She was babysitting the child when unidentified people broke into the flat.
Her son, Ramprasad Reddy, and daughter-in-law, Ch. Latha, both software professionals, were away in office.
Before leaving the flat with the kidnapped child, Raghu had left a note demanding a ransom. The Federal Bureau of Investigation (FBI), which had also joined the investigations into the sensational crime, was tightlipped about the ransom demand so that the child could be rescued.
The Telugu community in the US had announced an award of $30,000 for information about the infant.
The double tragedy has shocked Satyavathi's husband Venna Konda Reddy, who retired as a mandal education officer in Prakasam district, also in south coastal Andhra Pradesh.
Meanwhile, Telugu Association of North America (TANA) said the body of Satyavathi would be flown home Monday.