State cuts interest rate for delayed land acquisition compensation

MUMBAI: The state cabinet on Tuesday approved a new formula for calculating interest on delayed land acquisition compensation payable to farmers and other affected landowners, effectively reducing the interest they will receive

MUMBAI: The state cabinet on Tuesday approved a new formula for calculating interest on delayed land acquisition compensation payable to farmers and other affected landowners, effectively reducing the interest they will receive. Under the revised policy, delayed compensation will attract interest at one percentage point above the Reserve Bank of India’s (RBI) repo rate.

A file photo of Maharashtra BJP president Devendra Fadnavis with Nitin Gadkari and Sudhir Mungantiwar at a conference in Mumbai. (Vijayanand Gupta/HT photo)

The government officials said the move was aimed at reducing the financial burden on the state exchequer by containing the escalation in project costs arising from interest payments on delayed compensation.

For infrastructure and development projects, the government often takes possession of land before the final compensation award is determined. Under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, landowners are entitled to interest if payment of compensation is delayed.

“As the existing statutory interest rate differed from prevailing bank lending rates, the cabinet approved amendments to Section 72 of the act. Following the amendment, the interest payable on delayed compensation will be linked to the rate at which the RBI lends to commercial banks, with an additional one percentage point,” a release issued by the Chief Minister’s Office said.

Section 72 empowers the land acquisition, rehabilitation and resettlement authority to direct the district collector to pay interest where the compensation awarded is found to be lower than the amount legally due to the affected landowner.

“The revised policy clearly means that the delayed compensation is going to be much less than what the affected landowners have been receiving so far,” a revenue official pointed out.

In separate decisions aimed at boosting investment in the renewable energy sector, the cabinet approved a 25% concession in the land transfer fee for land purchased for renewable energy projects. It also granted a complete waiver of stamp duty on the transfer of such land between group companies and special purpose vehicles, with the objective of reducing project costs and accelerating implementation.