Agastya Shukla and Sirjan Kaur
Governments across the world are fast adopting and experimenting with land pooling instead of acquisition policies. Land pooling is considered to be a better and viable option since it moves away from a compulsory standpoint and offers voluntary choice to the landholders. Literature has documented that pooling policies to also reduce the litigation and conflict that may arise otherwise (IIHS). However, it is crucial to undertake a review of existing land pooling policies to ensure success. In Delhi, for instance, Verma (2022) documents that Delhi’s policy failed to create long term gains for its landholders.
The Punjab government recently introduced what has been termed as a ‘historic’ land pooling policy. The policy—which identifies 27 focus areas to begin with— aims to increase rapid ‘urban development and commercialisation’ in the state. This is a first for the state’s AAP government and the scale of the policy is significantly more than previous attempts at land pooling in the state. Approximately 84% of the state’s land is agricultural land. A review of the state’s land pooling policy, therefore, becomes crucial.
It is important to review the entirety of the policy along with the other policy decisions announced in conjunction. A few elements did not come into the limelight under the big announcement of the ‘historic’ land pooling. One such announcement was the increase in the Change of Land Use (CLU) fees and External Development Charges (EDC). The government announced that these were being undertaken to boost revenue generation. However, it is crucial that we critically assess these measures. The government hiked the EDC charges by a whopping 100%. High EDC charges add to the cost of construction. Neighbouring states fare better on this front. For the same residential plotted construction, a real estate builder would have to pay Rs 104 lakhs per gross acre in Gurgaon, but 128 lakhs per gross acre in Mohali.
While land pooling is being considered as a one arrow strategy to solve the state’s development and commercialisation challenges. It is important that the government recognises that such issues are hardly affected by one policy. A combination of reforms is required to address them. Change of Land Use permission is a classic example. Currently, states restrict the change of land use from one designated use type to another. The types of uses are designated under the zoning and master plans by states.
There are lessons that states can also learn from each other. Gujarat, for instance, has undertaken a shift in approach. Gujarat’s Town Planning Schemes (TPS) model has led to the allocation of nearly 40% of the reconstituted land for public purposes. The land parcels are not ‘pooled’ but are ‘reconstituted’ for the purposes of development. Such categorisation ensures that the ownership remains the same, and since ownership is the same, no stamp duty is levied. Remarkably, over 33,000 housing units were built within Ahmedabad’s TPS areas. Further, Gujarat’s scheme creates room for active participation of local authorities. This is clubbed with involving the landowners in the decision-making process. The local authorities create drafts of the town planning scheme, which is published in newspapers and also shared with landowners in a meeting called by the authorities. These measures are undertaken to ensure space for opinions of local population/landowners.
In the case of land pooling for the capital city, Amravati, Andhra Pradesh government created a separate authority—Andhra Pradesh Capital Region Development Authority—simply focused on the development of land for the capital. The authority stands out in terms of robust digital public records it has maintained for the pooled land parcels. The authority publishes village by village information of the pooled land, specific scheme for the area, current status, and reconstituted plot details.
Even as this policy takes a step in the right direction, a list of challenges remain. Firstly, the state government should undertake a holistic approach to resolving land allotment issues. Pooling is one step in the direction, but other issues related to restrictions on changing land use, high EDC charges, and restrictions under zoning laws are common irritants. Furthermore, as the state government takes on the endeavour of this historic pooling exercise, there are roadblocks that need to be addressed. The land market suffers from severe information asymmetries which has created troubles with determining true land ownership (Carnegie, 2021). These restrictions, subsequently increase the transactional costs of re-categorising land use from one to the other. The recently announced easing of sub-division of industrial land is a step in the right direction.
From an economic lens, Punjab must move beyond piecemeal policy interventions and address the systemic barriers of rigid zoning restrictions, high transaction costs and importantly, the poor public records. As a set of conclusory suggestions, the need of the hour is to set up a holistic regulatory structure to resolve the land allotment issues. A transformative policy, in its true essence, must not only mobilise land, but also empower the landowners and reduce bureaucratic frictions
Agastya Shukla is a Program Associate at PANJ Foundation. Sirjan Kaur works as a Senior Associate at an independent public policy institution.