Excerpts from the book "Ground Rules" by Swati Ramanathan, which gives a practitioner's perspective on challenges to implementation of land title systems in India.
 India’s growth story has shifted gears, with average growth over the last three years at a new level of 9.0%. India’s urban centres have been the flywheels around which this economic energy has been built. This urban story has been an osmotic one: on the one hand, cities have enabled economic growth, while on the other hand, they have simultaneously been impacted by the same growth factors. As an example of the symbiotic relationship between urbanisation and economic growth, migration into 34 major urban agglomerations accounts for 46.2% of the decennial growth between 1991 and 2001 of these centres.
Sustaining the country’s economic energy has significant challenges. One such challenge is related to the resolution of the issue of immovable property rights and land tenure systems. Land has been a principal source of sustenance or wealth from time of early settlements – for communities, conquerors, colonisers, industrialists and developers. With economic globalisation, the country has moved inexorably towards becoming a modern state with modern market systems, and needs to deal with associated requirements for global trust in the country’s statutes that protect contractual rights and agreements. Security of title to land and property Hernando De Soto, the Peruvian economist popularised the idea that land title allows the poor to access credit through formal banking systems thus converting the locked assets into liquid assets. Paul Dower and Elizabeth Potamite, through their research, affirm the role of title for access to credit, not just as collateral, but also as an important behavioural insight for the lender of the applicant who has taken the trouble to get the land title. Their survey in Indonesia showed that the likelihood of successful loan applications increased by 60% with a land title and increased the size of the loan by 29%. Klaus Deininger states that “evidence from Andhra Pradesh highlights not only that there is a considerable amount of land that does not have clear title, but also that providing a clear patta or deed certificate, can significantly increase land values, by 15% to 20% for privately owned and 30-45% for assigned or occupied land.” Central Govt. statutes require compulsory registration of sale of land. The reality is that due to high cost of registration, a large number of transactions in land in urban areas are informal. Section 18 of the Indian Registration Act does not demand compulsory registration of all land related transactions. State legislation on land acquisitions, court decrees, land orders, heirships partitions, mortgages, agreements to sell etc, do not require mandatory registration. The second impediment to security of land title is that the Indian registration Act does not ask the registration authority to verify history of the land or ownership from the seller, weakening the protection to buyers. Land registration is not registration of title, but registration of deed, acknowledging that a transaction has taken place between parties. All of these forces combine to weaken land records and security of tenure. What we have in India today is a presumed ownership of land which is questionable and can be challenged on multiple fronts.
A Framework to implement land title
Land reforms in urban and rural India could be through the 3 Rs - Land Registration Process
While work being done on the computerisation of registration processes is to be commended, stamp duties for sale of land are in the range of 8-10%. Reducing registration costs can increase the number of formal transactions with a net gain to the exchecker. Land Records Management
Many states have initiated electronic land records management in rural areas, but this work has not translated to urban areas due to various factors. One central factor: urban land parcels are smaller, have very different attributes from rural parcels (land-use, zoning built-up area etc are relevant parcels rather than soil type, crops, bank loans etc). Solution of land records management requires technology-based solutions, preferably GIS. Land Rights – Security of Title
Clearly providing security of title through robust records, improved registration and guaranteeing title, is the significant next generation reform on land. Transactions on land will become simpler, cheaper, quicker, and will be accurate and secure. There will be reliable data on property land and hence a dramatic reduction in litigations, and encroachments will go down. Tax and utilities collection will be better administered and allow fewer loopholes. Government record of land assets which is currently in shambles, will be vastly improved. This in turn will make land available for social development and provide for environment and infrastructure protection. Challenges and suggestions #1: Government Leadership At the Union level, this can be in the form of incentives for change and amendments to key statutes impacting land reform. At the state level, it requires appetite for change and leadership from the chief minister and the political members, as well as key state administrators, to drive outcomes and deliverables. Capable senior bureaucrats face multiple pulls and pressures on their time, rarely leaving them time to focus on details. External advisors with such state leadership support can add tremendous value in delivering outcomes. #2: Institutional Design
A second challenge is the design of institutional links between existing departments that deal in land issues. The key institutions dealing with urban and peri-urban land are Development authorities, Stamps and Registration Department, District Departments, Departments of Settlement and Survey, Municipal Corporations, Housing Development Boards and Industrial Boards. Today, these departments work in silos, where neither their administrative processes nor their data is linked or shared. In order to implement any successful model of security of records and title, decisions in who will administer such a system – whether it is an existing department or a new quasi-government Land Title Authority, or private company, will have to be made. #3: Enabling Statutes The third challenge is to adequately reflect in statutes, the framework of reforms towards guaranteed title. These can be in the form of new Acts, Amendments to existing with the rules and regulations accompanying them. #4: Process Mapping A fourth challenge is creating records and title management processes. This includes defining parameters of property, ownership, and transaction types (or changes to land and property). It also includes identifying departments concerned in each transaction type and ownership of updating data. #5: Developing the Right Technology Given the large number of transactions, and the changing variables in land – boundaries, rural to urban, sub-divisions – technology will need to provide speed, security and reliability of transactions. A parallel in search for a suitable technology is the technology for share registries and the de-materialisation of shares in Indian Stock Market in the late 90s. #6: Integration rural and urban systems Special consideration will be needed for land that lies in the periphery of urban areas. This is land that has an overlap of jurisdiction and uses, where it is often agricultural land but in the jurisdiction of the development authority of the adjacent city. When rural land is converted to urban land, there is a certain amount of confusion on the process of maintaining records and mutations and collection of revenue. #7: Public acceptance A seventh challenge is: will people embrace it. An important consideration: will the state adopting land title system mandate all conveyance in the land only through title, or will it make such a system optional? Keeping it optional could allow greater acceptance by the public and time for state machinery to set the process over time. Market forces will make property with title more valuable and attractive as mortgage instruments. State governments could incentivise acceptance of the guaranteed and electronic titles with rebates on property tax, registration fees etc. Guaranteeing titles is a reform whose time has come. It will take time to build the database, verify documents, conduct surveys, convert report documents into electronic images, and educate users. Taking a long-term approach in converting to a title system is important, both in changing mind-sets and developing robust-systems.
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