The proposed paper is an attempt to move the discussion beyond the question of compensation to a broader issue of how the state strategies intersect with the politics of constituting territories in the outlying areas of small towns. As the case studies elaborated in the paper illustrate the definition of compensation and views on it differ among the affected groups. Further, the act of land acquisition or even a rumor around it reverberates in the wider region and manifests as growth of real estate and in reconfiguration of property towards individual ownership model. The paper concludes with a review of existing conceptual categories around state and society, the nature of new institutions, and in this light the relevance legal rights versus political space to stabilize the territorial claims of relatively weaker economic and social groups.