Land records need formalisation for true price discovery

The Indian Institute of Management, Ahmedabad and the Hyderabad-based S Farms which deals in transactions of agricultural land, have published two volumes of its Agri Land Price Index in September and December 2023, and are considering taking it national. Pricing of land in India is a complex issue and any attempt to formalise the system is welcome. The first step to evolving formal land pricing is to make updated documents easily available for scrutiny.

The National Digital Records Modernisation Programme, a central-funded scheme, which is in force since 2008 has made significant progress in the digitisation of rural land records in some states, under the Svamitva Yojana. The scheme was far from properly completed and closed but a base had been prepared. In conversations with facilitators, sellers, and potential buyers, it is obvious that even digitising the last available land records has made a difference.

During the Covid-19 pandemic, investments in land jumped in IT-driven cities such as Bengaluru, Pune, Chennai, and Hyderabad. Places that were further away from the city on planned future corridors were the best bets for those scouting for land. Gauthan or panchayat properties in Maharashtra, land with poorly documented khata records in Karnataka and Inam lands in Hyderabad were all eyed. With no reference points, the values were highly speculative.

Agriculture land outside city limits is often not within the purview of the Real Estate Regulatory Authority (RERA) and is risky but expected to yield higher returns, once it gets pulled into city master plans. Currently, it is estimated that 4,900 new cities are under development in India. As this planning exercise picks up steam, a large part of rural land will make it to the municipal planned areas, and values get adjusted accordingly.

Another effort at documenting urban land was made by the National Council for Applied Economic Research (NCAER), through its Land Records and Services Index. With a lot of support from various social and research organisations at the grassroots level, the NCAER Land Records and Services Index 2021 had a social and economic basis. Using the hypothesis that access to land is a critical factor for economic growth and poverty reduction, it focussed on the need for reliable land and property records to improve access to land and reduce disputes. The pandemic and subsequent economic landscape took the punch out of that study and experts and researchers are still looking for signs that it would be revived.

The NCAER had worked on land pricing even earlier in 2008-2015, when it was advising the Delhi Development Authority on planning for land pooling. Land listings from a leading property portal from 2006 onwards were used to determine the price expectations of sellers in the National Capital Region. The biggest problem with land is the poor ownership records and even poorer documentation of land pricing. While valuers exist in plenty, standardised scientific methodology or data around land valuation is not available. Valuation is often based on past transactions. Since the cash component in land transactions in India does not get entirely captured, registered values could often be just a fraction of transacted values.

So how do all these efforts at documenting land and services or prices impact the consumers? The digitisation of land records translated into basic apps in different cities: Bhoomi and Dishaank in Karnataka, Mahabhulekh in Maharashtra, and UP Bhulekh in Uttar Pradesh. This allows consumers to check land records online.

These are all rudimentary efforts at making physical records digital. Efforts such as the Agri Land Price Index go a step further. Ultimately without pricing data, consumers and project executors still must run from pillar to post. In a country with land recording systems that are complex and different across states, there is no one-size-fits-all solution. But each of these attempts at formalising documentation of land records takes us one step closer to formalising pricing of land — both rural and urban.

(E Jayashree Kurup is a writer-researcher in real estate, and Director, Real Estate & Cities, Wordmeister Editorial Services. Views are personal.)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.