Illustration: Jayachandran/Mint
Illustration: Jayachandran/Mint

Opinion: The need for digitizing land records in India

Clear land titles will make it easier for the poor to borrow from the formal financial sector

The Peruvian economist Hernando de Soto has often pointed out that a modern market economy requires a strong system of property rights. India is a mess on this front. Land titles are presumptive rather than conclusive. The Hindi film Khosla Ka Ghosla provides brilliant insights into the damage done by dysfunctional land titles.

That is one reason why some have estimated that nearly two-thirds of all pending cases in Indian courts are related to property disputes. NITI Aayog has said that such property cases take an average of 20 years to settle. The result is that millions of Indians cannot use their principal asset as collateral to borrow from the formal financial system. The poor suffer the most.

The Union government has been busy trying to address this problem for almost a decade. The United Progressive Alliance government led by Manmohan Singh kicked off the National Land Records Modernization Programme in August 2008. It is now part of the Narendra Modi regime’s flagship Digital India initiative. The broad aim is to modernize land records management, reduce the scope for property disputes, make land records more transparent and move towards conclusive property titles. In short, the plan is to pull a system developed in the age of zamindari into the modern era.

The progress over the past decade has been uneven, with some states, such as Madhya Pradesh, Andhra Pradesh, Telangana, Chhattisgarh, Tamil Nadu and Maharashtra, doing better than the others. However, there are challenges, even in advanced states such as Maharashtra, as a recent field study by Sudha Narayanan, Prerna Prabhakar, Gausia Shaikh, Diya Uday and Bhargavi Zaveri found. Their study of 100 land parcels in five villages spread across two tehsils showed that the new digitized land records do a good job in reflecting ownership of land, but less so when it comes to recording encumbrances and area of land parcels.

Some of the most interesting work of sorting out the land titling mess has been done by state governments, as has been the case with labour law reforms as well. Three are worth mentioning here.

First, the Bhoomi Project in Karnataka led the way even before the Union government got into the act. The state government began to digitize land records at the turn of the century. The relevant document—the record of rights, tenancy and crops—has been made available through kiosks. The need to pay bribes to get access to this basic information in government offices has been done away with.

Second, the Rajasthan legislature passed the Rajasthan Urban Land (Certification of Titles) Act in April 2016. This law ensures that the state government is a guarantor for land titles in Rajasthan, and will provide compensation in case of issues of defective title. The guarantee is based on certification provided by the Urban Land Title Certification Authority, which will verify ownership of any property for a fee.

Third, Andhra Pradesh has taken a leap into the future. Its state government has tied up with a Swedish firm to use new blockchain technology to prevent property fraud. As in all other trades, blockchain will allow participants in a distributed ledger to check the ownership of a land parcel. As de Soto and former US senator Phil Gramm wrote earlier this year in The Wall Street Journal: “If blockchain technology can empower public and private efforts to register property rights on a single computer platform, we can share the blessings of private-property registration with the whole world. Instead of destroying private property to promote a Marxist equality in poverty, perhaps we can bring property rights to all mankind. Where property rights are ensured, so are the prosperity, freedom and ownership of wealth that brings real stability and peace."

The Indian push to digitize land records—and establish conclusive rather than presumptive titles—should have been completed by now. The government has now pushed the year of completion to 2021. The delay may have been avoidable, but is understandable. Clear land titles will ease a lot of constraints—from making it easier for the poor to borrow from the formal financial sector to easing commercial land acquisition for infrastructure projects instead of the misuse of eminent domain. And, even as computerization continues, some more attention should be paid to the possibilities offered by new technologies such as blockchain.

Can blockchain help India digitize land records? Tell us at views@livemint.com

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