It has been more than a decade since the ambitious project to digitize land records across the country, called Digital India Land Records Modernization Programme or DILRMP, was launched. The project aimed to bring India’s land records to the level seen in countries like the UK, where information about the land, its ownership, and usage is kept in easy-to-access central repositories with real-time updates. However, a recent assessment of the project’s impact in three states suggests that we will not be getting there anytime soon (goo.gl/tbz1EX).

There is no doubt that the problem is daunting. As many as two-thirds of civil cases pending in Indian courts deal with land related disputes, most of which revolve around establishing ownership. The existing legal framework, based on the system of “presumptive ownership", lends itself to litigation as land and property undergo several mutations over generations that are not always captured on public records. Moreover, data related to a specific parcel of land is stored in silo’ed government departments, and in formats that vary substantially from one state to another. Access to these records is time- and cost-intensive, as they involve frequent visits and bribes to government agents.

For some time now, there have been suggestions to improve this abysmal state of land records by introducing blockchain technology. The popularity of cryptocurrencies has brought forth this new concept of storing and sharing of information between participants. NITI Aayog recently announced that it will bring out a discussion paper on leveraging this technology for land records management. Andhra Pradesh is currently working with private firms to secure land records in its new capital, Amaravati, using blockchain. So, what is this technology and how effective would it be in cleaning land records through the country?

A blockchain-secured record-keeping process will collect, store and provide access to information quite differently than a conventional process. After reaching consensus on what constitutes a valid record, market participants use cryptography and consensus algorithms to create or modify records. In a public blockchain like bitcoin, all participants are allowed to create or modify the blockchain, while in a private blockchain, like what has been envisioned for land records, only select participants are given that responsibility. New information is chained to the old entry, ensuring that a trail of changes to a record is established since its creation. There is no need for a central authority to keep records as they are distributed across a system of networked computer nodes. All participants can see and use the latest version of the record without relying on anyone else. In short, data stored using blockchain is secure, transparent, easy to access, and hard to dispute.

But how do we move from the current state of land records to a blockchain-secured state? To transition legacy records, we need to ensure that every aspect of these records must be indisputable to start with. While blockchain could ensure integrity and indisputability of future changes, it cannot resolve differences that exist today. What benefit would blockchain provide to a land whose area is not captured correctly, whose ownership is contested, whose liens are not fully recorded and whose value is underreported? Can we hope to build a sturdy structure on a shaky foundation?

The prevalence of poor quality in extant land records suggests that introducing blockchain across the board for all land parcels is definitely not the way. To maintain indisputability, it must be introduced first on land with the least amount of issues. Land that belongs to the government—Centre or state, including those of its agencies like railways, defence and ports—could be great candidates for this transition. The Central government has created a Government Land Information System (GLIS) to reflect details of all its land holdings. While the benefit of securing these records with blockchain is low today, it will pay off in future as government monetizes them.

Amongst privately owned land, those that have been mortgaged could also be considered for introduction on blockchain. Banks and housing finance companies undertake extensive due diligence to validate the information in land records, and seek correction if there are differences for lands that are pledged with them. It is, therefore, not hard to imagine lenders seeking blockchain security for land records as it would dramatically cut down risks in lending against property. In fact, the first step in pooling information on mortgages across lenders had already started with the setting up of the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI). Overlaying blockchain on lands pledged against those mortgages could be a great start. Similarly, the newly set up information utility, National e-governance Services Ltd (NeSL), could also be used to drive blockchain-based record-keeping for underlying collateral like land.

On the other hand, to incentivize borrowers to seek this transition, at least initially, interest rate subsidies can be provided. Over time, blockchain-secure land records could command a premium (for example, a lower interest rate, easier title insurance or higher liquidity) which would entice more land owners to seek this security.

While a top-down approach of forcing blockchain on all land records could easily backfire, nudging selected participants to seek this transition using incentives could be the best way of leveraging this powerful technology.

Venkatesh Panchapagesan heads the real estate research initiative at IIM, Bengaluru.

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