Using Land for Economic Development: India's Land Problem Is Also a Public-Finance Problem

by Anirudh Burman.

Policy makers have traditionally considered the state's use of land for economic development as only a property rights problem. Using land for economic development is one of the main ways in which Indian cities are built and expanded. Roads, metros, housing, industrial areas and public facilities all require land. Government agencies decide where this infrastructure will go and what can be built around it. These decisions change the accessibility and development potential of land. They also create new obligations for roads, drainage, water, waste collection and other public services. Most of this is done by acquiring private land and putting it to public use.

Indian governments have traditionally relied heavily on compulsory acquisition to assemble land for this process. The state acquires land and pays compensation before financing the infrastructure needed to develop it. It gives the state a clear legal instrument, but it also has serious costs. Its use has often left compensation, rehabilitation and resettlement, procedural fairness and the wider distributional costs borne by affected people inadequately addressed.

It is also a poor way to finance development. Acquisition routinely takes time and money. Litigation, administrative delay and financing gaps compound both.

Under the old land-acquisition law and its successor, the state is the upfront buyer of land for roads, stations, housing, public facilities and urban expansion. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (the "2013 land acquisition law") made this route more expensive and more demanding. Over the past decade, states have looked for alternatives. But the case for change is larger than the consequences of the 2013 law.

Compulsory acquisition creates two linked land-finance problems. First, the state often commits large sums to land before it can build the infrastructure that gives a project its public value, sometimes without the resources to do so. This leads to delays. Second, litigation and administrative delay raise the cost of development and defer its benefits. They increase financing and construction costs, postpone land development and reduce the present value of expected benefits.

There is also an institutional problem. A development authority may assemble land, grant additional development rights or collect development-related charges, while a municipality or utility provides the resulting roads, drainage, water and other services. Similar problems arise outside municipal boundaries, where land may already be converting to urban uses while planning and finance powers remain with institutions designed for rural settlements. Land development therefore raises a wider set of public-finance questions. What rights does the state actually need over land? How should the costs of infrastructure be financed? What part of value created by public action can be recovered? Which institution should receive that revenue, and which institution must provide the resulting services?

I make the argument in three steps. First, compulsory acquisition should remain available but cease to be the default, especially for urban development and expansion. Second, I set out principles for choosing among land-development instruments and financing the public costs associated with them. Third, I propose seven changes to land assembly, public-asset management, planning and local finance. Together, they would lower unnecessary public expenditure while creating lawful and durable sources of revenue for public investment.

Limiting the use of compulsory acquisition

The 2013 land acquisition law raised compensation and placed rehabilitation and resettlement at the centre of acquisition. This protects people whose land is taken for public purposes. In many cases, acquisition costs can be a multiple of the market rate of the land being acquired, which makes urban land especially expensive. Government agencies must therefore account for compensation, rehabilitation and resettlement, administrative effort, finance costs, delay and litigation. These are fiscal commitments, not merely administrative processes.

Compulsory acquisition remains necessary for some public works. Metro alignments, transmission corridors, trunk sewers and road junctions may require contiguous land, indefeasible title, fixed geometry and timely possession. Voluntary assembly may fail where a single holdout can block a network. This, however, does not mean that compulsory acquisition should be the default strategy for state agencies.

The fiscal problem predates the 2013 law. When the state acquires land before developing it for urban purposes, it makes a fiscal commitment years before the developed land generates revenue. It also bears the risk of delayed approvals, contested awards, fragmented possession and changing construction costs. A project can acquire land first and confront the service and financing problem later, during redesigns, additional land requirements, delayed construction and obligations that were not part of the original acquisition decision.

The social cost is equally important. Acquisition can break the relationship between a landowning household and the value created by later planning and infrastructure, often by displacing that household. A one-time compensation payment may settle a legal claim, but it does not create a durable stake in the development that follows. The state is then the only party with a continuing stake in the land. In Indian practice, it has often not produced the intended development outcomes. Tenants, farm workers, small businesses, informal occupants and households with uncertain documents can lose access, income or neighbourhood ties. Compulsory acquisition can turn a potentially mutually beneficial transaction into an adversarial process between the state and affected citizens. That process has fiscal consequences as well.

The choice of instrument is therefore a question of public purpose and distribution, but also of long-term fiscal responsibility. States should develop a repertoire of land-assembly instruments that reduces coercion and upfront fiscal claims, while keeping the incentives of affected parties in view.

That is why the Indian state must have a choice of land-assembly instruments. It cannot rely only on expropriation. Before acquiring land, a state agency should compare the full lifecycle cost of negotiated purchase, pooling, readjustment, leasing and other alternatives. A lower upfront outlay is not necessarily fairer or cheaper over the life of a project.

Principles for a different land-development finance policy

Compulsory acquisition for urban development is usually framed as a question of coercion, compensation and procedural fairness. This treats the problem as one of how the state takes private property. But acquisition is a way to assemble undeveloped or underused land, develop it through infrastructure and planning, and unlock higher economic value for private and public actors alike. Most urban interventions change the productive potential of land. The question extends beyond acquisition to how the state measures, attributes and partly recovers the value created by that transformation to finance the public action that made it possible.

The starting point must be private property, because development changes the value of privately held land. Increases in land value belong to holders of property rights. The state does not acquire a claim over those gains merely because land values rise. It acquires a claim when its investment and planning decisions create part of that increase. A metro line, a road, rezoning or additional development rights can increase a parcel's accessibility or its development potential.

Where public action creates such an increase in value, the state should be able to do two things: (a) assemble and develop the land needed for planning and infrastructure, and (b) capture a limited and proportionate part of the value increase to help finance the investment that created the gain ((Peterson, 2008); (Suzuki, Murakami and Hong, 2015)). The objective is to recover public costs from the value those costs help create. Revenue must also reach the public body that bears the related infrastructure and service obligations. These premises lead to four principles for choosing and designing land-development instruments.

First, a better policy should reduce land-assembly and development costs for landowners and the state, as far as possible and without coercion. Indian states and cities already use versions of this approach for urban development, including town-planning schemes in Gujarat under the Gujarat Town Planning and Urban Development Act, 1976, and more recently in Maharashtra; and land-pooling schemes in Amravati, Delhi, Chennai and Guwahati ((Ballaney, Faust, Swarankar and Ghosh Belliappa, 2022)). The choice of the exact land-assembly scheme follows from this principle.

Second, states must ask whether a project requires absolute title, free from pre-existing private interests. Compulsory acquisition gives the acquiring state agency complete and final title. This reduces the risk of title challenges and gives planners broad scope to implement planned development in the acquired area. Agencies should weigh the need for such secure title against the cost of compulsory acquisition. Indefeasible title may be necessary only where a public purpose requires permanent and exclusive control over land. Relevant considerations include network continuity, security, strategic importance and the inability to tolerate later termination of the state's rights.

Third, land-development instruments should preserve the economic stake of affected parties where possible. Existing owners may then retain an interest in the value created by development, which can reduce opposition and lower upfront costs relative to compulsory acquisition. Town planning, land pooling and leasing can do this through returned serviced plots, retained title, deferred payments or other forms of continuing interest ((Hong and Needham, eds., 2007); Byahut and Mittal (2017)). These mechanisms may still displace existing uses or impose costs on tenants, workers and occupiers. Those costs can be lower than under compulsory acquisition, but they must remain part of the comparison.

Fourth, regular and stable flows of spending and income are preferable to large upfront allocations. Several proposals below reduce the state's initial cost and turn development finance into a steady, predictable stream.

These principles point to three relationships that land policy must get right. First, the state should acquire only the property interest that a public purpose requires. Permanent ownership, temporary possession, development rights and access rights impose different costs and allocate different risks. Second, where public investment or planning raises land values, the state should recover only a limited share of the increase attributable to public action, sufficient to help finance the investment and related service costs.

Third, revenue must be aligned with the institution that bears the resulting costs. A planning authority may grant development rights while a municipality provides roads, drainage, waste collection and other services. If revenue and service obligations sit in different institutions, value capture cannot finance public services effectively. The proposals below apply these relationships to land assembly, development, public assets and urban finance.

Proposals for a different land policy

I propose seven linked changes. None is novel in isolation, but their value lies in their combination as a public-finance strategy for urban development. They respond to four weaknesses in the present system: (a) excessive reliance on cash-heavy compulsory acquisition, (b) limited use of arrangements that preserve a private stake in development, (c) planning and development rights that are often disconnected from infrastructure costs, and (d) weak assignment of development-related revenue to the public bodies that finance infrastructure and services.

