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Forests cover 23% of our country’s geographical area. They have various areas reserved as wildlife sanctuaries and national parks. People of about 1, 73, 000 villages are dependent on forests for their livelihood directly.[1] They act as carbon sinks and water regime regulators and provide food, medicine, fabric, and habitat to many animals and human beings. Over decades, forests have been exploited vehemently due to which the government has penned down several laws for their protection. The following blog analyses the provisions of one such law called the Compensatory Afforestation Fund Act, (CAFA) 2016 which was made to simplify the collection and storage of funds received for compensatory afforestation (CA) activities. As per Section 2(d) of the Act, CA is afforestation done in lieu of the diversion of forest land for non-forestry use under the Forest (Conservation) Act, (FCA) 1980.[2]

Reasons For Making The Law

The Loksabha had first presented the Compensatory Afforestation Fund Bill in 2008 in the Parliament. After being passed in the lower house, it was moved to the Rajyasabha where it could not be passed. However, the report by the Comptroller and Auditor General (C&AG) titled “Compensatory Afforestation in India (21 of 2013)” recommended that the paradigm of CAMPA needed to be reviewed by the environment ministry and that the monies lying with ad hoc CAMPA should be transferred to India’s public account.[3] After that the Ministry of Environment developed another bill, which was passed in 2016 which know as Compensatory Afforestation Fund Bill 2015.


The CAFA puts in place the entire legal apparatus for implementing CA.  It establishes the National Compensatory Afforestation Fund (NCAF) under the country’s public account, which acts as a parallel budget for the forest department and, into which all monies deposited in the nationalized banks, collected by State and Union Territory administrations, and kept under the ad hoc Compensatory Afforestation Fund Management and Planning Authority (CAMPA) are to be credited.[4] Both the fund and management are to be formed at both the state and national levels. The states’ share in the funds was increased from 10% to 90%, and that of the Centre was decreased to 10%. The ad hoc CAMPA was formed upon the Supreme Court’s (SC) order of 5th May 2006, in the T. N. Godavarman Thirumulupad v. Union of India[5] case, for evaluation of compensatory afforestation activities and monitoring technical assistance. The CAFA gives statutory authority to CAMPA.[6]


In 2018, the Supreme Court pulled up the Central Government for not utilizing Rs.90,000 crore that had been set aside for environment regeneration and was a part of the Compensatory Afforestation Fund. This issue of the utilization of CAMPA funds had been raised in an affidavit filed by the chief secretary of Orissa which showed that the money from CAMPA funds was being falsely utilized for the renovation of bus stands and laboratories in colleges, construction of roads, etc. Justices Madan B. Lokur and Deepak Gupta said that the amount was used for purposes other than the activities it was collected for. There have also been several allegations by some experts that the 2016 Act reduces the access of tribal communities to forest resources due to forced plantation on their pastures, and relocation of their settlements which severely affects their livelihood. There were reports from various parts of India that CA was being carried out in breach of the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006 (or simply, FRA – Forest Rights Act) before the CAF Rules were released in 2018.[7]

According to Section 5 (2) of the Compensatory Afforestation Rules, 2018, a minimum of 80% of the funds deposited under Net Present Value (NPV – monetization of the environmental services that are provided to compensate for the forest area diverted for non-forest purposes) have to be spent for certain activities relating to wildlife and forest management, which include “assisted natural regeneration, artificial regeneration, silvicultural operations in forests, pest and disease control in forest, forest fire prevention and control operations, voluntary relocation of villages in the forest areas”, etc.[8]

The most alarming of these activities is mentioned in Section 5 (2)(h)[9], as per which the government can relocate forest-dwelling communities. The FRA does recognize the need for relocation rights in “inviolate areas for wildlife conservation” but necessitates some conditions for being resorted to:

  • The recognition and vesting of forest dwellers’ rights should be complete;
  • Their presence and activities should cause irreparable harm to wild animals and threat to their habitat;
  • Co-existence, as a reasonable option, should not be available;
  • A relocation package, that provides a reliable livelihood to the affected communities and fulfills their essentials as per various government policies and laws, should be prepared and communicated to the right holders;
  • The free and informed consent of the Gram Sabha needs to be obtained in written form;
  • No relocation can take place until facilities and land allocation at the settlement site are complete.[10]

These conditions, however, have not been specified in the Act of 2016. Only the word voluntary is mentioned, and there is no system for checking its compliance.

