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A Shift from the Decades-Old System
Addressing the media, Chief Minister Dr. Mohan Yadav highlighted that the previous system, in place since 2014, utilized "Factor 1," providing compensation that was approximately only twice the Collector Guideline Rate (Guideline Rate + 100% Solatium). However, as guideline rates often lagged significantly behind actual market values, farmers were not receiving fair prices for their land. Under the new "Factor 2" system, the compensation will effectively be 4x the Guideline Value, ensuring a more equitable and respectful return for the farmers' assets.
Comprehensive Consultation and Implementation
The decision follows a series of high-level interventions initiated by the Chief Minister on November 7, 2025. A specialized cabinet committee was formed on January 13, 2026, chaired by PWD Minister Rakesh Singh, along with ministers Chaitanya Kashyap and Tulsiram Silawat. The committee conducted extensive consultations with:
Farmers' Unions and Representative.
Public Representatives (MLAs and Ministers).
Industry Bodies such as FICCI, CII, and CREDAI.
Following these deliberations, the recommendation to move to Factor 2 was unanimously approved.
Direct Financial Impact on Rural Economy
The state currently sees an annual capital investment of ₹70,000 to ₹75,000 crore in infrastructure projects including roads, bridges, railways, and irrigation. The new compensation structure will have a massive financial impact:
Direct Benefit: Approximately ₹20,000 crore will now flow directly into the bank accounts of farmers, compared to the previous estimate of ₹10,000 crore.
Scope: The decision applies to all ongoing land acquisition projects and even pending cases where the final award has not yet been passed.
Beneficiaries: Data indicates that over 55,530 farmers across various departments like NHAI, MPRDC, PWD, and Irrigation are set to benefit from a total estimated compensation of ₹15,925.48 crore.
Accelerating Development By providing fair compensation, the government aims to reduce land-related disputes and expedite critical infrastructure projects. This move is expected to streamline the construction of dams, canals, expressways, and railway lines, ensuring they are completed on time.
Chief Minister’s Vision Reiterating his government's commitment, Chief Minister Dr. Mohan Yadav stated, "Madhya Pradesh will be prosperous only when the farmer is prosperous. Our government is committed to the respect, rights, and prosperity of farmers. This decision establishes a balance between development projects and the interests of the farmers".
This policy change is being viewed not just as a financial adjustment, but as a "Resolution for Farmer Respect" (Kisan Samman ka Sankalp), aiming to strengthen the rural economy and improve the standard of living for thousands of families across the state.