1. Reserve compulsory acquisition for indispensable public infrastructure. It should be limited to cases in which an alignment, network or public facility requires contiguous land, indefeasible title, fixed geometry and timely possession. Every other proposal should compare acquisition with lower-outlay alternatives on full lifecycle cost, not compensation alone. Urban development projects should be able to combine purchase, compulsory acquisition, leasing and land readjustment.
2. Create a legal framework for land assembly that reduces the state's immediate cash requirement. Land pooling, town-planning and land-readjustment schemes can reorganise plots, reserve land for public purposes and return serviced land to owners. They can reduce the state's immediate cash requirement while retaining land, rights or charges that help finance infrastructure.
3. Use long-term leasing where purchase is unnecessary. Long-term leasing is appropriate where a public purpose requires use or control, but not permanent ownership. It can reduce the state's upfront cash requirement while allowing the owner to retain title and receive an income stream. This does not make leasing cheaper by itself. The state should compare the discounted value of lease payments and contingent liabilities with the cost of purchase.
4. Use concessions to manage publicly owned assets, such as parks and gardens. Public ownership does not require the state to finance every investment or maintenance obligation directly from the budget. This was common across much of the economy until the 1990s and early 2000s, when the state often acted as both regulator and provider. Although the state has moved towards a more regulatory and facilitative role in many sectors, urban development still relies on direct public provision in many cases. Where the public purpose can be protected, the state can grant limited, time-bound use rights over public assets in return for investment and service obligations. It retains ownership and control over the public purpose, while the private party receives only the rights needed to perform the agreed function. States can, for example, use limited concessions to finance the maintenance of public parks and gardens by allowing commercial use over defined parts of an asset. A private party could operate specified commercial or visitor facilities. The municipality should retain ownership, preserve public access, limit the area and uses, and specify enforceable maintenance and service standards. As an example, the City of Austin Policies and Procedures for Concessions in City Parks provide a useful municipal-policy illustration: concessions remain limited commercial uses, must serve a public benefit and a financial return to the city, and operate under defined terms, planning and maintenance standards.
5. Make the local area plan the unit of value capture. A local area plan should link development rights, infrastructure and value capture. Public investment and planning decisions within an area can increase the development value of land. Premium FAR, betterment charges and other instruments should recover a proportionate share of the increase attributable to those actions. The proceeds should help finance the infrastructure and additional service capacity that make the development possible. The local area plan provides the spatial framework for identifying these costs, coordinating development rights and assigning the resulting revenue.
6. Align planning, service responsibility and revenue. Planning powers, development-related revenue and service obligations should be aligned. In many Indian cities, development authorities, such as DDA, MMRDA and AUDA, plan and develop land while municipalities and utilities bear service obligations. Where one public agency grants development rights and another must provide the resulting infrastructure and local services, they must share the resulting revenue. This applies a basic public-finance principle: revenue assignment should follow expenditure responsibility, or, in the usual formulation, finance should follow function ((Boex et. al., 2024)). The arrangement can take different forms. Planning and service functions may sit in the same body, or development-related revenue may be shared through a defined and timely transfer rule. The objective is to ensure that institutions responsible for servicing new development receive a portion of the revenue it generates.
7. Give rural local bodies planning and finance powers in peri-urban areas. The final question is where these powers should apply. Land conversion often begins before a settlement is formally classified as urban. If planning powers, infrastructure finance and development-related charges arrive only after urbanisation, the public sector inherits the cost of retrofitting roads, drainage and other services after development has occurred and much of the associated value has already been allocated. Planning and finance powers should therefore follow the geography of development. Much land conversion occurs where settlements function as urban places but remain under panchayats or other rural local bodies. These bodies must have lawful powers to plan layouts, reserve rights-of-way, collect development-related charges and provide basic services before unplanned growth makes infrastructure far more expensive.

The proposals form an architecture for reducing the upfront cost of urban development. They allow the state to recover a share of the value generated by public action while allowing land markets to function. The first three reduce the state's cash-heavy role as buyer of land. The fourth lowers the fiscal burden of maintaining a public asset without abandoning its public character. The fifth creates an area-based account for planning and infrastructure. The sixth ensures that revenue reaches the institutions that must provide services. The seventh extends the approach to places where urban growth is already changing land values outside municipal boundaries.

Conclusion

India does not need land-acquisition and development policies that claim all gains from land. It needs policies that stop treating compulsory acquisition as the first response and additional development rights as a free or disconnected permission. Land assembly, planning, infrastructure and municipal finance must be treated as one public-finance sequence. The seven proposals offer a starting point.

Selected bibliography

Hong, Yu-Hung, and Barrie Needham, eds. Analyzing Land Readjustment: Economics, Law, and Collective Action. Lincoln Institute of Land Policy, 2007.

Sorensen, Andre. "Land Readjustment, Urban Planning and Urban Sprawl in the Tokyo Metropolitan Area." Urban Studies 36, no. 13 (1999): 2333-2360.

Byahut, Sweta, and Jay Mittal. "Using Land Readjustment in Rebuilding the Earthquake-Damaged City of Bhuj, India." Journal of Urban Planning and Development 143, no. 1 (2017).

Jain, Vibhu. Examining the Town Planning Scheme of India and Lessons from Land Readjustment in Japan. ADBI Working Paper 1037, 2019.

Mahendra, Anjali, Robin King, Erin Gray, Maria Hart, Laura Azeredo, Luana Betti, Surya Prakash, Amartya Deb, Elleni Ashebir and Asmaa Ibrahim. Urban Land Value Capture in Sau Paulo, Addis Ababa, and Hyderabad: Differing Interpretations, Equity Impacts, and Enabling Conditions. World Resources Institute and Lincoln Institute of Land Policy, 2020.

Smolka, Martim O. Implementing Value Capture in Latin America: Policies and Tools for Urban Development. Lincoln Institute of Land Policy, 2013.

Ingram, Gregory K., and Yu-Hung Hong, eds. Value Capture and Land Policies. Lincoln Institute of Land Policy, 2012.

Sheikh, Shahana, and Ben Mandelkern. The Delhi Development Authority: Accumulation without Development. Centre for Policy Research, 2014.

van Duijne, Robbin Jan, and Jan Nijman. "India's Emergent Urban Formations." Annals of the American Association of Geographers 109, no. 6 (2019): 1978-1998.

The Gujarat Town Planning and Urban Development Act, 1976.

Delhi Development Authority. TOD Policy dated 30 July 2021, 2021.

De Souza, Flavia A. M., Tetsuo Ochi and Akio Hosono, eds. Land Readjustment: Solving Urban Problems Through Innovative Approach. JICA Research Institute, 2018.

Glasser, Matthew. Institutional Models for Governance of Urban Services, Volume 1: Synthesis Report. World Bank, 2021.

Anirudh Burman is a research at XKDR Forum.

How Indians rank their rights: what 26 interviews tell us about Article 19 and property

by Prashant Narang.

Citizens treat property as the material anchor that makes other freedoms meaningful; livelihood-enabling freedoms are prioritised, while free speech is cherished but policed asymmetrically.

In 1978, the Forty-Fourth Amendment removed the right to property from the Constitution's catalogue of fundamental rights. Lawyers and economists have debated the implications ever since. But do ordinary citizens internalise that demotion? This post introduces our Socio-Legal Review note - co-authored by Sehar Abdullah, Keerthana Satheesh, and Prashant Narang- which steps outside the courtroom to ask a simple question with big policy consequences: which rights do people treat as most important in their daily lives - and why? Drawing on 26 in-depth interviews across professions that are especially sensitive to rights restrictions (journalists, migrants, MSME owners, cab drivers, farmers, artists, street performers and more), we map how citizens rank the Article 19(1) freedoms alongside the right to property. The top-line finding: people continue to see property as foundational - often the precondition that makes other freedoms meaningful.

What we did

We used purposive and snowball sampling to reach respondents aged 19-65 whose livelihoods could be directly affected by limits on speech, association, movement, residence, profession, or on property. Most interviews were conducted in Delhi, with additional remote interviews in Kerala, Chennai, and Bengaluru. We piloted the instrument, then ran a three-part interview: background and demographics; general views on freedoms and "reasonable restrictions"; and case studies with graded constraints (for example, permits and bans; "public order" versus epidemic) to elicit trade-offs. Transcripts were thematically coded. This is qualitative research; insights are directional, not population estimates.

What we heard: the lived hierarchy

• Property as cornerstone - Across backgrounds, respondents described property as livelihood, security, and autonomy "a means to earn a living", as one farmer put it. People resisted permissions on buying and selling land and were most animated by compulsory acquisition scenarios. Support for acquisition often hinged on compensation: market-linked and predictable when the purpose was clearly public (for example, a metro), with sharper bargaining when it looked commercial (for example, a mall). The underlying intuition is economic: when property underwrites household security, the perceived risk of under-compensation looms large.
• Economic freedom as a gateway - Freedoms that enable livelihood - movement and residence for migrants (Article 19(1)(d) and (e)) and choice of occupation (Article 19(1)(g))- were consistently prioritised. A photojournalist linked movement directly to earning; an activist framed profession and property as part of a single "socio-economic" relationship that the state should ease rather than police. This fits a law-and-economics intuition: secure property and open markets reduce dependence and expand feasible choices, which then support speech and association.
• The free-speech asymmetry - Respondents valorised free expression for themselves - journalism as "the fourth pillar", bans as "the end of democracy" - but many were readier to restrict others, often using elastic notions of "harm" or "extremism". In short: pro-speech for me, pro-restriction for you. That asymmetry is a legitimacy warning: broad, vague grounds for curbing speech match the public's weakest intuitions and risk becoming catch-alls.
• Residence as identity - The right to reside and settle anywhere (Article 19(1)(e)) surfaced as a surprising anchor of national belonging. Several interviewees described the ability to live anywhere as central to Indian diversity - inking mobility to both opportunity and citizenship.

Why this matters for policy design

• Compensation design - Where acquisition feels commercial, citizens bargain harder and distrust adequacy; where purpose is plainly public, opposition is more about predictability than principle. Legislatures and agencies should therefore tighten "public purpose" definitions and commit to clear, market-linked compensation formulas (benchmarks, indexation, relocation assistance) and process timelines that reduce uncertainty rents and litigation.
• Targeted deregulation for livelihood rights -Frictions on movement, residence, and small-enterprise activity (permits, zoning that criminalises street vending, opaque lease and tenancy formalities) bite hardest on those who use these rights to earn. Policy wins lie in simplifying titles and transfers, digitising and time-bounding consents, rationalising vending, parking, and market rules, and reducing compliance steps for micro-businesses - exactly where our respondents located day-to-day pain points.
• Speech rules that travel well - The asymmetry we observed - tolerant for self, restrictive for others - suggests two drafting heuristics: (i) avoid vague grounds like "offence" without a tight harm standard, and (ii) pair restrictions with necessity-and-proportionality tests that officials must evidence ex ante. Narrow tailoring not only protects rights but also matches citizens' strongest defence of speech (for themselves) while tempering expansive instincts to curb others.

