The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, gave its approval for introduction of the Compensatory Afforestation Fund Bill, 2015 in Parliament during the current session.

 The proposed legislation seeks to provide an appropriate institutional mechanism, both at the Centre and in each State and Union Territory, to ensure expeditious utilization in efficient and transparent manner of amounts realised in lieu of forest land diverted for non-forest purpose. This would mitigate impact of diversion of such forest land.

 The proposed legislation also seeks to provide safety, security and, transparency in utilization of these amounts, which currently are being kept in Nationalised Banks and are being managed by an ad-hoc body. These amounts would be brought within broader focus of both Parliament and State Legislatures and in greater public view, by transferring them to non-lapsable interest bearing funds, to be created under public accounts of the Union of India and each State.

 The proposed legislation will also ensure expeditious utilization of accumulated unspent amounts available with the ad hoc Compensatory Afforestation Fund Management and Planning Authority (CAMPA), which presently is of the order of ₹ 38,000 crore, and fresh accrual of compensatory levies and interest on accumulated unspent balance, which will be of the order of approximately ₹ 6,000 crore per annum, in an efficient and transparent manner.

 Utilization of these amounts, will facilitate timely execution of appropriate measures to mitigate impact of diversion of forest land, for which these amounts have been realised. Apart from mitigating the impact of diversion of forest land, utilisation of these amounts will also result in creation of productive assets and generation of huge employment opportunities in rural areas, especially in backward tribal areas.

 Expenditure of the National CAMPA is proposed to be met from the funds to be retained in the National Compensatory Afforestation Fund (CAF) from the accumulated funds transferred to it by the ad-hoc CAMPA, and the funds to be transferred, on yearly basis, to the National CAF from a part of the funds credited by user agencies directly into State CAFs. The proposal, therefore, does not involve any additional expenditure on the Centre.

 The Bill provides for among other things:-

1. Establishment of the National CAF and the State CAFs to credit amounts collected by State Governments and Union Territory Administrations to compensate loss of forest land diverted for non-forest purpose.
2. Constitution of a National Authority to manage and utilise amounts credited to the National CAF.
3. Constitution of a State Authority in each State and Union Territory to manage and utilise the amounts credited to the State CAFs.
4. Establishment of a Monitoring Group to assist the National Authority in monitoring and evaluation of activities undertaken from amounts released from the National CAF and State CAFs.

Compensatory afforestation funds: establish national and state non-lapsable funds to transparently manage levies for forest diversion. The Bill creates non-lapsable interest-bearing National and State Compensatory Afforestation Funds to transfer accumulated balances from an ad-hoc body into public accounts, increase transparency, and ensure structured utilisation. It establishes a National Authority, State Authorities and a Monitoring Group to administer, manage and evaluate fund deployment, with fund flows designed to meet National CAF expenditure without additional central budgetary outlay and to promote mitigation of forest-diversion impacts, asset creation and rural employment.