Peruvian economist Hernando de Soto’s work on property rights and their importance in improving the livelihoods of the poor is now accepted wisdom. Economists S. Galiani and E. Schargrodsky have put this to the test over the past decade-plus, examining the diverging fortunes of comparable households which took over unused urban land on the outskirts of Buenos Aires in 1981. They find that households which managed to regularize their land titles didn’t just show better health and education outcomes along with smaller family sizes than those which hadn’t—they also favoured free market systems more.
The Indian urban landscape could do with a dose of this. Land titling and property records are notoriously lacking in India’s cities. This leads to a double whammy—depriving local urban bodies of revenue and hamstringing economic activity. The Household Finance Committee’s recently released report—showing the significant extent to which even poor households invest scarce resources in real estate—puts a sharp point on it. Reforms are an urgent necessity.