What this does not claim

This is a qualitative, urban-skewed sample. We do not estimate a numeric hierarchy or claim causal links between income and preferences. Our aim is to surface design hypotheses and legitimacy risks that can be tested at scale and used now for better drafting and implementation. Rural and longitudinal work are obvious next steps.

The big picture

Constitutional amendments can change a right's formal rank without changing its everyday salience. In our interviews, property remains the backbone of autonomy and a hedge against shocks; livelihood-enabling freedoms are the everyday workhorses; and speech is cherished but policed asymmetrically. For policymakers and drafters, the take-away is practical: align legal categories and procedures with how citizens actually use and trade off rights. That means predictable compensation and acquisition processes; frictions-down reforms for movement, residence, and micro-enterprise; and narrowly tailored, evidence-based limits on expression. This is the path to a constitutional order that people recognise in their daily choices - not just in the statute book.

Read the paper

Rights in the Eyes of the Beholder: The Lived Hierarchy of Rights in India's Democracy - Socio-Legal Review, 21(1), 2025. Authors: Sehar Abdullah, Keerthana Satheesh, and Prashant Narang.

Prashant Narang is a researcher at TrustBridge Rule of Law Foundation.

Do stamp duties affect transaction volumes? A study of real estate transactions in Mumbai

by Diya Uday.

The real estate market in India has many factors that cause price inefficiencies. The outcome is that investors will stay away from real estate markets as long as these inefficiencies exist. So how can market efficiency and thereby participation be increased? The Coasian answer is that a market will yield efficient outcomes in the absence of transaction costs.

What constitutes real estate transaction costs in India? Transaction costs are of two kinds: manifest and hidden. Manifest costs are apparent. They are borne by the parties to the transaction and not the market as a whole. They are quantifiable and therefore lend themselves well to observation and possibly measurement. Hidden costs are not statutorily imposed by the government but they increase the cost of conducting transactions. They may be identified but are difficult to quantify and therefore do not lend themselves well to measurement. Some of these are borne by the parties to the transaction while others hidden costs such as price distortions are borne by the market as a whole. In a previous article we argued that price distortions are the unseen consequences of restrictive land market regulations (Uday, 2019). The table summarises this typology of transaction costs with some examples.

Typology of land market transaction costs in India

Manifest transaction costs	Hidden transaction costs
Stamp duties	Title searches
Registration charges	Intermediary charges
Cost of updating government records	Price distortions

Having identified some transaction costs, we attempted to determine the effect of stamp duties on transaction volumes, using Mumbai as the environment under examination. We ask the question: Do transaction volumes change after an increase in stamp duty?

Our motivation for conducting this study is to gain some insights on the relationship between stamp duties as a transaction cost and transaction volumes in the Indian real estate market.

In the literature we see that stamp duties are considered as taxes that cause market inefficiencies (Maatanen and Tervio, 2019). They discourage mutually beneficial transactions and ensure that properties are not held by the people who value them the most (Mirrles et al., 2011). An increase in stamp duty leads to a decline in the number of sales (Dachis et al., 2012). This decline is attributable to a reduction in property prices (Davidoff and Leigh, 2013; Dachis et al., 2012). Similarly, elimination of stamp duties, increases transaction volumes (Best and Kleven, 2018). The literature that examines the effect of stamp duty interventions on transactions uniformly finds that transaction volumes react to stamp duty interventions.

Methodology and findings

For this study, we selected three types of transactions: conveyance, lease and mortgage. We first extracted transaction volumes data for these transaction types in Mumbai, from the website of the Department of Registration and Stamps in Maharashtra. We then calculated the total yearly transaction volumes for each of the three transaction types across all the years for which the data was available (July 2012 onwards). We extracted all notifications which amended stamp duty rates for the relevant period of the study (July 2012 - February 2020). From these, we selected the notifications applicable to conveyances, leases and mortgages only. The selected notifications were then sorted by month and year.The following interventions were studied:

• Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2012 notified on 15 April, 2012
• Maharashtra Stamp (Amendment) Act, 2015 notified on 24 April, 2015
• Maharashtra Stamp (Second Amendment) Act, 2017 notified on 7 September, 2017
• Mumbai Municipal Corporation (Second Amendment) Act, 2018 notified on 17 December, 2019

These interventions were overlaid on the transaction volumes data in the appropriate point in time. A cross-sectional observation of the effect of the increases in stamp duty on each transaction type was done.

This analysis yields the following observations:

• Conveyance transactions: There are three relevant interventions in the form of amendments to the law on stamp duty rates for conveyances for the period under examination. The first amendment was notified on April 25, 2012 by Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2012. Under this amendment the stamp duty on conveyances within the limits of the Municipal Corporation was increased from 4 per cent to 5 per cent of the market value of the property. The stamp duty for conveyances within the Municipal Council and cantonment areas was increased from 3 per cent to 4 per cent of the market value of the property. In both cases, there was an increase of 1 per cent. The second amendment was notified on September 7, 2017 by Maharashtra Stamp (Second Amendment) Act, 2017. Under this amendment the stamp duty payable on transactions in Municipal Council and Cantonment areas was increased from 4 per cent to 5 per cent of the market value. The third intervention was the Mumbai Municipal Corporation (Second Amendment) Act, 2019 notified on December 17, 2019. Under this amendment a surcharge of 1 per cent is charged on conveyances in the certain areas. In these places, the stamp duty payable on conveyance transactions is effectively increased to from 5 per cent to 6 per cent of the market value.

  For the first stamp duty intervention in 2012 we do not observe a drop in the transaction volumes. In fact we see a steady increase in the year 2012 despite an increase in the rate of stamp duty until 2013. After 2013, the transaction volumes are on an upward trend until 2018. We do not observe an immediate drop in transaction volumes after the second intervention. We see that the upward trend from 2016 continues despite an intervening increase in stamp duty. From the year 2018 we observe a drop in the number of registered conveyance transactions. At its lowest point, the number of registrations were the lowest since the later half of 2012. The downward trend from the year 2018 continues into 2019.

  One might theorise that the drop in transaction volumes from 2018 and into 2019 are the effect of the stamp duty interventions in 2017 and 2019. However, a look at the trends in transaction volumes of leases and mortgages also reveals a fall in the number of registered transactions from the year 2018. This indicates that the reduction in transaction volumes is likely to be on account of some other variable that affected the real estate market as a whole rather than on account of the increase in stamp duty rates. Figure 1 depicts conveyance transaction volumes in Mumbai for the period from July 2012 to February 2020. The dotted lines represent relevant stamp duty interventions in the month and year of the intervention.



• Lease transactions: There are two relevant interventions on stamp duty rates for lease transactions in the period under examination. The first intervention was the Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2012 notified on 15 April, 2012. This amendment applied to conveyances and not leases directly. However, we are considering this a relevant intervention for leases because the stamp duty for lease transactions is a percentage of the stamp duty for conveyance transactions. Therefore, any change in the stamp duty for conveyances will cause a consequent change to the stamp duty for lease transactions. Since the 2012 amendment increased the stamp duty for conveyances, it consequently increased the stamp duty for lease transactions. The second intervention for lease transactions was the Maharashtra Stamp (Second Amendment) Act, 2017 notified on September 7, 2017. Again, this amendment did not directly apply to lease transactions however, given the linkage between the stamp duty payable on conveyances and leases as explained above, we have included this amendment as a relevant intervention for lease transactions. Under this amendment, the stamp duty for conveyances was increased, thereby increasing the stamp duty for lease transactions.

  We observe no immediate effect of the increase in stamp duty on lease transaction volumes for both interventions. However, as observed with conveyance transactions we see a continuing upward trend in transaction volumes in the period immediately after the increases in the stamp duty rates by both interventions. After 2018, we observe a downward trend in transaction volumes. This continues into 2019. This trend has been observed with conveyance and mortgage transactions as well and is therefore, likely on account of some other variable affecting the real estate market as a whole rather than the increase in stamp duty. Figure 2 depicts lease transaction volumes in Mumbai for the period from July 2012 to February 2020. The dotted lines represent relevant stamp duty interventions in the month and year of the intervention.



• Mortgage transactions: There are four relevant interventions on stamp duty rates in the period under examination. The first intervention was the Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2012 notified on 15 April, 2012. While this amendment was for conveyances and not directly for mortgages, we consider this a relevant intervention because the stamp duty for mortgage transactions is a percentage of the stamp duty for conveyance transactions. Therefore, any amendment to the stamp duty for conveyances is a relevant intervention for mortgage transactions. Since the 2012 amendment increased the stamp duty for conveyances, it consequently increased the stamp duty for mortgage transactions as well. The second intervention was the Maharashtra Stamp (Amendment) Act, 2015 notified on April 24, 2015. Under this amendment, the stamp duty payable on a mortgage was increased from five hundred rupees to 0.5 per cent of the amount secured by the mortgage subject to a maximum of ten lakhs. The third intervention was notified on September 7, 2017 by the Maharashtra Stamp (Second Amendment) Act, 2017 whereby the stamp duty for some conveyances was increased to 5 per cent of the market value. Given the linkage between stamp duties for conveyances and mortgages, we have considered this a relevant intervention. The fourth intervention, is the Mumbai Municipal Corporation (Second Amendment) Act, 2019 notified on December 17, 2019. Under this amendment a surcharge of 1 per cent is charged on mortgages in the certain areas, increasing the overall stamp duty payable on mortgage transactions.

