New Delhi: Union transport ministry has decided on a ten-fold increase in the minimum compensation payable to road accident victims or their kin in case of death, permanent disability or minor injury irrespective of their income and age criteria. This order was revised after a gap of 24 years. The transport ministry, however, has left the option for people to pursue their case in the Motor Accident Claims Tribunal (MACT) if they believe they deserve higher compensation.

As per the new norms, to be notified soon, in case of a fatality in road accident the compensation will be Rs 5 lakh and for permanent disability it will be in the range of Rs 50,000 to Rs 5 lakh based on the extent of disability. This will increase by 5 per cent annually. This is being pushed as a move to provide quick relief to a large section of victims. Annually, 1.5 lakh people die while more than 5 lakh get injured in road accidents.

The higher compensation may also entail an increase in the third party premium outgo for vehicle owners.  Currently, the Motor Vehicles Act provides for Rs 50,000 compensation in case of death and Rs 25,000 for permanent disability as per the "no-fault liability" norm where the victim does not have to prove the negligence of the motor vehicle driver. This is binding on insurance firms. However, no victim accepts this and hence all cases go to the MACT.

In this case, the compensation is paid based on a structured formula under Schedule-II of the Act, which takes into consideration the age, income and number of dependants of the victim. Here, the victim has to establish the fault of the driver to get compensation. Though the MV Act provided for amending this structured formula from "time to time" keeping in view the increased cost of living, it was never revised.