The Fourth Plate

How Kerala’s Paddy-Protection Fund
Was Drained of Purpose

The money was meant to save Kerala’s paddy fields. Instead, it vanished – quietly, legally, and in plain sight.

Between 2008 and 2024, the Government of Kerala collected ₹1,510 crore from landowners and developers seeking permission to convert paddy fields and wetlands. The levy was framed as compensation for irreversible ecological loss—a cost imposed by law to slow the steady erosion of the state’s agricultural base.

The promise was straightforward: if land had to be lost, the money would be used to restore other paddy fields, conserve wetlands, and support farmers. The law even gave the money a name – the Agricultural Promotion Fund (APF) – and ring-fenced it to ensure it could not be absorbed into general state spending. But it never reached the fund at all.

On 28 November 2024, the Kerala High Court, in T.N. Mukundan v. State of Kerala, delivered a judgment that laid bare the gap between legislative intent and administrative practice. The court found that the state had failed to transfer even a single rupee of the conversion fees into the Agricultural Promotion Fund. Instead, the entire sum had been routed into the Consolidated Fund of the state and spent for purposes unrelated to agriculture—an act the court described as a “blatant bypass” of the law.

What emerged was not merely a case of accounting failure, but a window into how environmental protections are dismantled—not through repeal, but through neglect, delay, and financial sleight of hand.

A law born of agricultural decline

The Kerala Conservation of Paddy Land and Wetland Act, 2008 was enacted at a moment of reckoning. Paddy cultivation in Kerala had collapsed from more than 800,000 hectares in the 1970s to roughly 200,000 hectares by the early 2000s. Once-continuous rice landscapes were being fragmented and replaced by apartments, malls, IT parks, and gated communities.

The Act’s preamble is unusually explicit. It speaks of “indiscriminate and uncontrolled reclamation” and warns of the threat posed to food security and ecological balance. The legislation was meant to draw a hard line: paddy lands and wetlands were no longer expendable by default.

The Agricultural Promotion Fund was designed as the law’s financial backbone. Under Section 27A, conversion fees were to be:

• deposited into a dedicated fund,
• managed by the Land Revenue Commissioner,
• and used exclusively for restoration, conservation, and agricultural promotion.

The intent was clear. If conversion could not be stopped entirely, its costs would be internalised and redirected toward safeguarding what remained.

Two amendments that further
tilted the table away from farmers

While the Kerala Conservation of Paddy Land and Wetland Act, 2008 was conceived as a protective statute, two subsequent amendments fundamentally altered how the law operates on the ground – changes that critics argue have made it less farmer-friendly and more conversion-accommodating.

1. From Prohibition to “Pay-and-Convert”

The first shift emerged through the introduction and operationalisation of Section 27A, treated by courts as coming into force in 2017–18. This provision created a formal route for converting so-called “unnotified land” by applying to the Revenue Divisional Officer (RDO) and paying a prescribed fee.

In effect, the law moved from a prohibition-first framework to a permission-and-payment model. While presented as a regulated exception, Section 27A normalised land conversion as an administrative process—one that disproportionately favours those with capital, legal access, and project scale. Small farmers, meanwhile, faced new procedural hurdles, including technical demarcations, water-conservancy requirements, and prolonged approvals, often without comparable legal or financial capacity.

The shift also weakened the deterrent effect of the original Act. Once conversion became routinised through applications and fees, the balance tilted away from preserving agricultural land toward managing its orderly disappearance.

2. Widening Authority, Diluting Accountability

The second change came through Act 12 of 2024, officially titled the Kerala Conservation of Paddy Land and Wetland (Amendment) Act, 2023. This amendment expanded the definition of “Revenue Divisional Officer” to include any officer not below the rank of Deputy Collector authorised by the government.

On paper, this was framed as an administrative efficiency measure. In practice, it broadened the pool of decision-makers empowered to approve conversion-related actions. Critics argue that this diffuses accountability, increases district-level inconsistencies, and makes it harder for farmers to identify—and challenge—the authority responsible for decisions affecting their land.

Taken together, these amendments reflect a deeper transformation of the Act: from a law designed to protect paddy lands and farming livelihoods, to one increasingly structured to process and legitimise their conversion.

What the government admitted in court

The Public Interest Litigation filed by T.N. Mukundan, a private citizen, who was vilified by corporate lobbies, forced the state to disclose what it had never proactively clarified.

