On 26 May 2008, the government of India and state government of Jammu and Kashmir reached an agreement to transfer 99 acres (0.40 km2) of forest land to the Shri Amarnathji Shrine Board (SASB) in the main Kashmir valley to set up temporary shelters and facilities for Hindu pilgrims. This caused a controversy, with demonstrations from the Kashmir valley against the land transfer and protests from the Jammu region supporting it. The largest demonstration saw more than 500,000 protesters at a single rally, among the largest in Kashmir's history.
Six people were killed and 100 injured when police fired into a crowd in Srinagar protesting the transfer of forest land. Separatist JKLF (R) organised a march to the controversial land in Baltal. Senior separatist leaders Shabir Ahmad Shah, Syed Ali Shah Geelani and Mirwaiz Omar Farooq, leaders of the All Parties Hurriyat Conference (APHC), which planned the protests, were placed under house arrest. Throughout the Srinagar area, most public buildings, including schools and government offices, and many businesses, have remained closed.
Initial opposition to the land transfer was based on environmental concerns. Some environmentalists argued that the land transfer would hamper the region's delicate ecological balance. However, hundreds of acres of forested land were destroyed for the construction of a road linking Poonch to Shopian.
Reports that the SASB was planning to construct dams across the river Indus to generate electricity for the shrine were unconfirmed.
The state government accepted the demands of the protesters from the Kashmir valley region by revoking the land transfer decision on 1 July 2008. Hindu groups in the Jammu region reacted by mounting their own counter-protests against the revocation and called for the cancellation of the revocation decision.