Land economics: What Rahul Gandhi needs to know

Written by Subhomoy Bhattacharjee | New Delhi | Updated: Apr 28 2014, 14:00pm hrs
Rahul GandhiCongress Vice President Rahul Gandhi during an election rally in Botad, Gujarat. (PTI)
Rahul Gandhi has waded into the subject of land pricing, a subject he would have been well advised not to rake up, as the Congress party carries the maximum baggage here.

There is just no industry prior to 2006, which has bought land from the state at even close to market rates, in Gujarat or any other state. It was this year when the UPA government fast- tracked land buying through the SEZ Act. The furore it unleashed, begun corrections in pricing of land. But till today, no land sales mediated by any state has been at market prices, neither for public-private partnerships nor for SEZs.

We did an intensive survey of free sale land prices in Haryana and Madhya Pradesh for the past 30 years. Data showed the same evidence. In Singrauli district of Madhya Pradesh dotted with coal mines and power projects prices, land prices mediated by the state have begun to correct only in the new century but is still well below the market rates.

In Delhi, the land for the airport was given at Rs 100 by the Congress government. If one trawls the records of each state government, similar gems will tumble out. Yet as The Indian Express has pointed out, these sales are neither illegal, nor were the prices the chief attraction for entrepreneurs. Giving away land for a song was the norm across all parties straddling the political spectrum but if just getting the plots were so lucrative to set up an industry, India would have been riding an industrial revolution by now.

But further back in history, it is the Congress government under Indira Gandhi which erased the Right to Property from the Constitution in 1976. If Rahul flips through the debate then, and those around the celebrated Minerva Mills case a little later, he would have known the Right was dropped because the state felt it was being used by people to block land acquisition for projects by the government. Compared to the price the state-led development projects paid for land, Adani SEZ rates would seem a kings ransom.

So post 2006, all the state governments have woken up to the need to provide fair price for land they buy. Here again, though the Congress had a good rehab model from Haryana run by its own party, it crafted a totally unworkable Land Acquisition, Rehabilitation and Resettlement Act that will only create a towering bureaucracy and has to be one of the first things that will need a change. Gujarat on the other hand has worked out a solution that is now in the list of best practices of the Central government and likely to be rolled out irrespective of whom comes to power, post May 16. There is a lot of catching up to do. The global Doing Business Report shows, since 2005 there has been just no reform in registering property in India till 2014.

Subhomoy is a Deputy Editor based in New Delhi.