In an affidavit before the High Court, the government admitted that:

• ₹1,510 crore had been collected as conversion fees,
• ₹0 had been transferred to the Agricultural Promotion Fund.

The defence was fiscal stress. Kerala, the state argued, was facing severe financial constraints and had therefore used the money for general expenditure.

The court rejected this argument outright. Financial difficulty, it held, does not permit the executive to override a statutory mandate. The diversion of funds was not a policy choice; it was illegal.

Even more revealing was how little of the money had been used for its stated purpose. The court noted that only about ₹6 lakh—less than 0.001% of the total collected—had been spent on actual land restoration. Meanwhile, other expenditures, including vehicles and equipment, had been incurred without clear justification.

Orders with deadlines and a year of silence

The High Court’s judgment was unusually precise. It directed the government to:

• credit 25% of the collected amount to the APF within four months,
• transfer the remaining 75% in three equal instalments at four-month intervals,
• ensure all future conversion fees are deposited directly into the fund,
• and conduct annual audits, to be published online.

Yet by late 2025, there was no public confirmation that the repayment schedule had been completed. Instead, reports emerged that the High Court had initiated contempt proceedings against senior IAS officers for alleged non-compliance with its order.

At the same time, the state continued to approve large financial commitments elsewhere—borrowing ₹1,500 crore for housing schemes and allocating ₹100 crore for paddy procurement—without publicly addressing the court-mandated restoration of the Agricultural Promotion Fund. The absence of explanation has become part of the story.

Amid the uncertainty, a specific observation has surfaced (cited by a source who secured the information via RTI): that ₹50 lakh was allocated to the Kerala Remote Sensing Agency, allegedly sitting under the Chief Minister’s office, in addition some other minuscule allocations from the Fund. No government order, treasury transfer record, or budget document has been located to substantiate this claim.

The lack of transparency, however, raises a broader question: when funds meant for agriculture disappear into opaque financial systems, who tracks their afterlife?

From Directions to Defiance: Court Admits Contempt Case

In late November 2025, the Kerala High Court escalated the ₹1,510-crore dispute from judicial warning to enforcement, admitting contempt proceedings over the state’s failure to act on its earlier directions.

The petition, moved by T. N. Mukundan and argued by Senior Advocate Sri. Renjith Thampan along with Advocates V. M. Krishnakumar and Maya M., contends that the government wilfully disregarded the court’s binding order requiring conversion fees to be credited to the Agricultural Promotion Fund. In Con. Case (C) No. 2554 of 2025, the court recorded that its 28 November 2024 judgment—laying down a phased transfer schedule for the funds—had not been complied with.

The contempt proceedings name five senior officials: the Chief Secretary, the Revenue Secretary, the Finance (Expenditure) Secretary, the Agricultural Production Commissioner, and the Land Revenue Commissioner, signalling that the issue is no longer framed as a departmental lapse but as a top-level administrative failure. The court also noted that it had not been informed of any challenge to the 2024 judgment, underscoring that the directions remained binding.

What makes the contempt order especially consequential is how it captures the state’s posture a year after the original ruling. The court observed that the time-bound directions—25% transfer by 28 March 2025 and the remaining 75% by 28 November 2025—had not been met, and that instead of seeking review or an extension within time, the judgment had been “simply ignored.”

It further noted that a counter affidavit filed by the Finance Department raised arguments on the merits of the judgment that effectively amounted to seeking a backdoor review, including a late-stage contention that the government should be absolved from transferring ₹1,678.66 crore.
Finding prima facie wilful non-compliance, the High Court admitted the contempt petition, framed charges against each respondent, and listed the matter for further hearing from 5 January 2026—a procedural escalation that turns the “missing money” question into a direct test of whether court-ordered environmental governance can be enforced at all.

Regulation meets resistance

The fund controversy did not unfold in isolation. It ran parallel to a sustained legal campaign by powerful interests seeking to dilute the costs and constraints of land conversion.

Developers, commercial entities, and religious institutions challenged conversion fees, arguing that they were excessive or unconstitutional. In January 2025, the Kerala High Court struck down the ₹100-per-square-foot levy on large constructions over converted land—a ruling that removed a key financial deterrent against large-scale development.

At the same time, the Supreme Court, in State of Kerala v. Moushmi Ann Jacob, reaffirmed the legislature’s intent to discourage large conversions, holding that conversion fees must apply to entire landholdings, not merely the portion exceeding statutory thresholds.

