In February 2014, the state of Andhra Pradesh was bifurcated, leading to need for a new capital city in successor state of AP. As per the AP Reorganization Act 2014, a new greenfield capital was to be developed for the state of Andhra Pradesh. Hence, it was planned to construct a new greenfield capital “Amaravati” through LPS (Land Pooling Scheme) with active involvement of people.

The concept of land pooling was adopted where farmers/land owners (over and above 25,000 unique farmers) were appealed to pool their land (over and above 30,000 acres) to fulfil the land requirement to set up the people’s capital in Amaravati. In return, Govt. of Andhra Pradesh promised to give them developed plots (residential and commercial) in a proportionate ratio of land pooled by them as per the predefined guidelines. The Government made the people a partner in the development.

As per APCRDA Act - 2014, CHAPTER I (41) it is defined that the 'transferable development right’ means a development right to transfer the potential of a plot designated for a public purpose in a plan, expressed in terms of total permissible built space calculated on the basis of floor space index or floor area ratio allowable for that plot, for utilization by the owner himself or by way of transfer by him to someone else from the present location to a specified area in the plan, as additional built space over and above the permissible limit in lieu of compensation for the surrender of the concerned plot free form all encumbrances to the Authority;

As per Rule 129 of the Act. The Authority may, with the consent of the owner, acquire land for public purposes, for providing infrastructure, amenities and facilities by way of according Transferable Development Rights through issue of Development Right Certificate in lieu of payment towards cost of land in such manner as may be prescribed:

Provided that the Transferable Development Rights may be arrived at on the basis of relative land values and equivalent amount of both export and import areas as per the Registration Department records. Such Transferable Development Right may be utilized as additional built space by the owner who can use this either by himself or transfer it to any other person in full or in part for use in a less developed area as prescribed, or offset the money against the fees and charges payable for development permission or building sanction subject to fulfilment of all other rules and standing orders governed for construction of buildings.