Property Rights

Property rights are very complicated matter in India. Multiple agencies with high corruption index cripples the land market. To reform the sector urban development ministry is proposing few good plans.

The Times of India writes (3 September 2009)

After decades of missed economic opportunities and litigation logjam, the urban development ministry's initiative to overhaul the property rights
system comes as a welcome if belated development. The proposed property title system operating on the basis of a comprehensive triple-register system at the level of the city authorities as well as the resolution of obfuscated records has the potential to do away with much of the legal uncertainty that has plagued urban land markets in India. From a ranking of 36 in the International Property Rights Index (IPRI) in 2008, India has dropped sharply to 46 this year. This negative trend could cripple India's efforts to grow its economy rapidly.

The cornerstone of the IPRI is the correlation between a country's property rights system and its economic prosperity propounded by Hernando de Soto. Empirical evidence has borne it out since. Countries with robust property systems have been seen to have a per capita income up to as much as nine times greater than those without adequate legal protection. In India's case in particular, the relevance goes beyond just economic growth. The nexus of economic deprivation and political disenfranchisement has had dangerous consequences for stability and security. It is no coincidence that the poor yet resource rich eastern states where people have little to no stake in the land and natural resources are the epicentre of Naxalism.

This, however, suggests the initiative's limited scope. Given that it is under the umbrella of the Jawaharlal Nehru National Urban Renewal Mission and the comparatively easier logistics of implementing it in cities, the decision to start with urban areas is understandable. Economically as well, it makes sense given that these areas are expected to contribute about 65 per cent of the GDP by 2011. However, the other side of the equation that even by 2021, the urban share of the population is expected to be only 40 per cent illustrates why it is not enough. The World Bank has stressed the importance of land access and tenure security in alleviating poverty.

Initiatives modelled on the Bhoomi Keralam project in Kerala might be a good way forward. Computerising land records and utilising aerial photometry and GPS to feed a central database, it has been able to cut down the time taken for resurveys drastically. At the other end of the system, fast-track courts and gram nyayalayas at the panchayat level to deal with property litigation are a must as well. It is time India's legal system underwrote the marketable land rights of an individual that are the basis of economic growth.