Compensation, Rehabilitation and Resettlement

In one line

Market value, multiplied in a rural area, plus the value of everything attached to the land, plus a solatium of the same amount again, and a separate award for what becomes of the family.

In the wording a student can write in an exam: section 26 requires the Collector to determine the market value of the land, taking the highest of the value specified for stamp duty, the average of the top half of the sale deeds of similar land in the vicinity in the preceding three years, and any consented amount for a private company or a public private partnership, and to multiply it by a factor specified in the First Schedule for rural areas; section 27 adds the value of all assets attached to the land; section 30(1) adds a solatium equal to one hundred per cent of the compensation; section 30(3) adds twelve per cent per annum on the market value from the date of the section 4(2) notification to the award or possession; and section 31 requires a separate Rehabilitation and Resettlement Award for every affected family, the entitlements being in the Second Schedule.

Market value, and the multiplier

Section 26(1) requires the Collector to adopt the higher of three figures: the market value specified in the Indian Stamp Act, 1899, for the registration of sale deeds in the area; the average sale price for similar type of land situated in the nearest village or nearest vicinity, ascertained from the highest fifty per cent of the sale deeds of the preceding three years; and the consented amount in the case of acquisition for a private company or a public private partnership.

Section 26(2) requires the market value so calculated to be multiplied by the factor specified in the First Schedule, which is one in an urban area and up to two in a rural area, depending on the distance of the project from the urban area, so that a rural landowner receives up to twice the market value before anything else is added.

Why a multiplier at all? Because the recorded market value of rural land in India is systematically understated, stamp duty being avoided, and because the sale deeds of the preceding three years reflect the price before the project was announced. The multiplier is a rough correction for a known undervaluation, and a student should say so rather than treat it as a bonus.

What is added

Section 27 requires the Collector, having determined the market value, to calculate the total compensation including all assets attached to the land.

Section 28 lists the parameters: the market value under section 26; the damage sustained by reason of the taking of standing crops and trees; the damage by severing the land from other land; the damage by injuriously affecting other property or earnings; the reasonable expenses of a compelled change of residence or place of business; the damage from the diminution of profits between the notification and the taking of possession; and any other ground in the interest of equity, justice and beneficial to the affected families.