  As observed in case of lease and conveyance transactions, we observe no immediate reduction in the transaction volumes after increase in stamp duty by the 2012 intervention. We do observe a fall in the transaction volumes immediately after the 2015 amendment either.This appears to be a continuation of a downward trend in mortgage transaction volumes from the beginning of 2015. While we cannot say for certain, perhaps the sharpness of the downward trend could be affected by the increase in stamp duty. One may have observed a more gradual decline in the downward trend if the stamp duty has remained unchanged. We cannot however, verify this. After the short-term reduction, transaction volumes for mortgages increase until 2018 when a a sharp decrease in the transaction volume is observable. This downturn is consistent with the downturn we observe in respect of the transaction volumes of conveyances and leases and we therefore, cannot attribute this to increased stamp duties alone. Figure 3 depicts mortgage transaction volumes in Mumbai for the period from July 2012 to February 2020. The dotted lines represent relevant stamp duty interventions in the month and year of the intervention.

Limitations:

• The study has been done for the period from July 2012 upto February 2020. This is on account of the lack of published transactions volume data for the period prior to July 2012 from the website of the Department of Registration and Stamps in Maharashtra.
• This study observes the effects of stamp duty interventions on three types of real estate transactions only.
• The increases in stamp duties have not been significant.
• We have not controlled for the effects of other events in the real estate market on transaction volumes. However, we proceed on the assumption that a change in the market as a whole will affect all three types of major transactions. For example, an increase in interest rates for home loans will affect not just conveyances but also mortgage transactions and possibly leases. The observations for 2018 are in-line with this reasoning.
• The represented data is year-on-year and does not report month-on-month changes to transaction volumes.
• The sharpness of the increase in transactions in the year 2012 maybe smaller than what is being observed as we only have data from July 2012.
• The data does not distinguish between primary and secondary market transactions or residential and commercial transactions.

Conclusion

We undertook this study to determine the effect of stamp duties on transaction volumes by attempting to answer the question: Do transaction volumes change after an increase in stamp duty? Our motivation for doing so was to gain insights on the relationship between stamp duty as a transaction cost and transaction volumes in the Indian real estate market.

We did not observe any immediate decreases in transaction volumes in Mumbai pursuant to increases in stamp duties. This is a departure from global literature which suggests that transaction volumes decline with increases in stamp duties. However, our data offers some insights which are as follows:

First, while we may not observe immediate changes in any transaction volumes pursuant to stamp duty interventions, we observe that all three types of transactions follow some common trends. For example, there is an increase in transaction volumes across all transactions types in 2017 and a significant drop in transactions across all transaction types from the year 2018. This decline continues into 2019. This is significant because it indicates the existence of market variables that affect all transactions regardless of the type of transaction. These variables appear to have a possibly greater impact on transaction volumes than changes in stamp duties do.

Further, given that stamp duties are among the larger manifest costs, it is likely that we will not be able to observe any changes in transaction volumes if smaller manifest costs are changed. The variables affecting all transactions types in common are therefore perhaps hidden costs.

Second, the lack of volatility in the period immediately following an intervention may be indicative of a thin market where only the bare minimum on-market transactions are taking place. Transaction volumes are therefore not likely to be affected by rises in stamp duty rates. This confirms our view that despite the high market value of real estate assets in Mumbai, transactions are likely to be taking place out of necessity rather than for investment purposes, unlike in other countries where such studies have been conducted.

Third, we know that real estate transactions in India have a cash component. Given this, transactions are unlikely to be significantly affected by small increases in stamp duty.

Does this also mean that the converse is true? Will reductions in stamp duties increase transaction volumes in the real estate market in India? Literature indicates that significant changes such as tax holidays have more sizeable effects on transactions (Besley et al., 2014). For instance, a temporary elimination of transaction taxes was found to increase real estate market activity by twenty per cent in the UK (Best and Kleven, 2018). Less significant reductions in stamp duties are unlikely to have a sustained and significant effect on market participation, given the state of the Indian real estate market. While small reductions in stamp duty rates may seem like low hanging fruit with which to fix the problems of a thin market, this study indicates that without addressing the other variables that appear to be affecting transaction volumes, it is likely to be a blunt policy intervention. However, governments tend to lean towards offering stamp duty concessions to boost market participation. This is not the shot in the arm that the real estate market needs.

Since the Indian real estate market appears to present a unique case, the answer to increasing participation perhaps lies in a bundle of interventions aimed at addressing and reducing both hidden and manifest transaction costs. Some of these could be the removal of land market restrictions that have distortionary effects on the market (Uday, 2019), increasing information symmetry by creating more comprehensive land records (Shaikh and Uday, 2018) and the creation of streamlined market places which allow easy trading of real estate assets.

References

Besley et al., 2014, The Incidence of Transaction Taxes: Evidence from a Stamp Duty Holiday, Timothy Besley, Neil Meads and Paolo Surico, Journal of Public Economics, Volume 119, November 2014.

Best and Kleven, 2018, Housing Market Responses to Transaction Taxes: Evidence From Notches and Stimulus in the UK, Michael Carlos Best and Henrick Jacobsen Kleven, The Review of Economic Studies, Volume 85, Issue 1, January 2018.

Dachis et al., 2012, The Effects of Land Transfer Taxes on Real Estate Markets: Evidence from the Natural Experiment in Toronto, Ben Dachis, Giles Duranton
and Mathew A. Turner, Journal of Economic Geography, Volume 12,
November 27, 2012.

Davidoff and Leigh, 2013, How Do Stamp Duties Affect the Housing Market?, Ian Davidoff and Andrew Leigh, Economic Society of Australia, Volume 89 No. 286, September 2013.

Maatanen and Tervio, 2019, Welfare Effects of Housing Transaction Taxes: A Quantitative Analysis with an Assignment Model, Niku Maattanen and Marko Tervio, European Research Council, 2011.

Mirrlees et al., 2011, Tax by design, James Mirrlees, Stuart Adam, Tim Besley, Richard Blundell, Stephen Bond, Robert Chote, Malcolm Gammie, Paul Johnson, Gareth Myles and James M. Poterba, Institute for Fiscal Studies, Economic and Social Research Council, September 2011.

Shaikh and Uday, 2018, Rethinking urban land records: A case study of Mumbai, Gausia Shaikh and Diya Uday, The Leap Blog, November 1, 2018.

Uday, 2019, How land laws create dead capital, Diya Uday, The Leap Blog, July 15, 2019.

 

Diya Uday is a senior researcher at the Finance Research Group, Mumbai and visiting faculty at the Tata Institute of Social Science, Mumbai. The author would like to thank Ajay Shah and the two anonymous referees for their comments and suggestions.

Linking welfare distribution to land records in India: Part 1

by Diya Uday and Bhargavi Zaveri.

Over a year ago, the Union Government announced the PM-KISAN scheme, which is the first centrally sponsored scheme for making direct benefit transfers to farmers. The scheme, which promises an annual transfer of Rs. 6,000 to farmers, is in line with the trend towards substituting in-kind subsidies with direct benefit transfers (DBTs) in welfare programs in India.

For example, in 2018-19, Rs. 2 trillion (around 8% of total government expenditure) was reportedly delivered through DBTs to beneficiary accounts. In the last two years alone, at least four state governments have rolled out DBTs for providing direct income support for farmers (Table 1).

Table 1: Agricultural income support schemes (2018-19)

	Union	Telangana	Andhra Pradesh	Odisha	West Bengal
Name of scheme	PM Kisan	Rythu Bandhu	Rythu Barosa	Kalia	Krishak Bandhu
Year of announcement	2019	2018	2019	2018	2018
Basis of calculation	Absolute	Per acre	Absolute	Absolute	Per acre
Annual amount	6000	10000	7500	4000	5,000
No. of instalments	3	2	2	2	2
Eligibility	Landowners	Landowners	Landowners/tenants	Landowners/tenants	Unclear
Annual budget allocation (INR crores)	75,000	12,000	8,750	5,611	3,000
Intended no. of farmers (in Mn)	120 (households)	6 farmers	4 farmers	7.5 households	7.2 farmers

Source: These features are extracted from the scheme documents available in public domain as on January 2020.

A common theme that runs across these agricultural income support schemes is that they utilise land records. India has had a checkered history in the field of land record administration and welfare distribution. For example, a previous attempt at linking the fertiliser subsidy to digitised land records has reportedly failed. The variation in the quality of land records across states, and of state capacity for the identification of beneficiaries, will affect the working of such schemes. We may anticipate problems such as the time-lags involved in the updation of records, the area of the land parcel where the subsidy is linked to the size of the land and the identification of possessory interests such as renters and share-croppers. For example, a ground truth study conducted across Maharashtra, Rajasthan and Himachal Pradesh, showed substantial lags in the updation of land records on account of a change in ownership (NCAER 2017). In Maharashtra, for instance, it took an average of 85 days to update the revenue records to reflect a change in the ownership of a land parcel on account of a sale transaction, and 110 days to reflect such a change on account of the death of the original owner (IGIDR 2017).

