Bengaluru: The Karnataka government’s decision to increase compensation for land earmarked for an Integrated Solid Waste Management (ISWM) unit on Bengaluru’s outskirts has drawn sharp objections from the Finance Department (FD), which has warned that the move could set a risky precedent for future acquisitions and distort the state’s land pricing mechanism.

Cabinet nod for 11% hike triggers alarm

The controversy stems from a Cabinet decision last week approving an 11 per cent increase in compensation for 60 acres of private land to be acquired from Terra Firma Biotechnologies Ltd for the ISWM project in Bengaluru Rural district.

In May, the government had cleared plans for setting up a large ISWM facility to address Bengaluru’s mounting waste management crisis. The project requires 134 acres and 10 guntas of land, of which 46 acres are government-owned, 60 acres belong to Terra Firma, and the remaining 28 acres are privately owned by different parties.

The Price Determining Committee (PDC) had fixed the land value at ₹1.35 crore per acre, as per the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. However, in October, Terra Firma wrote to the government stating that it would agree to the acquisition only if the rate was revised to ₹1.57 crore per acre.

Finance Department opposes deviation from approved rate

In a note accessed by The Indian Express, the Finance Department strongly objected to the Cabinet’s decision, stating that the proposal “explicitly overrides the official Price Determining Committee’s rate of ₹1.35 crore per acre” and “undermines the established legal and valuation process” under the Land Acquisition Act.

The FD cautioned that agreeing to a higher rate based on negotiation rather than valuation “compromises the integrity of the state’s pricing mechanism” and “could open the floodgates for similar demands from landowners in other government projects.”

“Intangible benefits” not a valid ground, says FD

The Bengaluru Solid Waste Management Limited (BSWML) had justified the hike citing “intangible benefits” such as the site’s suitability for waste processing, existing infrastructure, and public acceptance due to its prior use as a landfill between 2008 and 2016.

However, the FD rejected this reasoning, stating that such factors were “neither quantifiable nor standardised under any financial rule.” It noted that these “intangible benefits” cannot serve as grounds for overriding a rate determined by the Price Committee, adding that the “negotiated rate of ₹1.50 crore per acre may become the new benchmark for all land deals in Bengaluru Rural district.”

Government cites urgency amid landfill crisis

Officials involved in the project have defended the Cabinet’s move, citing the urgent need to establish a new solid waste management unit with the Bellahalli landfill nearing full capacity within a year. The government has argued that acquiring the Terra Firma land — which already hosted a waste processing unit earlier — would expedite project implementation, as the site is both technically viable and socially acceptable.

The Bengaluru Solid Waste Management Limited had urged that the “slight premium” in compensation be viewed as a pragmatic decision to avoid future legal disputes or acquisition delays that could stall waste management operations in the city.

Risk of fiscal implications across departments

Despite the justification, the Finance Department has maintained that granting exceptions based on one case could inflate land acquisition costs statewide, as departments might face pressure to match or exceed the new rate. “This precedent could be cited by landowners across sectors, leading to escalated project costs and fiscal strain,” the FD noted in its internal communication.

The note concluded that the decision “weakens the institutional checks built into the land acquisition process” and recommended that the state reconsider its approval of the enhanced compensation.

The final decision on whether the higher compensation will stand is expected to be revisited by the Cabinet subcommittee in the coming weeks.