Friday, June 24, 2011

Views: Nitin Desai - Public land for private ends

Nitin Desai / February 17, 2011, 0:32 IST
Business Standard
Efficient land markets require rational management of public land
The role of the government in the operation of land transactions has once again hit the headlines. If earlier the focus was on the processes of acquisition of private land by the government, attention has shifted now to the complementary process of transferring land under public control to private parties.

Some big land transfers that have recently been in the news, like the Vedanta University case in Orissa and the land for the Nano factory in Gujarat, have involved lands that were under public control, directly or indirectly. Some of these lands were acquired earlier for some other announced public purposes, in the case of the Nano factory land, for an agricultural university. Should the state be free to take land acquired for one purpose and transfer it for a different purpose?

But there are signs of change. Stung by the Adarsh housing society scam, which implicated the Congress government in Maharashtra, Sonia Gandhi has asked all Congress chief ministers to forgo discretionary authority over the transfer of lands under public control. More recently, at the end of January, honourable Justices Katju and Mishra of the Supreme Court have given a major judgment dealing with the issue of common lands which will require radical changes in the way in which state governments deal with the common lands under their control.

The Supreme Court judgment is far-reaching. The case arose because some influential locals had trespassed and occupied a village pond, filled it and built on it.

The judgment limits the powers of the government to authorise or regularise the privatisation of village ponds and common lands. It instructs the state governments to prepare schemes for the eviction of illegal/unauthorised occupants of such lands, with only a few exceptions, even if such occupation has subsisted for a long time and has involved a huge expenditure in construction.

Another category of common land that is under pressure is the area classified as wasteland, a misleading term as it creates the impression that the land is not used for anything. But that is not correct. These so-called wastelands are used by locals for grazing, firewood or water supply. State governments are handing over these common lands to private parties for biofuels or for compensatory forestry undertaken by enterprises as a requirement for the environmental clearance of their projects. Once these common lands are re-forested, they pass out of the control of the local community into the hands of the forest department.

Forest lands are also under pressure from mining interests as a large proportion of the unexploited mineral wealth of India is under forests. The present struggle about the no-go areas for coal mining is a manifestation of this pressure. A different type of pressure comes from bio-conservationists who want to protect areas excluding locals. Even though the forest lands are owned by the government, its freedom to transfer them is limited by the Forest Rights Act that requires the consent of locals who have traditional rights to forest products.

The scope for mala fide transfers of public lands is greatest in urban areas. For a variety of reasons, state governments control large tracts of vacant land in urban areas, including ecologically fragile lands reclaimed from marshes or shallow coastal waters. Large areas of land were acquired and placed in the hands of urban development authorities like the DDA. The central government also is a major urban landlord particularly in metro areas where land costs have gone through the roof. The cantonment areas of the defence services extend to some 1.8 million hectares and the Railways, the Post Office and port trusts also own valuable urban properties.

The large areas of urban land controlled by the state would have helped contain land speculation and promote affordable housing development. But in practice, the urban development authorities operated like land speculators. Their stranglehold on urban land led private property developers to leapfrog beyond urban limits into peri-urban areas thus leading to urban sprawl and thereby imposing huge infrastructure costs on the public sector.

How can one get to grips with the challenge of ensuring honest, transparent and efficient management of the vast tracts of land that are under public control?

As a first step, the government must prepare a complete inventory of the lands under its control and the agency that can decide how this land should be used and that has the power to transfer this land to private parties. An annual audit of land transactions undertaken by these agencies should be mandatory. In urban areas, the probity of the transactions can be assessed by comparing them with similar private transactions.

The management of the urban lands under public control can be vested in a professionally run land management corporation. This corporation can be accountable to the legislature and should observe high standards of transparency. But it must be situated at an arms length from the political executive. These publicly owned urban lands must be subject to the same planning controls as privately owned lands.

Transfers of land at concessionary prices should be avoided altogether and all transactions must take place at market prices. If a particular activity, say a school or a hospital or a cultural centre, provides free or low-cost services to the general public, the cost of acquisition at market prices should be subsidised directly by the government department concerned rather than through discretionary provision of urban land at a concessional price.

The transfer of large tracts of public lands in rural areas to private parties should be done only in exceptional cases. Forests and the so-called wastelands are under public control for ecological rather than commercial reasons. Local communities depend on these lands for many services. Hence the primary control on such transfers has to be the environmental clearance. Since local communities are affected, they must be consulted and their interests protected before any such transfer takes place. The area of land transferred must bear some reasonable relationship with need and that terms of the transfer should be consistent with the best available information on nearby commercial transactions.

Rational management of public land, particularly in urban areas, is absolutely necessary not just to avoid scams but to move towards a more efficient land market. Let us hope that the current turmoil brings us closer to this.

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