The implementation of such schemes is complicated by the fact that while the land records are generally maintained by the Revenue Department of the state government, the Agriculture Department is responsible for the implementation of the income support scheme. The efficacy of such schemes would thus depend on the extent to which these departments are able to collaborate.

A new study on the Rythu Bandhu scheme in Telangana

Telangana is an interesting place to study the implementation of an agriculture income support scheme delivered through DBT by entirely relying on land records. This is because unlike the other states that have rolled out similar schemes, the state government of Telangana, before rolling out the Rythu Bandhu scheme (RBS), undertook a state-wide land records updation drive. Referred to as the Land Records Updation Program (LRUP), the drive involved officers of the Revenue Department visiting each village for rectifying errors, updating the land records and issuing a new de-facto land record, referred to as Pattadar Passbooks, to the owners of agricultural land parcels.

While some have acclaimed the RBS as a success story for providing relief to farmers and innovating in the space of agriculture support (here and here), the scheme has been equally criticised for excluding landless and tenant farmers from its purview.

These developments bring up many interesting questions:

• How was the LRUP done?
• To what extent did it contribute towards the design and the implementation of the RBS?
• What are the co-ordination and information sharing mechanisms set up between the Revenue and Agriculture Departments?
• Has the reliance on land records for the identification of beneficiaries resulted in exclusion and inclusion errors? What is the extent of such errors? 
• What is the impact of linking the entitlement under the RBS to the size of the land parcel?

Answering these questions will help in understanding the state capacity required for conducting a state-wide land records updation drive, the problems that arise in linking land records to welfare distribution, and the design and operationalisation of DBTs which use land records for the purpose of identification of beneficiaries.

We investigated these questions through a series of interviews, focus group discussions and matching of land records with beneficiary databases in Telangana, over a period of six months. In a two part series of articles here on The Leap Blog, we unveil our key findings. A more detailed version of this work is visible in Thomas et. al., 2020.

In this first part, we describe how the Telangana government undertook a state-wide land records updation program, the outcomes of the updation program and its potential impact on the identification of beneficiaries under the Rythu Bandhu scheme. The LRUP, which primarily aimed to cover agricultural land, achieved fairly large coverage in terms of area (86%). All districts, except Hyderabad (which does not comprise agricultural land) were covered under the LRUP. The number of disputed land parcels was surprisingly low (~5%), and a fresh revised digital land record could be issued to ~93% of the land parcels that were covered and undisputed.

We argue that the scale and efficiency of the LRUP and the rate of disputed land parcels, is attributable to two factors: the lack of a survey that measures the boundaries of land parcels; and restricting the nature of rights and interests in the updated digital land record. We further argue that these constraints have influenced the design and scope of the RBS, restricting its benefits to land owners, and excluding tenants and share-croppers whose interests are no longer recorded on the land record used for the identification of RBS beneficiaries.

In the next article, we will look at the implementation of the RBS, the payment mechanisms used, the overall satisfaction levels and the extent of errors in the identification of beneficiaries under the RBS.

Our study supplements theoretical perspectives on state capacity in India, generates fresh insights into the kind and quantum of capacity required for the upgradation of land records, a probem that is believed to be a significant challenge to India's development. It also contributes to the literature on state capacity and welfare programs in India (Muralidharan et al (2016); Totapally et al (2019)).

Our study involved interviews with government officials of departments of the State Government which were involved in the implementation of the LRUP and the RBS, namely, the Revenue Department, the Agriculture Department and the Finance Department. We interviewed officials of these Departments at the level of the state, two sample districts and sample villages in each of these districts respectively. Additionally, we interviewed officials of the Finance Department and the Integrated Tribal Development Agency (ITDA), which is the department within the government responsible for the delivery of services to tribal communities in scheduled tribal areas.

The districts of Nalgonda and Mulugu were selected as sample districts for the study, owing to the concentration of a large number of small and marginal landholdings and the population of scheduled castes and scheduled tribes in these districts. To obtain insights into the overall satisfaction levels with the RBS, we conducted focus group discussions with beneficiaries and non-beneficiaries in the two selected villages in these districts. Finally, for the purpose of estimating the extent of errors, if any, in the coverage of beneficiaries under the RBS, we compared the base land records in each of these villages with the RBS beneficiaries lists.

Scope of the LRUP and capacity deployed

The LRUP was envisaged as a three month exercise to improve land records in respect of agricultural land in Telangana through two phases:

1. First phase : This phase covered (a) land parcels with no disputes and (b) land parcels where there were undisputed errors on the records, such as errors of names and surnames.
2. Second phase: The second phase was designed to cover disputed land parcels, such as land parcels in respect of which disputes are pending in the revenue or civil courts, or land parcels that belonged to a Wakf (land belonging to a religious charity and administered by a statutory board) or had boundary disputes with the Forest Department. The key here was that there was a finite list of categories of "disputes" that were identified by the State Government for the purpose of excluding land parcels from Phase 1.

Table 2 gives an overview of the coverage of the LRUP. It shows that except for one district, namely, Hyderabad, which has no agricultural land, the LRUP covered all the districts aggregating to 86% of the area of the state.

Table 2: Coverage under the LRUP

Unit	Coverage	Total	Coverage (%)
Districts	32	33	96.77
Mandals	573	584	97.26
Revenue Villages	10,823	10,343*	Unclear
Area (in acres)	2,38,18,551	2,76,94,830	86
Source: Revenue Department (June 2019) *As per Census 2011.

The coverage indicated in Table 2 was achieved in three months, with the Revenue Department officers having been divided into teams led by the Tehsildar (an official of the Revenue Department in charge of a cluster of villages). The Collector of each district was responsible for the formation of appropriately sized teams for the district, with the mandate of covering 250 acres per day per team. Table 3 gives an overview of the resources deployed for the purpose of the LRUP.

Table 3: Overview of resources deployed for the LRUP

Duration of the project	15th September, 2017-31st December, 2017
Total number of revenue officers involved in the project	3,500
No. of teams	1,507
No. of villages assigned to each team	9
Estimated area to be covered per day	250 acres per team
Estimated No. of days per village	10
Estimated No. of days per district	100
Source: MCR Human Resource Development Institute of Telangana and interviews.

We find that four distinct records are maintained at the level of the village (Table 3a) and the village-level exercise involved updating one of the records, namely, the Record of Rights and the issuance of digital Pattadar Passbooks (explained below) to each land owner.

Table 3a: Overview of land records maintained at the village level

Sethwar	A record containing details of cultivable area on each agricultural land parcel.
Khasra Pahani	A record containing the details of crops on each agricultural parcel of land.
Pahani	A record containing parcel-level information on the ownership, non-ownership interests, area, cultivable and non-cultivable portions, cropping patterns on each agricultural land parcel.
Record of Right (Form 1B)	A record containing a sub-set of the information from the Pahani records, with a focus on the ownership, area, manner of acquisition of each agricultural land parcel
Pattadar Passbook	A record containing information on the ownership of the land parcel.

Each team was part of a training conducted by the District Collectors on (a) the objectives of the exercise; (b) step by step processes involved in the exercise; (c) the formats for the collection of information; (d) the statutory processes to be followed for the correction and modification of the records; and (d) the daily progress reports to be sent to district and state. A state level control room and multiple district-level control rooms were set up to deal with questions that cropped up during the exercise. The reporting heirarchy was clear. The Tehsildars would prepare daily reports for the District Collector, who in turn, was responsible for compiling the village-wise reports in her District. Each report contains information on (a) the details of missing serial numbers for entry in the the Pahani; (b) the extent of variation in the area of the land parcel reflected in the Sethwar and the Pahani; (c) unsettled disputes and issues in the village; (d) details of the land assigned by the government; and (e) list of land parcels put to non-agricultural use in the village.

Budget deployed for the LRUP

An analysis of the financial statements of the Telangana Government shows that while the budget does not separately allocate funds for the LRUP, there is a significant increase in the budget allocation for overall 'land reforms' for the year of implementation of the LRUP, namely, financial year 2017-18 and the financial year 2018-19 (Table 4). In the absence of specific information on the extent to which this allocation was utilised for the LRUP, it is difficult to draw any insights. However, our interviews yielded more specific, although rough, information on the amounts spent for the implementation of the LRUP (Table 4a).

Table 4: Overview of budget estimates for land reform in rural areas (2015-2020)

Financial year	Budget estimate (INR lakhs)	Year-on-year change (%)
2015-16	1363.03*
2016-17	1256.56	-7
2017-18	1335.85	6.31
2018-19	1502.20	12.45
2019-20	1506.18	0.26
Source: Annual Financial Statements. *This is the actual amount spent on land reforms in 2015-16.

Table 4a: Budget estimates for implementation of the LRUP

Aggregate budget (INR crores)	100
Amount used for printing Digital Pattadar Passbooks	40-60
Amount allocated per district for title verification, etc.	1-2
Source: Interviews conducted with state government officials (June 2019)

Table 4a shows that a blanket amount of Rs. 1-2 crores was allocated per district for the process of conducting the title verification, and the overall implementation of the LRUP. This was in addition to the regular budget of the Revenue Department. The allocation was uniform across all districts without regard to their size or other factors which might complicate the implementation further such as fragmented land parcels and vast forest areas. In the absence of district-level data on the usage of these additional funds, it is difficult to ascertain the sufficiency of these amounts or the extent to which a uniform allocation poses problems for the larger or more complex districts.

