According to the great epic of India - Ramayana, Lord Sri Rama after killing Ravana stopped here at Proddatur near the banks of River Penna while he was on the way to his kingdom Ayodhya. As the sun sets (sunset translated to 'proddu' in Telugu) he decided to stay there tonight and asks her wife Sita to find an appropriate place to take rest. Thereafter the place is believed to be known as Proddatur and also styled as Proddutur.
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