There is a difference here. Prashanti was a Bangalore train and Visakha was a Secunderabad train. So obviously, there would be great demand for these trains from BBS. But Simhadri is a slow day-time train, with a lot of UR coaches, that goes to Guntur. What demand is there from BBS to Guntur or BZA? At the most, people in KUR-BAM section will use it to go to VSKP. There will be practically zero impact on VSKP-GNT section.

Even if ECoR steps in and extends it further, it is of no use....
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The main reason SCR proposed the extension of Simhadri was because they can do it without changing the schedule between GNT-VSKP. With that schedule is not possible to run the train till BBS. And even if extended to KUR, it will reach there around midnight, and start back around 1 AM. As it is there isn't much demand from KUR/BAM to BZA/GNT and on top of that the timings are quite crappy. I think VSKP people won't have anything to worry about.

Besides, how else will the Srikakulam area get direct connectivity to BZA/Amaravati? Should they always rely on traveling to VSKP somehow and change trains from there?

I think Simhadri extension is a very safe bet. It can get approval very easily. It will be useful to people in the VSKP-PSA section, and will have very minimal impact on passengers in the VSKP-GNT section.