The Panchayats (Extension to the Scheduled Areas) Act, 1996 (PESA) grants the Gram Sabha authority to take decisions in 5th Schedule Areas (tribal majority areas in tribal minority states) and, according to Section 2 (k) of the CAFA, compensatory afforestation is to be carried out following the guidelines of the Forest (Conservation) Act, 1980.[11] However, the representation of forest-dwelling or tribal or local communities in the National CAMPA is practically non-existent. The Act also mentions the definition of a working plan but does not include that, in areas where community forest resource rights are being claimed under the FRA, the forest bureaucracy does not have any role in preparing a working plan (a plan for management, approved by the officials of the forest department).[12] It is the Gram Sabha, constituted under Rule 4(1) (e), which should do it.[13] The forest department is supposed to incorporate the Gram Sabha’s plan in its “working plan”.[14] The FRA is simply ignored by the CAFA and its rules. Some view the act as treating forests as some estate of the forest bureaucracy and as a U-turn on the FRA, 2006 which was made to rectify the historical injustice done by the colonialists to the forest dwellers. The CAFA Rules have limited the areas, in which the FRA can be applicable, to those where a patta (title) has been issued, which is only 3% of the area where the communities are likely to have interests. Already, the Act has been accused of violating tribal rights. Furthermore, there have been requests by several agencies to ignore or decrease the amount they have to mandatorily pay for compensatory afforestation activities.[15]


In September 2020, the Ministry of Mines had requested the Forest Advisory Committee (Ministry of Environment, Forest and Climate Change) for the exemption of the digging of exploratory boreholes from payment of NPV. The Forest Advisory Committee had rejected the Mine Ministry’s plea but had recommended that instead of charging NPV as per the percentage of total forest area (2-5%), it may be charged on a per borehole basis. Thus, the digging of as many as 25 exploratory boreholes is currently exempted from prior forest clearance. But, for projects with more than 25 such boreholes, a seismic survey, prior forest clearance, payment of NPV, etc. are mandatory. Projects like wind energy plants and underground mining have been given 50% exemption from NPV, and projects like building schools, hospitals, village tanks, etc. are completely exempted from paying NPV (which was Rs 10,43,000 per hectare in 2019 as per the environment ministry’s handbook on forest conservation rules).[16] The Compensatory Afforestation Fund Act, 2016 evidently simplifies the collection and storage of funds received from user agencies. However, activities carried out under it need regular monitoring because the threat of corruption looms large.

Author(s) Name: Paridhi Sharma (Symbiosis International (Deemed) University)


[1] ‘About CAMPA’ (Forest Clearance Portal, June 2013) <> accessed 14 November 2022

[2] Compensatory Afforestation Fund Management Act 2016, s 2(d)

[3] ‘The Compensatory Afforestation Fund Bill 2015’ (PRS Legislative Research, 2005) <> accessed 14 November 2022

[4] Compensatory Afforestation Fund Act 2016, s 3(3)

[5] T N Godavarman Thirumulupad v Union of India (1997) 2 SCC 267

[6] Compensatory Afforestation Fund Management Act 2016, s 8(1)

[7] Ishan Kukreti, ‘Supreme Court Pulls Up Centre For Not Using Rs.90,000 crore Meant For Environment’ (Down To Earth, 11 April 2018) <> accessed 15 November 2022

[8] Compensatory Afforestation Rules 2018, s 5(2)

[9] Compensatory Afforestation Fund Management Act 2016, s 5(2)(h)

[10] KB Saxena, ‘Compensatory Afforestation Fund Act and Rules: Deforestation, Tribal Displacement and an Alibi for Legalised Land Grabbing’ (2019) 49 (1) Social Change 23-40 <> accessed 15 November 2022

[11] Compensatory Afforestation Fund Management Act 2016, s 2(k)

[12] Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act 2006, s 3(1)(i)

[13] Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest rights) Rules 2007, s 4(1)(e)

[14]KB Saxena (n 9)


[16] Jayashree Nandi, ‘Oil Exploration in Forests Becomes Cheaper, Easier’ (Hindustan Times, 12 September 2020) <> accessed 14 November 2022