Government Proposes ₹2 Lakh Compensation Scheme for Road Accident Victims

The Government of India has introduced a long-awaited compensation plan for road accident victims, proposing ₹2 lakh for fatalities and ₹1 lakh for grievous injuries. The draft scheme, formulated under Section 164A of the Motor Vehicles Act, 2019, is now pending review by the Supreme Court of India.

Background: A Delayed Implementation

The proposal comes over three years after Parliament passed amendments to the Motor Vehicles Act in 2019 to ensure interim financial relief for victims of road accidents. Although the law was formally notified on April 1, 2022, the Ministry of Road Transport and Highways (MoRTH) had failed to frame a detailed implementation mechanism.

The delay prompted advocate Kishan Chand Jain to approach the Supreme Court. In April 2025, a bench led by Justice JB Pardiwala granted the Centre four months to finalise the compensation scheme—a deadline that lapsed on August 28, 2025. The draft scheme was filed with the apex court a day later, on August 29.

Proposed Compensation Structure

The draft scheme sets ₹2 lakh as interim relief for deaths and ₹1 lakh for grievous injuries resulting from road accidents. Key features include:

  • Coverage: Applicable only to future accidents after the scheme’s notification.

  • Payment Authority: Insurance companies of the offending vehicles will be responsible for payouts.

  • Timeline: Payments will be disbursed within 15 days of application approval.

  • Process: Claims to be filed through a government portal and processed by Motor Accident Claims Tribunals (MACT).

  • Adjustment Mechanism: Interim compensation will later be adjusted against the final MACT award.


Criticism of the Draft Scheme

While the scheme aims to provide immediate relief, concerns have been raised over its adequacy.

  • Advocate Kishan Chand Jain argued that compensation should match Section 164 figures—₹5 lakh for deaths and ₹2.5 lakh for injuries—rather than the reduced amounts proposed.

  • The scheme does not address accidents involving uninsured vehicles, a major gap given the large number of uninsured vehicles on Indian roads.

  • Victims’ families often face years-long delays in receiving full compensation, making higher interim relief critical.

Legal Proceedings and Timeline

During a September 1, 2025, Supreme Court hearing, the matter was adjourned until October to allow Jain and Senior Advocate Gaurav Agarwal (Amicus Curiae) to review the scheme. The MoRTH has circulated the draft to:

  • Ministry of Finance

  • Department of Legal Affairs

  • Insurance Regulatory and Development Authority of India (IRDAI)

These bodies have been asked to provide feedback by September 8, 2025.

Road Safety Statistics in India

The proposal comes amid alarming road safety figures. Government data submitted to the court highlights:

  • 460,000 road accidents reported in 2024.

  • 106,000 deaths recorded in these accidents.

  • 202,000 cases of grievous injuries registered.

The statistics underline the urgent need for an effective compensation mechanism, especially for families who lose their sole breadwinners in accidents.

Challenges Ahead

The proposed scheme marks a step forward in institutionalising interim relief, but its limited scope raises concerns:

  • Exclusion of uninsured vehicle accidents may leave many victims without relief.

  • The compensation amount is significantly lower than the statutory entitlement under Section 164, raising questions on equity and justice.

  • Implementation will require robust digital infrastructure and coordination among insurance providers, state governments, and MACTs.

Conclusion

The Supreme Court’s review of this draft scheme will determine whether India finally achieves a structured and timely relief framework for road accident victims. Given the high accident fatality rate, effective implementation could provide much-needed financial stability to affected families.

However, the scheme’s current form may require substantial revisions to ensure fairness, comprehensive coverage, and to meet the intent of the Motor Vehicles Act amendments.


Location: Pune, Maharashtra, India

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