Unreality Bytes In Realty Laws

Written by Subhash Agrawal | Updated: Oct 10 2002, 05:30am hrs
I forget the number of times I have heard and read about the fact that foreign investors shy away from India due to bureaucratic controls and rigid labour laws, how foreign firms need the ability to retrench workers and scale their operations. But few people have seriously looked at the damage done to the economy due to our property laws.

This is a unique category where archaic legislation, bureaucratic bottlenecks, corruption and absence of timely redressal mechanisms combine to form a very combustible mix and magnify the enormity of impact. Along with the usual gamut of local building laws, which vary tremendously from state to state, there are a whole number of stipulations and caveats which govern how and by whom a piece of property can be bought, sold, rented, developed and used. Some make sense in terms of keeping our cities clean and orderly, but most do not. They simply allow officials to harass the rest of us.

The list of hurdles goes beyond wanting a permit to construct an extra room. It includes improper land records and unclear titles, high stamp duty on transactions, a confusing maze of fanciful masterplans and perverse rent control acts. In fact, Delhi is especially notorious. The mosaic of land laws and authorities is so chaotic it would be hugely funny were it not so stifling. Property owners have to constantly run around just to keep within the law, and they often give up. Most deals in Delhi are now on the basis of general power of attorney, a weak legal protection but which obviates paying high conversion charges and stamp duty. And check out this bitter-sweet irony: ownership documents for Ashoka Hotel, the governments flagship property, are simply missing, while the government has been running Hotel Ranjit illegally for the past three decades, according to the Delhi masterplan.

Aside from lethargy, one reason why so many perverse laws continue to exist is the pompous attitude of the Indian civil service which has steadfastly looked down upon both the land-owning and poor classes, and which continues to behave as if India needs to be protected from Indians. Also, the larger concept of public space, and who shapes it for whom, where, and why remains largely unclear in the collective India psyche. An absence of clear ownership papers makes it easy for illegal encroachment upon both private and public land, estimates of which now run into thousands of acres across the country.

And if not financial gain, there is always the politics of poverty. Local leaders capitalise on the helplessness and desperation of the poor by either promising public land at throwaway prices or regularisation of illegal slums. All it takes is some local non-governmental organisation looking for a cause and celebrity status to eagerly jump in and produce distorted moral arguments over human rights of the poor. The case may go to court where it is stuck for many years. Meanwhile, the slum becomes bigger and brasher, with satellite TV antennas sprouting out over asbestos roofs, and in time it takes on the critical mass of a colony, upon which time it becomes almost impossible to do anything about it.

Almost 15 per cent of Indias urban dwellers now live in slums. India may be a high-tech base in the making but our land regime has been totally regressive and Kafkaesque all these years. All these legislation, laws and procedures have not done an iota to create aesthetically inspired cities or shelter for the homeless, but have instead created an artificial scarcity of land and among the highest property prices in the world. They have engendered a culture of suspicion among property owners, widespread proxy ownership in favour of relatives and further complication of ownership rights. Pending cases in all courts across India number a staggering 28 million, out of which the majority relate to either taxation or property. They have also spawned a whole industry of middlemen, touts and local hoodlums, people whose clout and money now greases Indian politics.

While some positive changes have been made in recent years, such as repealing urban land ceiling, it will take a long time to sort out the mess and undo the damage done to our urban infrastructure and community values.

The author is an analyst of Indian political and business trends and the editor of India Focus, a political risk report for international investors