Digital Pattadar Passbooks

One of the key components of the LRUP was the issuance of digital Pattadar Passbooks (PPBs) to all the owners of agricultural land whose land was found to be undisputed during the LRUP. The PPB is a land record unique to the erstwhile unified state of Andhra Pradesh. Originally, it recorded the interests of owners, Pattadars (defined, under the land revenue laws, as the person who pays the land revenue), mortgagees, and tenants on the land parcel. The purpose of this document was to facilitate farmers' access to credit. For example, the AP Rights in Land and Pattadar Passbooks Act, 1971 allows farmers to apply for credit on the basis of the passbook; and empowers the Collector to recover, on behalf of the lender, an unpaid loan obtained on the basis of the passbook.

The State of Telangana adopted the AP Rights in Land and Pattadar Passbooks Act, 1971 and renamed it as the Telangana Pattadar Passbooks Act, 1971. In 2018, Telangana made two critical amendments to the Telangana Pattadar Passbooks Act, 1971: first, it dispensed with recording the interests of tenants and occupants who are not owners on the PPBs. The reason for this is unclear. However, the current law governing agricultural land tenancies in Telangana, which confers superior rights to protected tenants (namely, tenancies created in 1950) reportedly led to insecurity among owners of agricultural land parcels. It is possible that this was the motivation for restricting the set of rights that were recognised in Pattadar Passbooks.

Second, it specifically provided that loans could be made on the basis of the electronic record of rights, and that the production of the PPB should not be insisted upon for advancing a loan on the security of land, the interest of the owner in land or the crops growing on it (Table 5).

Table 5: Recording of interests in Pattadar Passbooks: pre and post 2018 amendment

	Pre-2018	Post 2018
Pattadar	Yes	Yes
Mortgagee	Yes	No
Tenant	Yes	No

The non-inclusion of tenancies and other interests in the PPB is an important amendment as it ultimately affects the identification of beneficiaries under the RBS.

Disputes uncovered in Phase 1 of the LRUP

Contrary to the popular notion of land being a highly disputed area, nearly 95% of the area covered under the LRUP was cleared as free of disputes related to ownership during the first phase (Table 6).

Table 6: State-level outcomes under the LRUP

LRUP outcomes: in acres and gunthas
Total extent verified	2,38,53,248.36
Total extent clear	2,28,77,333 (94.65)
Total extent not clear	9,75,915.34 (4.09)
LRUP outcomes: in number of land parcels
No. of Survey Nos. verified	1,96,78,844
No. of Survey Nos. cleared	1,87,60,272 (95.33)
No. of Survey Nos. not cleared	9,18,572 (4.66)
Total No. of Khatas covered	71,71,409
Total No. of cleared Khatas	67,68,151 (94.37)
Agricultural Khatas	60,00,509
Non-agricultural and govt. assets	7,67,642
Total No. of Khatas not cleared	4,03,258 (5.62)
Source: Revenue Department, Government of Telangana. Numbers in brackets are percentages of the total of the head under which they appear.

It is possible that the speed of implementation of the LRUP, the coverage and the high clearance rate is attributable to the manner in which the verification process was conducted. Since the LRUP was not preceded by a survey, the entries in the land records with respect to the area and parcel boundaries, were verified on a self-declaration basis. In the article that follows this one, we demonstrate the discrepancies in the area recorded in the base land records and the Rythu Bandhu beneficiary lists. Second, the LRUP involved the updation of a limited number of fields of information in a PPB. As mentioned above, interests other than ownership were not recorded in the revised PPBs. Since interests such as tenancy and possession, which are inherently more difficult to record, were not within the scope of the program, this might have contributed to the wide coverage, low disputes and speed of implementation of the program.

The design of the LRUP and its bifurcation into two phases has important implications for the scale that the program could achieve. As mentioned above, all disputed land parcels were kept out of the purview of the first phase. Thus, for instance, land parcels with respect to which cases are pending in the civil courts or revenue courts or were subject to succession disputes, were kept for Phase 2 of the LRUP. This ensured that digital PPBs could be issued in respect of the bulk of the land parcels (93%) that were cleared of ownership related disputes under the LRUP (Table 7).

Table 7: Number of digital Pattadar Passbooks issued under the LRUP
No. of cleared agricultural Khatas	60,00,509
No. of PPBs issued	55,85,396 (93.08)
No. of Khatas cleared for PPBs, but not yet digitally signed	4,15,113 (6.91)
AADHAAR is available	1,65,055
AADHAAR is not available	2,50,058
Source: Revenue Department, Government of Telangana (June 2019). Nos. in brackets are percentages of the total of the head under which they appear.

Conclusion

The LRUP was envisaged as a speedy and one-time state-wide intervention for the updation of land records and the issuance of updated digital Pattadar Passbooks in Telangana. While the scale and the speed of the program holds important lessons on the importance of planning and capacity, the design and implementation of the program have several unintended consequences affecting the utility of land records generally and the design of the RBS more specifically.

Our study reinforces the notion of the multiplicity of land records at the village level. The ubiquity of the digital Pattadar Passbooks has made them a de-facto land record for ascertaining claims to ownership in Telangana, although their original purpose was restricted to allowing easier access to agriculture credit on the security of the underlying land and crops grown on it. As demonstrated in Table 3a, information about an agricultural land parcel is now spread across the base land records - such as the Pahaani records and the record of rights - which are usually maintained in all states under the respective land revenue laws, and the digital Pattadar Passbooks. This increases the potential for inconsistency in the information across different land records, even as the records are maintained by the same department of the State Government. Given the large-scale digitisation of base land records in Telangana, and the relative ease with which they can be accessed by citizens through digital portals such as MeeSewa, the need to overlay these records with a new land record in the form of Pattadar Passbooks, remains questionable.

Second, the LRUP was not preceded by a state-wide survey. The design of the program restricting the kinds of interests required to be recorded in the updated digital Pattadar Passbooks allowed the program to proceed with relatively higher speed. Counter-intuitively, the level of disputed agricultural land parcels was relatively lower than one might have estimated. However, this seems to be in line with a previous study that sought to investigate the degree of concordance between information recorded in digital land records and reality in Maharashtra, Himachal Pradesh and Rajasthan. The survey found relatively high concordance on ownership between the digital land records and reality. For instance, the study in Maharashtra found that out of the 102 samples land parcels examined across two villages in Maharashtra, 101 of them were owned by the person reflected in the digitised land record. However, the study found higher discrepancies in recording encumbrances and the area of the land parcel as reflected in the digitised land record and the actual area occupied in reality.

In short, the LRUP could achieve this scale within such a short span of time due to the simplification and minimisation of information that was required to be recorded in the Pattadar Passbooks. However, even as the discourse on the formalisation of land records leans towards widening the range of information recorded in land records, the measure of creating a new digital land title record with a restricted set of information would have the unintended consequence of the record being of limited utility.

Finally, the failure to record interests such as tenancy and mortgages on the digital Pattadar Passbooks, might have influenced the design of the Rythu Bandhu scheme. Reliance on the digital Pattadar Passbooks for the identification of beneficiaries leads to exclusion of landless farmers, such as tenants and share croppers, who are cultivating land and incurring expenditure as tenants. To ensure that the agriculture income support is beneficial, the design of the land record that is used as the base for the identification of beneficiaries, is critical. If the land record records interests such as tenancy and occupancy, it is easier to include tenants and actual cultivators within the ambit of the DBT scheme thereby ensuring that the intended benefits under such schemes reach the tiller of the land.

References

Sanand, Gupta and Prabhakar. A Pilot Impact Assessment of the Digital-India Land Records Modernisation Programme, NCAER (2017).

Narayanan et al. Report on the implementation of the Digital India Land Records Modernisation Programme (DILRMP) in the state of Maharashtra, IGIDR (2017).

Muralidharan, Karthik, Paul Niehaus, and Sandip Sukhtankar. 2016. Building State Capacity: Evidence from Biometric Smartcards in India. American Economic Review, 106 (10):2895-2929.

Swetha Totapally, Petra Sonderegger, Priti Rao, Jasper Gosselt, Gaurav Gupta. State of Aadhaar Report 2019. Dalberg, 2019.

Thomas, Uday and Zaveri. Linking welfare distribution to land records: a case-study of the Rythu Bandhu Scheme (RBS) in Telangana, IGIDR (2020).





Diya Uday and Bhargavi Zaveri are researchers at the Finance
Research Group, Mumbai. The study was supported by the Omidyar Network India.

Base and superstructure: Ideological constraints affecting India’s land markets

by Anirudh Burman.

As a scarce resource, land in India has often been, and will continue to be a source of heightened contestation. This contestation has taken place on the base of the legal framework that regulates land markets. This legal framework enables the state to exercise extensive control over the market. Over the decades, state power has been used extensively in an attempt to restructure socio-economic relations in society.

This legal framework has been successful in fomenting political mobilisation, it has not increased the efficiency of the market in any meaningful manner. If the underlying premises remain unchanged, this feature of our land markets - intensive political contestation without meaningful efficiency or equity gains - is likely to continue. This is likely to become increasingly contentious given the increased dynamism of the Indian economy - rapid urbanisation, diversification of the rural economy, and industrialisation.

During colonial rule control over land was not subject to democratic power. Since 1947, the use and control over land has been under democratic control. However, in these years, the issue of control over land was a huge source of conflict. Radical laws were passed to redistribute agricultural land and to ensure equitable rights for the cultivating class. However, their success was limited. Their implementation gave rise to a spate of litigation, and also led to extreme violence.

