The land issue | The financial express
The government must tackle its unfinished reform agenda to unleash the land market if its $1.4 trillion infrastructure-focused growth effort is to bear fruit. During his first term, he sought to amend the Land Acquisition, Rehabilitation and Resettlement Act by ordinance, but was unsuccessful due to political backlash. IIM-Ahmedabad’s new Farmland Price Index (ALPI) – developed in collaboration with digital farmland marketplace SfarmsIndia – should therefore be welcomed as the start of a process to free up the land market by removing uncertainty in the valuation of agricultural land. Better price discovery is needed to facilitate acquisition as the fair price of rural land – unlike well-functioning markets in cities – has proven elusive. The challenge at the village level is that transactions go unrecorded, reflecting distress sales that tell us more about the agrarian crisis and ongoing differentiation among farmers than about the rural land market.
The index would act as a reliable source for comparing land prices and assist in the potential conversion of agricultural land into real estate or industrial use. Some of the factors in determining the price of farmland include irrigation facilities, distance from the nearest town or airport, and proximity to an international airport. The index was developed for 107 districts in Andhra Pradesh, Telangana, Karnataka, Maharashtra, Tamil Nadu and Uttar Pradesh, and can easily be scaled up nationwide. According to IIM-A’s Prasant Das, this would help adopt more scientific measures to provide compensation for land acquisition.
A functioning land market is imperative as India is becoming less and less of an agrarian economy due to population shifting from villages to cities. This development process has been highly conflict prone as land acquisition is contested by villagers and tribals, who believe their land is acquired for a song. Land acquisition was a major factor in the abandonment of an FDI steel project in Odisha seven years ago. The project to make the cheapest car in the world also had to move to another state due to a land dispute. The high-speed rail project between Ahmedabad and Mumbai is still ongoing and land acquisition is not yet complete. The result is that although India has around 200 million hectares of agricultural land, acquisition remains contested ground.
While better price discovery through an ALPI is needed, it is equally important that other measures are taken to ensure the development of a land market in the country. Writing in The Print, Anirudh Burman argues for the need to improve the poor quality of land records, the absence of which creates grounds for endless litigation. The framework of restrictions on the transferability of land rights, depending on the type of land, the proposed use of the land and the professional or residential role of the interested buyer must also be addressed. Complex administrative procedures create obstacles that hamper the proper functioning of the land market. The Records Act of 1908 and state tax laws, for example, require the completion of two separate processes to effect a transfer of land. This, together with weak state capacity, results in endless delays. Any redesign will require rethinking these processes. An ALPI can initiate some of these desired changes to make land acquisition less conflict-prone.