Mahayuti to slash interest due to farmers for delay in land acquisition

MUMBAI: Struggling with financial instability, the Maharashtra government is trying to reduce expenditure wherever it can. This time it has decided to reduce the interest due to farmers for any delay in compensation for their land acquired for government projects.

The government, which was previously giving from 8% to 15% interest, has decided to make the interest rate uniform by making it 1% higher than the repo rate applicable to banks. The decision was taken in the state cabinet meeting held on Tuesday, and it will affect farmers whose land is acquired for government projects.

The government said that the decision would not only help in reducing the financial burden on the state exchequer but also the cost of the project. However, those whose lands are acquired stand to lose.

In 2013, in order to reduce the opposition of farmers and others to land acquisition, the central government adopted the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act. Its implementation significantly reduced the resistance to land acquisition, as project-affected persons (PAPs) began getting a fair sum of money as compensation.

The legislation not only increased the compensation amount but also allowed interest if the payment was delayed by the government for any reason. Sections 30 (3), 72 and 80 of the Act provide between 8% and 15% interest on compensation that is delayed. For instance, Section 80 states: “Provided that if such compensation or any part thereof is not paid or deposited within a period of one year from the date on which possession is taken, interest at the rate of fifteen per cent per annum shall be payable from the date or expiry of the said period of one year on the amount of compensation or part thereof which has not been paid or deposited before the date of such expiry.”

But the fresh decision taken on Tuesday by the state cabinet has changed the compensation formula. “The interest rates have been standardised. In case of delay in paying land acquisition compensation, interest will be paid at a single uniform rate, which will be one percent higher than the interest rate applicable to banks. The cabinet has approved the provision for charging annual interest at the new rate on overdue compensation,” said a release issued by the chief minister’s office.

A bill to make the amendment in the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act will be brought before the state legislature in its monsoon session.

In the run-up to the assembly polls last year, the Mahayuti alliance made several promises, a farm loan waiver being among the major ones. However, on March 30, finance minister Ajit Pawar announced that the state would not be waiving loans taken by farmers any time soon. It was the second election promise that the Mahayuti government reneged on after refusing to hike the payout under its flagship Ladki Bahin Yojana from ₹1,500 to ₹2,100 per month.