Together, these judgments underscore a tension at the heart of Kerala’s land governance: environmental regulation exists, but it is constantly contested, narrowed, and reinterpreted.

What the ground reveals

Across the state, the consequences of this legal and financial ambiguity are visible.

In Puzhakkal, Thrissur, revenue authorities relied on satellite imagery to establish that nearly 19 acres of wetlands linked to the Sobha City project developed by Sobha Developers had been filled after the Kerala Conservation of Paddy Land and Wetland Act came into force. Government orders subsequently directed the reconversion of the land—an official acknowledgment that paper classifications and land-use records can diverge sharply from physical reality on the ground.

In Thrissur, litigation around a proposed shopping mall by Lulu Group hinged on whether land described as “converted” was, in fact, still under paddy cultivation until recent years: again turning on satellite evidence rather than local revenue records.

In Thiruvananthapuram, the expansion of Technopark Phase III proceeded over identified wetlands under a “public purpose” exemption, illustrating how statutory protections bend when economic priorities intervene.

Each case is presented as exceptional. Taken together, they reveal a pattern: the gradual normalisation of conversion, justified retrospectively and regularised financially.

What Happens When Floodplains
Are Treated as Vacant Land

The documentary record from Thrissur makes clear that what is at stake in Puzhakkal is not merely agricultural land, but critical flood infrastructure. Official complaints submitted to the district administration describe the 30-acre site as lying at the centre of the Puzhakkal paddy fields, a natural basin that absorbs monsoon runoff from large parts of Thrissur city.

These fields function as a seasonal water-retention system, moderating flood peaks and preventing overflow into surrounding low-lying neighbourhoods. The documents warn that reducing this water-holding capacity—through landfilling or construction—would inevitably intensify urban flooding, particularly during extreme rainfall events that have become more frequent in recent years.

The same records allege that permission for an industrial park was granted without a meaningful assessment of ecological conditions or disaster risk, despite the site’s role as a hydrological convergence zone where multiple rivers, canals, and drainage channels meet.

Invoking Section 30 of the Disaster Management Act, 2005, the complainant called for all follow-up activities to be halted and for the approval order to be reviewed. Satellite imagery and technical studies appended to the complaint reinforce this warning: obstructing the natural spread and storage of floodwaters in the paddy fields accelerates runoff, pushing large volumes of water into densely populated urban areas in a short time.

Time to ask tough questions

In the Lulu Thrissur case, the Kerala High Court did not close the door on conversion: it ordered it reopened, carefully. By directing the authorities to conduct a fresh, evidence-based review within four months, the court signalled that earlier decisions were procedurally and substantively inadequate, particularly in their reliance on land records that conflicted with satellite imagery showing continued paddy cultivation until as recently as 2022. 

That deadline now expires in days. What remains unclear is whether the promised reassessment will meaningfully re-examine ecological facts on the ground, or simply repackage earlier conclusions under a new administrative cover. As the clock runs out, the critical question is not whether a report will be submitted but what kind of report it will be, whose data it will trust, and whose interests it will ultimately serve.

10 questions as the deadline expires

1. Will a new remote-sensing survey be conducted, or will authorities rely on previously submitted satellite data already questioned by the court?
2. What time series of satellite imagery will be used and will it include images up to 2024 to rule out post-litigation alterations on the ground?
3. Who is commissioning and validating the remote-sensing analysis: a neutral government scientific body, or an agency engaged through the project proponent?
4. Will the new report explicitly reconcile contradictions between land-use records, databank entries, and satellite imagery noted in the judgment?
5. Has the Village Officer / Agricultural Officer submitted updated field reports, and will those reports be made public?
6. What hydrological assessment will accompany the review, given the court’s concern about continued paddy cultivation and flood vulnerability?
7. Has Lulu Group submitted a fresh position or representation, and if so, does it acknowledge the court’s finding that the land remained cultivable until recently?
8. Will the review address cumulative impact, or will it again treat the site as an isolated parcel divorced from surrounding paddy systems?
9. What safeguards exist to prevent post-hoc “regularisation”, where a new report merely legitimises a predetermined outcome?
10. If the four-month deadline is missed or the report is inadequate, will the government disclose this openly—or wait for further judicial intervention?

Editor’s note

This investigation is based on court judgments, official affidavits, and contemporaneous reporting. Allegations not supported by documentary evidence have been explicitly identified as such. Further reporting, including RTI-based verification, is ongoing.