Maharashtra Cabinet Approves Higher Interest on Delayed Land Compensation
The Maharashtra state cabinet on Tuesday approved a proposal in Mumbai to pay an additional 1% interest to affected landowners whenever there is a delay in paying compensation for land acquired by the government for major infrastructure and development projects across the state.
According to an official government press release, the updated interest rate will now be set at 1% higher than the prevailing interest rate at which the Reserve Bank of India (RBI) provides loans to commercial banks.
An official stated that considering the critical urgency of several public projects and schemes, it frequently becomes necessary for the government to take advance possession of land. Because this land is handed over to the government before the final financial award is officially decided under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (LARR) Act, 2013, interest must be paid to affected persons for the entire delayed payment period.
An official noted that a notable difference previously existed between the interest rate provided under the old rules and the prevailing interest rates on standard bank loans. To address this gap, the state cabinet approved a formal amendment to Section 72 of the LARR Act, 2013. Under the amended section, interest will now be calculated and paid at a rate 1% higher than the benchmark rate at which the RBI lends to commercial banking institutions.
Government officials highlighted that delays in awarding compensation to landowners are frequently caused by bureaucratic red tape, inadequate coordination between local revenue departments and other government bodies, as well as delays in the release and allocation of land acquisition funds.
This policy decision comes at a time when the state government is executing extensive land acquisition drives across various regions. Among these key projects is the planned Mumbai 3.0 development, which will be spread over 323.44 square kilometres across 124 villages located in Uran, Panvel, and Pen tehsils.
In addition, the state is preparing to acquire approximately 15,000 hectares of land for the proposed Eastern Vidarbha Industrial Corridor. Land acquisition procedures are also currently underway for several other large-scale infrastructure initiatives, including the Vasai-Virar multimodal corridor, Vadhvan Port, and the Shaktipeeth Expressway.
