Did you know that 66% of the litigation in India is land or property related? PRATAP PADODE, Founder, FIRST Construction Council sheds light on one BIG risk that is holding private capital back from making commitments
Land and property deals mean that big money is involved. However, try visiting a land or property registration office and while you would expect to have a plush office as the profile of each customer is ideal for a wealth management business development executive, one is aghast at the poor infrastructure provided to an otherwise efficient department which works very well as a team.
Efforts have been undertaken to change the situation and computerization of registration of land and property deals has now been completed in more than 93% in India. ‘Record of Right’ is a land record where all sorts of right and liabilities in respect of every piece of land are registered. Computerization of Record of Rights have been completed in 6,25,137 villages out of 6,57,397 villages (95.09%) as on 31st December 2023.
But some issues are not as easy as establishing rights. Take the example of Andhra Pradesh.
Since the Chief Minister of Andhra Pradesh, N Chandrababu Naidu has returned to power and picked up the baton from where he left it last, it is appropriate to cite the Land Pooling system that he had introduced. The new capital of Amaravati planned by the TDP government was to be built over 33,000 acres of land. To encourage farmers to give up their land voluntarily for the project, the government launched a land pooling scheme in December 2014. Land pooling involved 34,400 acres donated by 29,966 farmers!
The Andhra Pradesh Capital Region Development Authority Act was notified in early 2015, setting the terms of the compensation. For every acre or 4,840 square yards of wet farming land on the banks of Krishna River, a residential plot of about 1,000 square yards and a commercial plot of 450 square yards would be given. In the case of dry agricultural land, the size of the commercial plot would be smaller at 250 square yards.
In addition, the government agreed to pay an annual rent of Rs 50,000 per acre of wet farmland and Rs 30,000 per acre of dry land. This rent, with a 10% increase annually, was set to continue for 10 years from the date of entering the pooling scheme. To access these benefits, the farmer had to show ownership documents in the form of a patta. Meanwhile, landless families who were displaced from the land were paid Rs 2,500 a month as compensation for ten years.
This table summarizes the terms of compensation as per the Andhra Pradesh Capital Region Development Authority Act, notified in early 2015.
Singapore had prepared three master plans for the capital city of Amaravati, according to which, it would house a total of nine regions, including a government city, health city, finance city, sports city, electronics city, justice city, tourism city and knowledge city.
The land pooling scheme was accepted by some farmers on one condition: that the government would build all civic amenities like roads and drainage system. The understanding was that once the capital was built, businesses would flock to the area, and the plots given to the farmers would become high-value real estate.
As per CM Chandrababu Naidu, out of the total project cost of Rs 51,687 crore, tenders were called for works worth Rs 41,171 crore and bills were paid to the tune of Rs 4,319 crore during the earlier TDP government. The last administration as per the CM Chandrababu Naidu, withdrew land acquisition notification for 1,917 acres, terminating annuity for 2,903 farmers and cancelling welfare pensions for 4,442 farmers.
Can you imagine how many cases must be crying for justice due to the flip flop in policy in Andhra Pradesh alone? And we are only talking about the Land Pooling Scheme. So many industries too abandoned their conceptualised projects due to the flip flop in policy.
Government must assure investors and landowners that no matter which government comes to power once an agreement has been entered with due process, and if the government issues the permission, then there should be no back tracking. This will relieve investors from this risk which is holding investments back.