Since 1991, product markets have largely been freed for manufacturing. Services are half-open, while agriculture is closed. But in addition to half-open services and closed agriculture, factor markets (land and labour) await reform. Part reason for non-reform is that factor markets are primarily state subjects. Without reforming both land and labour markets, the economy?s productivity cannot increase. It is sometimes forgotten that land market reform predated Industrial Revolution in Europe. There are several dimensions to land market reform?encompassing inefficient real estate usage in urban India, antiquated land legislation (and acquisition procedures) in rural India and conversion problems from the latter to the former. Because of historical and colonial reasons, land regimes have also differed across India. It cannot be a complete coincidence that historical mahalwari regions have out-performed historical zamindari regions and one wonders at the counter-factual of the British introducing ryotwari everywhere. Regardless of the regime, there is yet another problem and this concerns titling.

In any common law system, establishing titling is a horrendous affair, since title has to be traced back to its original roots and even title searches (with costs an additional issue) are no guarantee of ownership. Contrary to what is commonly presumed, registration of sale deeds only registers the instrument and does not register titles. Title searches are further complicated by hopelessly outdated cadastral surveys. Consequently, all computerisation of land records have limited utility. Until titles are clearly established, they are garbage in and garbage out, a programme that has plagued the CSS (centrally sponsored scheme) on computerisation of land records, in existence since late-1980s. The rural development ministry?s Department of Land Resources now has a draft Land Titling Bill 2010. This is a draft for discussion, placed in the public domain and eventual implementation will be conditional on state reactions. The overall idea is the Torrens system, implemented in several common law countries, after its origins in Australia. The immediate impact is a transition from registration of instrument to registration of ownership, thus ensuring that registration is proof of ownership. In that sense, the government will endorse ownership through registration and reduce litigation. What is not obvious is whether this will be combined with some form of title insurance, often required when there are question marks on title.

But obviously, there are several prerequisites before the proposed land titling authority can guarantee titles. There has to be a title registry and there have to be survey settlements. The land information system and use of this for valuing property will follow. The proposed Land Titling Tribunal, to supplant recourse to courts, is also a subsequent matter. Enough technology is available to match satellite-based images with survey records and digitise cadastral maps. Although transition to Torrens or titling insurance hasn?t occurred, Goa has done precisely this. Can other states replicate that success? To state it differently, some states are efficient in administrative delivery. Others are not. The proposed Bill will be easy to implement in Goa, but not necessarily in states that are in the central and eastern parts of India. Nor should one forget issues that will crop up if alienation of tribal land is concerned and the fact that under special dispensation, some states have the right to introduce their own lands. We have constitutionally fragmented the states and allowed the fragmentation to continue. Contrary to what is stated in the Preamble to the Bill as an objective, we won?t get standardisation and unification everywhere in India. But it is an important first step and one that ought not to be restricted only to rural India.

There is enough empirical evidence to show that an efficient property rights regime (in this context land) enhances productivity and all such initiatives need not be interpreted in the Hernando de Soto sense of complete and freely transferable ownership rights. There are different ways of unbundling land rights and even those for other forms of property, like natural resources. For instance, making tenancy illegal in northern India has only served to drive it underground. Even if one has reservations about ownership legislation, there is no reason why tenancy laws cannot change. To state the obvious, establishment of property rights will also encourage owners to invest in land, a point that is also valid for urban slums. Many people have now forgotten DC Wadhwa from the Gokhale Institute of Politics and Economics, Pune. Those who remember him, will remember him for having fought a case (in the Supreme Court) against the government of Bihar in the mid-1980s and authoring a book Re-promulgation of Ordinances: A Fraud on the Constitution of India. Very few people will remember that he also wrote a paper then on introducing the Torrens system in India. It has taken around 25 years for that idea to be taken seriously. But even now, it is only an idea for public debate.

?The author is a noted economist