27/05/2020 - Government Policies

KEY POINTS

·         Land is the most preferred asset for individuals and lenders in the country. The 2017 data from the National Sample Survey Office suggests that an average Indian household keeps more than 65 per cent of its assets in land.

·         Multiple issues distort land markets from functioning effectively today. Like agriculture, land is a state subject under our Constitution. Land use, master planning, development control regulations, zoning are all different across the country and their enforcement is also uneven.

·         These values do not get updated often, leaving them as poor proxies for lenders and investors to follow. As a result, the states lose revenues from stamp duty and registration charges because of improper benchmarking.

·         The Digital India Land Records Modernisation Programme, which was launched with the aim of digitising and modernising land records and the creation of a centralised land record management system, was a partial success.

·         The SWAMITVA (Survey of Villages and Mapping with Improvised Technology in Village Areas) yojana has been launched by the Centre to “map rural inhabited lands using drones and latest survey methods.”

Ideas for comprehensive land reforms

·         Dematerialisation of stock records and creation of borrower credit profiles. Both were pushed by the government to ensure that our re­cord-keeping does not come in the way of our economic growth.

·         While the fo­rmer was easier as only a few institutions were involved, the latter was a classic case of incentivising a broad array of financial institutions to seek such a record for reducing their risk. Dematerialisation has helped take risk off the table for owners and lenders (against shares) alike.

·         Land register is similar to a securitised receipt of land and its ow­nership financial institutions would be comfortable to lend against. Like de­positories in the stock market, there could be incentives for independent players to update these records for a fee.

·         There is minimal state interven­tion needed since it does not infringe the sovereignty of the government over the land records. The current process of registering liens or mortgages could continue though their need wou­ld be reduced if such information is already available in this new record.

·         The use of technology like block chain to ensure integrity through distributed responsibility becomes easier in this model as the records are clean and standardised to suit the purpose of the financial system.

Please review

"Extraordinary times call for extraordinary measures" as coincidentally, the corona crisis has come at a time when India’s economy was struggling in the midst of one of the worst slowdowns.

Land is the most preferred asset and there are precedence where country has  undertaken bold economic reforms when encumbered with an unprecedented crisis.

Thus, the current crisis has given an opportunity to unleash the power of land reforms - to which everyone agrees but have never got implemented in scale.

>>> Need for land reforms :

- A nationwide lockdown caused widescale loss of livelihoods, pushing companies into perilous working capital positions, and leaving millions of India's informal economy workers (about 85% of India’s workforce are employed in the informal sector - acc. to Niti Aayog) unemployed.

-To revive demand, to harness private sector investments for employment generation and to contribute towards the efforts of  "Make In India"  and "Self reliant India" as reform will allow industries to purchase land directly from farmers.  

- Land reforms are also specifically needed with regard to agricultural marketing, and the current mandi system that restricts farmer access to markets across the country.

>>>  Positive aspects :

- This move will allow our economy to remain globally competitive. The amendment of the Land Reforms Act, 1961 is regarded as a milestone decision that will rid the state's economy of a “major stumbling block” as it looks to re-fashion itself into an attractive investment hub.

- The guiding principle is, therefore, to increase the attractive capacity of states to outside investors, by increasing ease of doing business, and allowing companies greater flexibility to react to market conditions.

>>> Criticisms of the move :

- In the absence of a well thought out reform process, there is certainly a risk of exploitation of workforce.

-  there can be no economic growth without ensuring the occupational safety, security and wellbeing of the stakeholders of land reforms.

>>> Conclusion :

Having used the pandemic as an opportunity to introduce long overdue reforms such as land reforms, it is now time for the country to return to work. "Sabka Saath, Sabka Vikas, Sabka Vishwas" will work only if Sabka includes all the rich and the poor, the small and the big.

Please review. Thank you.

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