The Gujarat government on 4 July 2025 announced a sweeping overhaul of its compensation policy for agricultural land affected by power transmission infrastructure, replacing the decades-old jantri-based valuation formula with a market-value-linked framework that pays farmers twice the prevailing market rate — and upfront in a single payment. The revision, declared from Gandhinagar, is among the most significant pro-farmer policy shifts in the state's power sector in recent years.

Key Changes in the Revised Policy

Under the earlier framework, compensation for transmission lines passing through agricultural land was pegged at 200 per cent of the jantri value — the government-notified benchmark rate, widely criticised for lagging actual market prices. The revised policy replaces this with compensation at twice the prevailing market value of the land, a shift that is expected to significantly increase payouts in areas where market prices have outpaced jantri valuations.

The calculation area for land occupied by electricity transmission towers has also been expanded. Previously, only the actual measured foundation area was compensable. Under the new rules, an additional one metre on all four sides of the tower base will be included. For a 765 kV transmission line, this means the compensable area rises from 625 square metres to 729 square metres.

Upfront Payment Replaces Instalment Model

A critical change concerns the timing of disbursements. Landowners previously received compensation in three tranches — 40 per cent at the foundation stage, another 40 per cent during tower erection, and the remaining 20 per cent after transmission wires were installed. Under the revised policy, eligible landowners will receive 100 per cent of the compensation in a single upfront payment, eliminating the financial uncertainty associated with staggered payouts.

Market Rate Committee to Determine Land Value

To determine land values under the new framework, the state government will constitute a Market Rate Committee (MRC). The committee will include the District Collector, representatives of landowners, the transmission service provider, affected farmers, and authorised market valuers representing farmers. Officials said the committee is intended to ensure that market values are determined 'in a transparent and impartial manner.'

The revised policy also specifies compensation for the Right of Way (RoW) corridor through which transmission lines pass. Based on the MRC-determined market value, compensation will be paid at 30 per cent in rural areas, 45 per cent in municipal areas, and 60 per cent in municipal corporation areas.

Political Leadership and Farmer Consultations

The decision was taken under the leadership of Chief Minister Bhupendra Patel and the guidance of Deputy Chief Minister Harsh Sanghavi, following consultations with farmers' organisations. Agriculture Minister Jitu Vaghani, Energy Minister Rushikesh Patel, and Minister of State for Energy Kaushik Vekariya were also involved in the deliberations. The state government said the revision was prompted by representations from multiple farmers' organisations seeking a more realistic basis for compensation.

Retroactive Benefits and Scope

Notably, farmers who had already received compensation under the earlier policy but whose transmission line projects are still under execution will also be eligible for benefits under the revised framework. The policy is expected to apply to power transmission projects involving electricity lines and towers across Gujarat. This comes amid a broader national push to accelerate grid expansion, making fair land compensation increasingly critical to project timelines.

With the MRC model set to be constituted and the upfront payment mechanism in place, the effectiveness of the policy will ultimately depend on how swiftly and transparently market valuations are conducted across districts.