Problems of land acquisition by the State

Land is the most distorted factor market in India. The State is deeply involved in all aspects of the functioning of the land market. Particularly in a place like Delhi, one sees acre after acre of land which has been politically allocated to cronies of the State at some point in the past. In addition, the market features high transactions taxes and acute illiquidity.

The State routinely engages in forcible land acquisition, where traditional rural populations are displaced. This land finds its way into the hands of modern developers at below-market prices, with rents flowing into the State machinery. This is obviously unfair. Ila Patnaik has an article in Indian Express where she shows an argument by Shubhashis Gangopadhyay on how this problem can be solved.