3. Establishment of National Fund.— (1) With effect from such date as the Central Government
may, by notification in the Official Gazette, appoint in this behalf, there shall be established for the
purposes of this Act, a special Fund to be called the “National Compensatory Afforestation Fund” under
the public account of India.
(2) The National Fund shall be under the control of the Central Government and managed by the
National Authority in such manner as may be prescribed.
(3) On the date of establishment of the National Fund, all monies collected by the State Governments
and Union territory Administrations which has been placed under the ad hoc Authority and deposited in
the nationalised banks shall be transferred to the National Fund.
(4) There shall also be credited into the National Fund, by each State on yearly basis, ten per cent. of
the funds realised from the user agencies in respect of the forest land diverted in their favour, which have
been credited directly into the State Fund.
(5) There shall also be credited to the National Fund—
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(a) grants-in-aid received, if any, by the National Authority;
(b) any loan taken or any borrowings made by the National Authority;
(c) any other sums received by the National Authority by way of benefaction, gift or donations.
(6) The monies received in the National Fund shall be an interest bearing fund under public accounts
of India.
(7) The balance in the National Fund shall be non-lapsable and get interest as per the rate declared by
the Central Government on year to year basis.
4. Establishment of State Fund.—(1) With effect from such date as each State Government may, by
notification in the Official Gazette, appoint in this behalf, there shall be established for the purposes of
this Act, a special Fund to be called the “State Compensatory Afforestation Fund-......... (name of State)”
under public accounts of such State:
Provided that in case of Union territory having no legislature, such fund shall be established under the
public account of Union of India with effect from such date as the Union territory Administration may, by
notification in the Official Gazette, appoint in this behalf.
(2) The State Fund in each State shall be under the control of the State Government of such State and
managed by the State Authority of such State, in such manner as may be prescribed.
(3) There shall be credited into the State Fund of a State—
(i) the unspent balance of all monies which has been transferred by ad hoc Authority to the State
Compensatory Afforestation Compensatory Afforestation Funds Management and Planning Authority
constituted in such State in compliance of guidelines dated the 2nd July, 2009;
(ii) all monies transferable from the National Fund under clause (a) of section 5;
(iii) all monies realised from user agencies by such State towards compensatory afforestation,
additional compensatory afforestation, penal compensatory afforestation, net present value, catchment
area treatment plan or any money for compliance of conditions stipulated by the Central Government
while according approval under the provisions of the Forest (Conservation) Act, 1980 (69 of 1980);
and
(iv) the funds recoverable from user agencies by such State in cases where forest land diverted
falls within the protected areas, that is, areas notified under sections 18, 26A or 35 of the Wild Life
(Protection) Act, 1972 (53 of 1972) for undertaking activities relating to the protection of biodiversity
and wildlife.
(4) A State Government may also credit to the State Fund constituted by it—
(i) grants-in-aid received, if any, by the State Authority;
(ii) any loan taken or any borrowings made by the State Authority;
(iii) any other sums received by the State Authority by way of benefaction, gift or donations.
(5) The monies received in the State Fund shall be an interest bearing fund under public accounts.
(6) The balance in each State Fund shall be non-lapsable and get interest as per the rate declared by
the Central Government on year to year basis.
5. Disbursement and utilisation of National Fund.—Save as otherwise provided in this Act, the
monies available in the National Fund shall be disbursed and utilised in the following manner, namely:—
(a) ninety per cent. of the all monies collected by a State, which has been placed under the ad
hoc Authority and the interest accrued thereon, shall be transferred to the State Fund established in
such state under sub-section (1) of section 4;
(b) the balance ten per cent. of all monies collected by the States and Union territory
Administrations, which has been placed under the ad hoc Authority and the interest accrued thereon,
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and all fresh accrual to the National Fund, as provided in sub-section (4) of section 3, and the interest
accrued thereon, shall be utilised for meeting—
(i) the non-recurring and recurring expenditure for the management of the National Authority
including the salary and allowances payable to its officers and other employees;
(ii) the expenditure incurred on monitoring and evaluation of works executed by the National
Authority and each State Authority;
(iii) the expenditure incurred on specific schemes approved by governing body of the
National Authority.
Explanation.—For the purposes of this section, “scheme” includes any institute, society, centre of
excellence in the field of forest and wildlife, pilot schemes, standardisation of codes and guidelines and
such other related activities for the forestry and wildlife sector.
6. Disbursement and utilisation of State Fund.—Save as otherwise provided in this Act, the monies
available in a State Fund shall be disbursed and utilised in the following manner, namely:—
(a) the money received for compensatory afforestation, additional compensatory afforestation,
penal compensatory afforestation, catchment area treatment plan and for any other site specific
scheme may be used as per site-specific schemes submitted by the State along with the approved
proposals for diversion of forest land under the Forest (Conservation) Act, 1980 (69 of 1980);
(b) the monies received towards net present value and penal net present value shall be used for
artificial regeneration (plantation), assisted natural regeneration, forest management, forest protection,
forest and wildlife related infrastructure development, wildlife protection and management, supply of
wood and other forest produce saving devices and other allied activities in the manner as may be
prescribed;
(c) the interest accrued on funds available in a State Fund and the interest accrued on all monies
collected by the State Governments, which has been placed under the ad hoc Authority and deposited
in the nationalised banks, in compliance of the directions of the Supreme Court dated the 5th May,
2006, shall be used for conservation and development of forest and wildlife in the manner as may be
prescribed;
(d) all monies realised from the user agencies in accordance with the decision taken by the
Standing Committee of the National Board for Wild Life constituted under section 5A of the Wild
Life (Protection) Act, 1972 (35 of 1972) or the orders of the Supreme Court involving cases of
diversion of forest land in protected areas shall form the corpus and the income therefrom shall be
used exclusively for undertaking protection and conservation activities in protected areas of the State
including facilitating voluntary relocation from such protected areas and in exceptional circumstance,
a part of the corpus may also be used subject to prior approval of the National Authority;
(e) ten per cent. of amount realised from the user agencies, which has been credited directly into
the State Fund in a year shall be transferred to the National Fund to meet expenditure as provided in
clause (b) of section 5;
(f) the non-recurring and recurring expenditure for the management of a State Authority including
the salary and allowances payable to its officers and other employees may be met from a part of the
interest accrued on the amounts available in the State Fund, in the manner as may be prescribed;
(g) in case of trans-boundary forestry or environmental implication of diversion of forest land for
non-forest purposes in a particular State, if found expedient and necessary by the National Authority,
it may, in consultation with the concerned Sate Authorities order that such sum as may be justified for
reparation of the trans-boundary effects, be transferred to State Fund of such State or States;
(h) State Authority shall release monies to agencies identified for execution of activities in predetermined instalments as per the annual plan of operation finalised by steering committee of such
State Authority and executive committee of the National Authority.
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7. Accounting procedure.— The accounting procedure to regulate the manner of crediting the
monies to the National Fund and State Fund in a year shall be in such manner as may be prescribed.