Mend land policy to push realty, infrastructure

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Vinod Behl | 20 Aug, 2012
The relaxation of rules by the Prime Minister's Office (PMO) on transfer of government land in a bid to speed up public-private partnership (PPP) projects in infrastructure sector is, indeed, significant. Especially so when economic growth has dipped to a 9-year low, amid infrastructure and realty projects hanging fire due to delayed approvals.

Last year, the government had put a condition to make cabinet nod a must for transfer of government land to any entity. The recent waiver of such cabinet approval will cut delays, putting infra projects on fast track.

Land availability has been a major hurdle in infrastructure development. But for this bottleneck, India's economic growth can jump two percentage points. It is hoped the recent policy move will help free up hundreds of thousands of hectares of government land, putting it to productive use.

Indian Railways alone has over 400,000 hectares of land, with about a tenth of that lying vacant. With the recent progressive policy initiative, the Rail Land Development Authority (RLDA), besides numerous state-run enterprises, will be able to develop their vast tracts of land lying idle.

Along with putting unused government land to use, there is also the need to end excessive and wasteful acquisition land by government bodies. Most of them have acquired land much in excess of their requirement, a lot of which is lying vacant. There is an urgent need to check this unregulated and excessive acquisition through a well-defined atlas of land use for different categories.

Infrastructure development and connectivity also provides a major boost to real estate development, leading to appreciation in property prices. But the absence of a land policy is creating artificial scarcity of land, resulting in undue hike in the prices of land which is a major cost component in housing.

All this is leading to severe shortfall in housing supply. What is worse is that state-level urban development bodies -- instead of performing their defined role to provide affordable housing to masses -- are choking the supply by their monopolistic control over land.

Combined with rigid zoning norms in master plans, they are causing the holding-up of land. Not just that, they are also pocketing profits by auctioning the land at abnormally high rates, making houses unaffordable for the masses.

In this backdrop, there is a need for a proper land policy to push supply. This has to be in line with the housing policy, as land is the most expensive component of housing and short supply is not only pushing up costs but also severely hitting mass housing programmes.

Restrictive land use policies are impediment to urban growth. Therefore, the need is for a well-defined and a well-regulated land policy aimed at optimum use of land. It is also important that floor space index -- which, in simple terms, determines what proportion of land can be used as built-up area and how much should be left vacant -- is also increased.

With reforms in the various enactments on rent control and proper policy on renting of housing, one can not only plan how much land is required in the future, but also push private investment into mass housing.

Much of the current mess has a lot to do with opaque land acquisition rules. Some of that got exposed during recent agitation by farmers in Noida and Greater Noida as the land acquired from them was sold by the by authorities at hefty prices to developers.

Even the new land acquisition policy changes proposed by the central government pose a hurdle to easy availability at reasonable rates for mass housing. One hopes the new National Land Acquisition and Rehabilitation and Resettlement Bill comes up for passage in the monsoon session of parliament.

But more importantly, one also wishes it is able to strike a fine balance between the interests of farmers and developers. This is key to efficient use of land for real estate and infrastructure development.

(The writer is editor of Realty Plus, a real estate monthly. He can be reached at vbehl2008@gmail.com)