For all the frenzied activity over the equitable distribution of agricultural land, and planned urbanisation, the outcomes have been poor. Both agricultural and urban land in India are frightfully expensive. Getting land to set up industry often becomes a political nightmare. The rural economy that is intrinsically tied to land remains woefully stagnant. Migrants to urban areas are unable to afford decent housing, sanitation and safety.

An important dimension of this field is that these outcomes are rooted in the ideological basis on which Indian markets for land rest on. This ideological framework is broadly common across different kinds of land markets in India - rural, urban, industrial. And this framework has developed over the years in a manner that has rigged the land market against those who depend on it the most.

India’s regulatory framework in the land market today resembles that of other sectors like the financial markets and the telecom sector before they were liberalised. Market liberalisation did two things - it limited the scope of government regulation, and reoriented regulation to solving problems that privately-dominated financial and telecom sectors faced. This led to the growth of both these markets, and generated unprecedented benefits for consumers and prosperity for investors.

Similarly, the regulation of rights in land has a strong connection with the size, dynamism and growth of India’s land market. Laws and regulations that impair such rights constrain the land market.

State regulation of agricultural and rural land

Today, the state regulates almost all parts of the agricultural land market extensively. It determines what is agricultural land, and what is not. It determines who can own agricultural land. Many states prohibit non-agriculturalists from buying agricultural land. Others prohibit non-residents of a state from buying agricultural land within the state.

It also places restrictions on other kinds of transfers of agricultural land. For example, land given to the dependents of deceased military personnel cannot be transferred in many states. Through land-ceiling legislation, it lays down how much agricultural land one can own based on its estimation of what constitutes a sufficient amount of land.

Many states in India do not recognise tenancies and prohibit subletting of agricultural land. Others place restrictions on the contracts tenants and owners of agricultural land can enter into. Other regulations place restrictions on leasing and subleasing of agricultural land.

State regulation of towns and cities

Just like agricultural land, state regulation of urban land markets is extensive. In urban areas, the state not only decided who will own how much, and for what purpose, its role starts at the very inception - of deciding when a town should be called a “town” and a city a “city”. While almost all countries adopt some similar framework to regulate land-use, the framework adopted by India has been criticised by many as being too stringent, and one that effectively slows down the process of providing urban facilities like sanitation to rapidly growing new towns.

Conclusion

This restrictive regulatory framework has failed to provide dividends. Property in major Indian cities is more expensive relative to most other major cities in the world. Rural incomes have remained stagnant and required substantial government support. It is therefore time to revisit this regulatory framework (a) by understanding why this framework has failed, and (b) what can be done to reform this framework.


The author is researcher at Carnegie India. This paper was presented at the APU-NIPFP workshop Strengthening the Republic#1, January 11, 2020.

How land laws create dead capital: A case study of Maharashtra

by Diya Uday.

Land is an important form of capital. In India, for most households, it is the dominant element of the household portfolio. About eighty per cent of all household assets in India, are in the form of real estate (land, buildings and other constructions owned by households, for residential, commercial or vacation purposes) (Ramadorai Committee Report, 2017, pg. 12). In the CMIE 'Consumer Pyramids' household surveys, almost all households own some land or real estate.

As with other factors of production, an efficient economy requires full utilisation of the resources in the country, efficient mechanisms for discovering its price, and frictionless transactions. This is not taking place well in India. For example, unsecured debt still accounts for two-thirds of the total liabilities for the very poor and one-third of the rich in India (Ramadorai Committee Report, 2017, pg. 6). Similarly, despite landlessness in rural areas, only fourteen per cent of all households reported leasing-in land (NSSO Report, 2013, pg. 30). In many states such as Maharashtra, the proportion of households leasing-out land is well below ten per cent (NSSO Report, 2013, pg. 30).

In the study of land economics in India, a key question that has to be pursued is: Why, despite the sizeable presence of land as an asset in household balance sheets, is there poor capitalisation of land in India? What obstructs harnessing the full productive capacity of land in India?

The idea of land as dead capital was made prominent by Hernando de Soto, who used the term to refer to something that could not be easily bought, sold or used for an investment. He showed that the poor possess far more capital than is evident, but institutional failures hinder utilisation of the land as wealth. For example, he found that in Egypt a person who wants to acquire and legally register a lot on either state-owned desert land or former agricultural land has to navigate a plethora of bureaucratic procedures, estimated to take anywhere between five to fourteen years. As a consequence, a large number of people chose to build dwellings illegally (de Soto 2000, pg. 20). This means that these properties cannot be used to access formal credit or be legally sold or rented.

There is a need for a comparable literature on India. How does the land market work? What are the impediments to translating land into value added? How can wealth in the form of land impact upon the life of the owner to a greater extent than is presently the case?

In this article, three questions are studied, treating Maharashtra as the environment under examination:

1. Do regulations on land hinder the effective utilisation of land as an asset in India?
2. What are the restrictions imposed?
3. What are the less visible effects of these restrictions?

Three pathways to harnessing land wealth

The value of land is unlocked in three ways:

1. A mortgage, whereby land is used as a security to access credit.
2. A sale, where the owner of the land transfers it to a buyer.
3. A license or lease on the land in exchange for regular payments.

There has been a considerable focus on mortgage transfers as a means of capitalising the value of land. Land titles and access to credit are now intricately connected in policy discourse on financial inclusion and access to finance. For example, the RBI has recognised the role of land titles in access to credit and consequently to financial inclusion (Mohanty Committee Report, 2015, pg. 26). Some court interventions too, have given creditor rights precedence over transfer restrictions on land.

The other two methods -- sale and lease -- have received less attention, but are no less important. The owner of an asset must be given the freedom to choose the method by which the asset is to be capitalised. Directing policy attention only towards land as a means of accessing credit, and ignoring reforms in sale and rental markets, reduces the choices available for a land owner.

A case study of land laws in Maharashtra

We now turn to identifying provisions of law that affect the transferability of land in Maharashtra.

Methodology. A list of laws was obtained from the website of the Bombay High Court. This list was examined to identify the laws that potentially affect transfers of both agricultural and non-agricultural land and real estate, by reading the names of the laws. The long titles of these short-listed laws were examined to assess the applicability of the law for this case study. This yielded the following list of laws that impact upon land transfers:

1. Maharashtra Land Revenue Code, 1966
2. Maharashtra Tenancy and Agricultural Lands Act, 1948
3. Maharashtra (Prevention of Fragmentation and Consolidation of Holdings) Act, 1947
4. Maharashtra Stamp Act, 1958
5. Registration Act, 1908
6. Maharashtra Rent Control Act, 1999

The analysis of these laws yields the following results:

• Restrictions on the transfer of agricultural land: There are two kinds of restrictions on the transfer of agricultural land. The first kind of restriction is that under the Maharashtra Tenancy and Agricultural Lands Act, 1948, agricultural land can only be transferred to a resident agriculturist. An agriculturist is defined as a person who cultivates land personally. A non-agriculturist can only buy agricultural land after obtaining the permission of the Collector, unless the property is specifically allocated to residential, commercial or industrial uses or is to be used for a bona fide industrial purpose. In all other cases, the restrictions on transfers continue to exist. These restrictions apply to subsequent transfers as well. Similarly, mortgages to lenders other than co-operative societies, also require permission of the Collector. In each case, the Collector may grant permission subject to conditions.

  These restrictions induce three problems. First, they increase the cost of transacting on such land. Second, the law does not prescribe a time limit for granting such approvals. Neither are these permissions covered under the Maharashtra Right to Public Services Act, 2015. Without statutory timelines, the procedure for transfer could be time-consuming and tedious. Discretion in delay creates the possibility of corruption. Third, since these restrictions continue to apply even after the land the purchased, they also handicap future purchasers.

  A second class of restrictions kicks in after the sale is completed. Where the law has done away with the requirement for permission, the land must be put to the intended and permitted use within five years from the date of transfer. Failure to do so incurs a penalty of two per cent of the market value and even forfeiture. Further, when a purchaser of this land wants to sell it without utilising the land for a non-agricultural purpose, she can do so only with the permission of the Collector and after payment of a transfer fee of twenty five per cent of the market value of the property. If sold within ten years, these restrictions continue to apply to the transferee as well. There are further restrictions placed on certain classes of agricultural land, such as the payment of fifty per cent of the purchase price to the Collector. In case of a delay in the payment of price, this amount increases to seventy five per cent of the purchase price.

• Restrictions on the transfer of tribal land: The Maharashtra Land Revenue Code, 1966, places three types of restrictions on the transfer of tribal land. First, for sale of tribal land to a non-tribal, the permission of the Collector with the previous approval of the State Government has to be obtained. Before the grant of this approval, the Collector has to first offer the land to tribal persons residing in the village of the transferor or within five kilometres of the land. In scheduled areas, the additional sanction of the Gram Sabha has to be taken, unless it is for a 'vital government project' such as for highways, canals, etc. In all cases, the Collector is permitted to grant approval for transfer, with conditions. These restrictions would apply upon a lender, who might repossess land, also.

  The second type of restriction relates to the mortgage of such land. In case the mortgage is below five years, the permission of the Collector has to be taken for transfer. In the event that the mortgage is above five years, the permission of the Collector with the previous approval of the State Government has to be obtained. In case of a mortgage to a non-tribal, the same procedure of offering it first to a tribal person within the village or within a five kilometre distance from the land is undertaken. Further, the law permits the Collector to restore possession of the land to the tribal person at the end of the mortgage period, regardless of any court order or law. This means that if a tribal person defaults on a loan where land is taken as collateral, at the end of the term of loan, regardless of a court order to the contrary, the land can be restored to the mortgagee at the discretion of the Collector. These restrictions hamper lending against such land. In a field study conducted across twenty villages in Maharashtra, respondents were unanimous in stating that if they defaulted on a loan for which land was collateral, nothing would happen and that when land is used as collateral it was rarely enforceable if there was a default (Narayanan et. al, 2019). Court rulings on this subject have been conflicting, sending mixed signals to lenders (Zaveri, 2017). Poor transferability also hampers the establishment of a credit history and thus access to credit.

