How does compensatory afforestation funding work in India, and why is so much of it unspent?

Where the money comes from

When forest land is diverted to a non forest use, such as a mine, a road or a dam, the user agency pays for it. Under the Compensatory Afforestation Fund Act, 2016, those payments go into a State Fund held in the public account of each state. They include:

• Compensatory afforestation, paying for trees to be planted on other land to replace the forest lost.
• Net present value, paying for the value of what the forest provided and will no longer provide.
• Catchment area treatment and other conditions attached to a clearance.

Both the State Funds and the National Fund are interest bearing and non-lapsable, so money not spent in one year stays in the fund. Ten per cent of fresh receipts goes to the National Fund each year, and ninety per cent stays with the state.

The Act received assent on 3 August 2016. The Rules were notified on 10 August 2018, and both came into force on 30 September 2018. Before that, the money had been held since 2006 by an ad hoc authority set up under Supreme Court direction.

What it can be spent on

The Act ties each kind of money to a purpose. Compensatory afforestation and catchment money goes to the site specific scheme it was paid for. Net present value goes to forest and wildlife work: planting, assisted natural regeneration, protection, fire control, soil and moisture conservation.

The 2018 Rules split the net present value money:

• Not less than 80 per cent for forest and wildlife management.
• Not more than 20 per cent for infrastructure and capacity, such as nurseries and buildings for front line staff.

They also list what it may not pay for, including salaries, travel, foreign visits, vehicles for officers, furniture, air conditioners, zoos and safaris, and the lease, hire or purchase of land for afforestation.

Money is released in instalments against an annual plan of operations, which the state submits by 31 December for the following financial year and which is approved at the national level.

How much has been transferred and used

On 28 January 2019, with Supreme Court approval, Rs 54,685 crore held by the ad hoc authority came under the control of the Government of India. On 29 August 2019, Rs 47,436 crore was handed to the 27 states and union territories that had opened accounts by then.

That Rs 47,436 crore is still often quoted as the size of the fund. It was the first tranche. The Supreme Court’s Central Empowered Committee, in a report dated 11 July 2025, records Rs 78,630 crore transferred to states and union territories up to 31 December 2024.

The same report records, for 2018-19 to 2024-25 up to December 2024:

• Annual plans approved: Rs 50,264.24 crore
• Released by state governments to forest departments: Rs 36,744.96 crore
• Utilised by forest departments: Rs 26,276.01 crore

In March 2026 the Ministry told the Lok Sabha that Rs 12,515.30 crore was unutilised as on 31 March 2025, naming delay in release by state governments to their forest departments as one reason.

Compensatory afforestation achieved on the ground, as reported to the Lok Sabha in August 2026, has fallen each year since 2021-22, from 41,826.71 hectares that year to 22,146.23 hectares in 2024-25.

Why it goes unspent

The official record names five causes, and they reinforce each other.

Land. Compensatory afforestation needs land to plant on. The Comptroller and Auditor General found in 2013 that only 27 per cent of the non forest land due for compensatory afforestation between 2006 and 2012 had been received, and planting had happened on 7 per cent. The Parliamentary Standing Committee had already noted that land for compensatory afforestation cannot be acquired under the land acquisition law. Later state audits of Uttarakhand and Odisha found no land bank had been built. The Rules bar using net present value money to lease or buy land for afforestation.

The plan cycle. Nothing is released without an approved annual plan. Audits found plans submitted late, and in Odisha funds released in the middle of the year, after the June and July planting season had passed. A planting season missed is a year lost.

Release through state budgets. The Central Empowered Committee observed that many states route these funds through the same budget process as their own resources, adding steps between the fund and the forest division.

Capacity. The same report found State CAMPA offices understaffed and their committees meeting irregularly.

Spending caps. National CAMPA has asked states to plan around 20 per cent of available net present value money each year, and 10 per cent of interest. A letter of 25 May 2026 allows these to rise to up to 30 and 20 per cent for 2026-27, subject to approval. Part of the balance is unspent by design, as a reserve that keeps earning interest.

What the audits found on quality

Spending is one test. Survival is the other. The audit of Uttarakhand, Report No. 5 of 2024, records an average plantation survival of 33.51 per cent against a mandated 60 to 65 per cent, and Rs 13.86 crore spent on activities the Rules do not allow. In August 2026 the Ministry told the Lok Sabha it does not maintain a central database on sapling survival.

That is the gap that matters most for anyone doing this work. Money released and money utilised are both measured. Trees alive five years later are, at national level, not.

Accredited compensatory afforestation

The Van (Sanrakshan Evam Samvardhan) Rules, 2023 add a route that uses land outside government forest. A person who has established afforestation on land free of encumbrances and outside the Adhiniyam can offer it against a user agency’s compensatory afforestation obligation, if:

• the area is at least one hectare
• canopy density is 0.4 or more
• the trees are at least five years old

The land is then handed to the Forest Department and notified as protected forest. Entities doing this register with the Green Credit Registry.

This changes who can supply compensatory afforestation. It also means the land leaves its owner’s hands, which is a different arrangement from a long lease and needs to be priced as one.

What this means for degraded land

The shortage the audits keep naming is land that can be planted and is free to plant on. Degraded land restored on long lease addresses part of that shortage. Accredited compensatory afforestation is one route where established, measured planting on such land can meet an obligation, with the land transferred at the end.

Our approach is to measure survival on a fixed schedule from the first season and publish it, because survival is the figure the national record does not yet hold. How we choose land and the terms we ask for are on the land restoration page. The change to plantation on forest land in January 2026 is covered separately in private plantations on forest land.

CAMPA guidelines and ceilings are revised often. Confirm the current position with National CAMPA and the State Authority before relying on this page.

Related questions

What is CAMPA?

CAMPA is the Compensatory Afforestation Fund Management and Planning Authority. Under the Compensatory Afforestation Fund Act, 2016, there is a National Authority managing a National Fund in the public account of India, and a State Authority in each state managing a State Fund in that state's public account. The money comes from payments made when forest land is diverted to non forest use.

How much CAMPA money has been transferred to the states?

A report of the Supreme Court's Central Empowered Committee dated 11 July 2025, annexing a National CAMPA report, records Rs 78,630 crore transferred to states and union territories as their 90 per cent share up to 31 December 2024. The often quoted figure of Rs 47,436 crore was the first tranche handed over on 29 August 2019, not the size of the fund.

Can a private company earn compensatory afforestation credit?

The Van (Sanrakshan Evam Samvardhan) Rules, 2023 provide for accredited compensatory afforestation. A person who has established afforestation on land outside the Adhiniyam, free from encumbrances, of at least one hectare, with canopy density of 0.4 or more and trees at least five years old, may offer it against compensatory afforestation obligations. The land is handed to the Forest Department and notified as protected forest.