India, Aug. 12 -- The state cabinet on Tuesday approved a new formula for calculating interest on delayed land acquisition compensation payable to farmers and other affected landowners, effectively reducing the interest they will receive. Under the revised policy, delayed compensation will attract interest at one percentage point above the Reserve Bank of India's (RBI) repo rate.

The government officials said the move was aimed at reducing the financial burden on the state exchequer by containing the escalation in project costs arising from interest payments on delayed compensation.

For infrastructure and development projects, the government often takes possession of land before the final compensation award is determined. Under the Righ...