  The third type of restriction relates to lease of such land. The provisions requiring permission of the Collector and State Government and the requirement of offering the land to a tribal person within the village or within a five kilometre distance from the land, also apply to lease transactions. These provisions make leasing of such land to anyone but tribals, a lengthy and expensive procedure. Where there are no takers from among the tribal community, the owner of such land is effectively left with one less tool for capitalising the value of her asset.

• Restrictions on the transfer of notified fragments: A fragment of land is defined as a plot of land which measures less than the notified standard area. The Maharashtra (Prevention of Fragmentation and Consolidation of Holdings) Act, 1947 imposes two types of prohibitions and restrictions on such land. First, any land which is notified as a fragment, can only be sold to the owner of a contiguous parcel of land. In addition to limiting the owner's access to the land market, as in the case of tribal land, these sale restrictions also inhibit recoveries of lenders.

  Any land which is notified as a fragment can only be leased to the cultivator of a contiguous parcel of land. This provision is problematic in that it operates within an already restrictive lease market, where incentives to lease are few. Further in the event that the cultivator of a contagious parcel is not interested in leasing-in the land, the owner is either forced to cultivate the land herself or to let it lie fallow, effectively making it a dead asset.

The following laws do not place direct restrictions on sale, lease or mortgage transfers, but have provisions that affect these transactions (Category 2 provisions):

• Rental market restrictions: There are two main laws that govern rental markets in Maharashtra, one for agricultural land and one for constructed property. While these laws, unlike those in some other states, do not prohibit leasing of land, they do impose other restrictions. First, the Maharashtra Tenancy and Agricultural Lands Act, 1948, which applies to agricultural land, prescribes rent ceilings. The prescribed formula for determining the maximum amount of rent payable is that the rent must not exceed five times the assessment or twenty rupees per acre, whichever is lower. Similarly, the Maharashtra Rent Control Act, 1999 controls rents in specified properties by imposing a statutory maximum rent which is below the equilibrium rent (determined on the basis of the market value of the property). The law also limits the percentage of yearly escalation in rent chargeable to tenants.

  Rent ceilings reduce the rental revenues of owners. In addition to prescribing the value of the agreements, these laws also prescribe other terms such as the grounds of termination exhaustively. This means that the parties have little or no freedom to contract grounds of termination beyond those prescribed in the law. Further, the recovery of possession of the premises is a difficult process which will most likely require administrative or court intervention, which means additional costs to the owner. These features coupled with rent ceilings, leave no incentive to owners who wish to capitalise their asset by means of a lease. In fact, anecdotal data from land-owner farmers in Palghar and Mulshi Districts in Maharashtra suggests that the fear of non-recovery of leased out land is a key reason for not leasing out of land.

• Registration of transfers and stamp duties: The Registration Act, 1908 requires certain deeds used to effect transactions in immovable property, to be registered with the office of the registrar or sub-registrar. A document has to be registered by payment of a registration fee. In Mumbai, this amount is thirty thousand rupees. The biggest problem with this system is that while registering this deed, the registrar is not under any obligation to confirm the veracity of the contents of the deed or the marketability of title. The registration of fraudulent documents of transfer thus is possible. For example, in a recent episode, an examination of property documents revealed forged signatures and non-existent parties to the transaction. This system therefore adds to the cost of the transaction, without any real benefit to the parties. A purchaser, borrower or lessee is incurring the cost of registration without actually having the assurance of marketability of the land or identity of the parties.

  Stamp duty is incurred before the registration. Like other taxes upon transactions, stamp duty is a `bad tax' in public finance parlance. The Maharashtra Stamp Act, 1958 imposes a stamp duty of five per cent on the market value of the property in a sale transaction. Recently, a surcharge was introduced which has further increased the applicable stamp duty.

• Presumptive titles: The Maharashtra Land Revenue Code, 1966 requires the updation of land records each time a transfer takes place. For this, the transferee has to make an application for updation of the record. The concerned officer will invite objections. If there are no objections, the record is updated. If there are objections, the dispute will be adjudicated before updating the record. Despite this lengthy procedure, land records do not have any value in terms of proof of title. The Supreme Court recently reiterated that entries of transactions in revenue records, do not create title to land.

  Purchasers demand the issue of a certificate of marketability of title from the seller. This involves a process of legal due diligence or examination of title by legal experts. In most cases, the purchaser also conducts their own diligence in addition to demanding this certificate, adding further costs to the transaction.

• Form of land records: There are two types of textual records in the state of Maharashtra: the 7/12 extract for agricultural/rural land, and the Property Rights Card in urban areas. A study on urban records in Mumbai reveals that the fields of information required to be recorded under the rules of Maharashtra Land Revenue Code, 1966, only serve the purpose of collection of revenue (Sheikh et. al., 2018). These records are therefore fiscal cadastres and information contained in these records is limited. Vital information such as easementary rights, restrictive covenants on the land, litigation and encumbrances are not recorded.

  Insufficient information in land records increases the cost to and risk borne by the buyer. In case of a mortgage, the cost of lending is also likely to increase as it will take into account these risks, making borrowing more expensive for land owners.

Thus, we have a depiction of how the landscape of laws in Maharashtra interferes with the translation of land into value added. There are three limitations of this work. First, the list of laws is not exhaustive. There are other laws, regulations, government orders, which affect the transferability of the property, which do not find mention in this case study. For example, there are a number of transfer restrictions in urban areas, such as restrictions on change of land use and development under the Maharashtra Regional and Town Planning Act, 1966, the Development Control Regulations, the imposition of transfer fees payable by apartment owners to co-operative societies and transfer fees paid on Collector's land. Second, at present, there is no empirical evidence, that links these provisions to the impact on land economics. Third, this study is theoretical and does not analyse how these provisions will play out on-ground. Depending on the administrative processes, these provisions may have either a large or small impact in obstructing transactions.

Conclusion

The aim of this study was to examine the regulatory restrictions imposed on land transfers and their potential role in creating dead capital. This study documents two classes of restrictions: Category 1 provisions, which directly restrict transfers in the land market and Category 2 provisions, which affect the ease of doing transactions. Both these categories of provisions create a complex web of conditions for transfer, which may contribute to create dead capital in land markets, with varying effects. For example, a land owner may not be able to capitalise land by transfers on account of Category 1 provisions for two reasons. First she may be outright prohibited from undertaking a transaction, or second, the provision generates an unseen restriction of some kind, which operates to effectively disallow her from capitalising her asset. Category 2 provisions, again may affect the effective capitalisation of land by transfers in two ways. First, by creating disincentives to capitalisation in some manner; rent ceilings are a classic example of this. Second, these restrictions impose costs which reduce the benefits from capitalisation.

Furthermore, this study highlights the unseen consequences of economic policies and the regulations made to implement them. There is a need for policy makers to think about the secondary consequences of any regulation. Each instance listed above is a case of the proverbial coin with two sides, one of which has been overlooked. In the area of land markets in particular, it appears that policies have been unidirectional; predominantly discounting the impact of these policies on capitalisation of land. Recent amendments to the law too reflect this fallacy. For example, the 2016 amendment to the Maharashtra Land Revenue, 1966, introduced the requirement of additional permission Gram Sabha for transfers in scheduled areas. While the argument for this was that it would would lend more accountability to the transfer process, one must also recognise that this increases the complexity and cost of the transfer process which might reduce demand for such land, leading to a situation where even a willing owner, is left with no market for capitalisations.

The effects of these restrictions will be greater in states which have more restrictive regimes. In solving these problems, therefore, the first step is a comprehensive study, at the level of each state, which documents these restrictions. As an example, for Maharashtra, this would be a more complete version of this article. The impeding provisions must be categorised in the manner described by this case study. The reason for this is that different categories of restrictions will require different action points. The second step is to determine empirically if each category of these restrictions affect the capitalisation of land as an asset. Field studies are required which determine the on-ground effects of these provisions on aspects such as (i) the costs of lending, (ii) the cost to the owners of the land and (iii) the transaction frequency.

References

Narayanan et. al., 2019, Land as collateral in India, Sudha Narayanan and Judhajit Chakraborty, Indira Gandhi Institute of Development Research, February 2019.

Sheikh et. al., 2018, Rethinking urban land records: A case study of Mumbai, Gausia Sheikh and Diya Uday, The Leap Blog, November 1, 2018.

Zaveri, 2017, Distortions in the Indian land collateral market, Bhargavi Zaveri, The Leap Blog, February 1, 2017.

Ramadorai Committee Report, 2017, Report of the Household Finance Committee, Reserve Bank of India, July 2017.

Mohanty Committee Report, 2015, Report of the Committee on Medium-term Path on Financial Inclusion, Reserve Bank of India, December 2015.

NSSO Report, 2013, Household Ownership and Operational Holdings in India, National Sample Survey Office, December-January 2013.

de Soto, 2000, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, Hernando de Soto, Basic Books, 2000.

 

Diya Uday is a researcher at the Indira Gandhi Institute of Development Research, Mumbai and visiting faculty at the Tata Institute of Social Science, Mumbai. The author would like to thank the three anonymous referees for their comments and suggestions.