Problem of inequity in land

The utilisation of land in India has always been vexatious. The situation is getting steadily worse. By 2050, India will be the most land-scarce major economy in the world.

The land misallocation problem has three major socio-political drivers:

1. Returns from land ownership in India derive not from its use but from the scarcity rents secured by deployment unequalising development.

Structural change involves considerable alterations in the geography and topography of land use. These should result in greater and more inclusive benefits to the population. The focus is on the rents from scarcity value, rather than on profits from deployment on the most productive activities.

When the textile mills and manufacturing units in Mumbai were closed, a mafia of bankrupt legacy industrialists exploited the decline of the mills and factories by building expensive commercial and residential real estate.

Similarly, in countless Indian cities, agricultural land was denotified for builders and developers to build high-end housing. Their access to cheap land was subsidised by the State – first to “cooperative housing societies”, and then to developers and promoters after 1991.

An economic project that uses a very scarce resource to solely benefit the effluent ones and widen inequality is doomed to meander in irrelevance.

2. The State is the largest owner of land Government land is partitioned between various units of the State. Thus, the government spends a lot of time and effort on land acquisition but there is enough government land in every major city in India to make these cities slum-free in five years!

The government being India’s largest landowner could have been an asset. But it is a weak zamindar, unable to use its land assets coherently. The commons are used to support inegalitarian economic development.

3. The commons of a nation are natural resources, including land, that are shared by communities and not owned by anyone. The government acts as the custodian and regulator of the commons.

With rising environmental concerns, the commons now receive public attention, but in India, the story is a depressing (and extremely well-documented) one of rising inequality.

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