The Compensatory Afforestation Fund Act, 2016
The Compensatory Afforestation Fund Act, 2016, Act No. 38 of 2016, dated 3 August 2016, was enacted by Parliament to establish national and state funds for money collected from agencies using forest land for non-forest purposes, and to create authorities to manage and use those funds. It came into force on 30 September 2018, originally extended across India except the State of Jammu and Kashmir, and was later made applicable to the Union territories of Jammu and Kashmir and Ladakh.
What the Act does
The Compensatory Afforestation Fund Act, 2016, Act No. 38 of 2016, dated 3 August 2016, creates a permanent system for holding and using money recovered when forest land is diverted or used for non-forest purposes. Parliament enacted the law following Supreme Court directions concerning the collection, protection, monitoring and transparent use of compensatory afforestation money.
The law provides for:
- A National Compensatory Afforestation Fund under the public account of India.
- A separate State Compensatory Afforestation Fund under the public account of each state.
- A National Compensatory Afforestation Fund Management and Planning Authority.
- A State Compensatory Afforestation Fund Management and Planning Authority for each state and Union territory.
- Budgets, accounts, audits, annual reports, monitoring and investment of the funds.
Who is affected
The Compensatory Afforestation Fund Act, 2016 directly concerns a user agency, meaning any person, organisation, company, Central Government department or State Government department that requests diversion or de-notification of forest land, or uses forest land for a non-forest purpose under the Forest (Conservation) Act, 1980.
For a property buyer or owner, the relevant question is whether the proposed land use involves forest land or requires its diversion or de-notification for a non-forest purpose. The supplied text does not impose a separate requirement on an ordinary property transaction that does not involve forest land.
Money covered and permitted uses
The National and State Compensatory Afforestation Funds receive amounts connected with:
- Compensatory afforestation and additional compensatory afforestation.
- Penal compensatory afforestation.
- Net present value of diverted forest land.
- Other amounts recovered from user agencies under the Forest (Conservation) Act, 1980.
- Biodiversity or wildlife protection where diverted forest land falls within a protected area.
The money may support plantations, assisted natural regeneration, forest protection, forest-related infrastructure, the Green India Programme, wildlife protection and related activities.
Fund management
The National Compensatory Afforestation Fund is controlled by the Central Government and managed by the National Authority. Money previously held through the ad hoc Authority must be transferred to it. Each state must credit ten per cent of funds realised from user agencies and deposited directly in its State Fund to the National Fund each year. The National Fund is interest bearing and non-lapsable.
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Common questions
Does this law apply when I buy ordinary private property in Tamil Nadu?
The supplied text does not create a separate obligation for an ordinary property purchase. It is relevant where forest land is requested for diversion or de-notification, or is used for a non-forest purpose.
Who must contribute money under this law?
The law concerns user agencies, including persons, organisations, companies and government departments seeking to divert or de-notify forest land, or using forest land for non-forest purposes under the Forest (Conservation) Act, 1980.
What can compensatory afforestation money be used for?
It may be used for plantations, assisted natural regeneration, forest protection, forest-related infrastructure development, the Green India Programme, wildlife protection and related activities.
Can money in the National Compensatory Afforestation Fund lapse?
No. The Act states that the National Fund is non-lapsable, interest bearing and earns interest at the rate declared by the Central Government from year to year.
