Mumbai: In a bid to rationalise interest payments and considering the mounting debt burden on the govt, the state cabinet on Tuesday approved a proposal to provide a uniform rate of interest in cases where compensation for land acquisition is delayed.
The Right to Fair Compensation and Transparency in Land Acquisition Act 2013 was adopted for acquiring land for various public, governmental, and semi-governmental projects. Due to the provisions in this law, landowners receive handsome compensation and rehabilitation, significantly reducing opposition. In rural areas, the compensation is four times the Ready Reckoner rate (RR rate) of the land being acquired, and in urban areas, it is 2.5 times the RR rate. For state highways, the compensation is five times the RR rate.
Further, the act stipulates that if there is a delay in paying compensation, landowners are entitled to 12% interest under Section 30(3) and 9% and 15% interest under Sections 72 and 80, respectively. However, this imposes a huge burden on the treasury and increases the original cost of projects.
The cabinet approved the introduction of a bill to bring in a uniform rate of interest, which will be 1 percentage point higher than the repo rate for banks. Sources said this will effectively bring down the interest to be paid to around 9%.
