“Buy land, they’re not making it anymore” – Mark Twain
Twain’s pithy quote rings a conflicting note in the India of today. Land remains one of the most prized physical assets; its non-diminishing economic value increases manifold when it or even its surroundings are developed. As cities grow and the need for capacity building in infrastructure and providing land for economic activities increases, governments have had to resort to acquiring land owned by private citizens.
Land acquisition has been a contentious policy arena, as it largely falls under individual states which have typically followed the compulsory acquisition route, with compensation based on the land reference rates determined in each state and municipality by the local authorities. These reference rates are invariably anomalous and largely de-linked from market realities. In certain cases, the state governments have auctioned such acquired land to private parties for much higher prices than the meagre compensation paid to the original landowners.
In short, the economic benefits arising from land have historically been appropriated by the government, its agencies or private parties. The interests of the original title-holders have been marginalised. Despite different compensation formulae devised by different states, land acquisition has so far remained a contentious issue, and has of late spawned numerous people’s movements, public interest litigations and protests over the denial of the benefits arising from such land to its first owners.
This murky scenario has prompted the governments to look at alternate methods of sourcing and developing land which allows the landowners to partner in and benefit from the development process. Enter the concept of ‘land pooling’.
What Is Land Pooling?
Land pooling results in equitable and efficient land development. It is actually a means of readjusting uneven land distribution by bringing fragmented land holdings together to constitute a larger land parcel. Consequently, infrastructure is developed on the land, and it is then returned to the original owner/s after applying a formula. This formula compensates the authority or the entity which undertook the development for the infrastructure and other provided services by allowing them to sell or retain a part of the original land.
Though seemingly complicated, this approach is actually a highly effective way of achieving development while simultaneously promoting social justice. Land pooling involves participation of the national and state governments for policy formulation, notifications, approvals and creation of operational norms. The local agency will receive blanket assistance from various government departments, and is responsible for creating a proper land valuation mechanism to encourage the participation of land owners.
In this manner, land pooling creates an ecosystem for planned development through infrastructural projects supporting urban area growth, and is an efficient means of combining smaller, irregular land holdings into larger, developed wholes which can serve as new urban areas. By turning landowners into stakeholders in land development through unlocking of their land value and passing on the majority of the benefits to them, the state creates a model of social empowerment and growth while ensuring sustainable development.
· The land pooling process incentivises the private sector to become a willing participant in development
· It does way with bottlenecks of long land acquisition negotiations, and heavy compensation monies
· The state also benefits by saving money which it would otherwise have spent on compensation pay-outs
· More importantly, the state can avoid legal wrangles related to rehabilitation and resettlement of dispossessed land-holders, and protests which can arise from the forcible or compulsory land acquisition method.
· The land pooling concept helps unlock previously fragmented land holdings and free up additional land which, in semi-urban and urban fringe areas, can be effectively utilised for creating affordable, low-cost housing through development norms which may be prescribed as part of this policy
· It also allows for creation of newer centres for commercial growth, thus helping to create employment opportunities.
Finally, the land pooling method also leads to a robust way to create and maintain land title ownership records. This, in turn, creates a transparent registry system, which will even enhance land revenues for the local bodies to undertake more projects for public benefit.
With apologies to Mr. Twain, a more constructive approach to solving India’s land acquisition conundrum would be: "Don’t buy land, pool it – the developed whole makes more sense than the sum of its fragmented parts."
Author: Rohan Sharma, Associate Director – Research & REIS, JLL India