The Union cabinet on Monday cleared a new land acquisition bill that proposes a minimum of four times the market value as compensation for land acquired by state governments in rural areas.
The compensation would be double the market value in urban areas. But for land to be acquired by a state for a public purpose project, at least 80% of the affected people should give their consent.
Giving the green signal to the bill, Prime Minister Manmohan Singh stressed the need to strike a balance between faster economic growth and the interests of farmers.
Rural development minister Jairam Ramesh said the bill would be introduced in Parliament on Wednesday and then sent to a standing committee.
"This is a historic bill which defines rehabilitation and resettlement, and public purpose by taking on board the concerns of farmers and landless labourers," Ramesh said.
Several ministers who have been chief ministers - Sharad Pawar, Vilasrao Deshmukh, Virbhadra Singh, Sushilkumar Shinde, Veerappa Moily and Farooq Abdullah -expressed reservations.
The concerns were mainly over getting the consent of 80% of landholders, which will make acquisition more difficult. They also said enactment of the bill would also raise land prices.
Pawar reportedly said provisions such as the failure to set up a project in 10 years after acquisition could drive away investors and industrialists.
Sensing the differences, finance minister Pranab Mukherjee suggested that an informal group of ministers be set up for deeper consultations even though the standing committee will vet the bill.
The Centre will present the bill before the National Development Council in October to get a broad consensus of chief ministers.