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Multiplicity of laws, agencies make land deals a nightmare

Multiplicity of laws, agencies make land deals a nightmare

New Delhi: When Pune-based software engineer R. Venkatraman was looking to help his sister buy land in Bangalore in 2005, he found that doing the due diligence to buy the property cost as much as registering the property later.

Before buying the 2,400 square metre plot of land in HRBR Layout in Bangalore, Venkatraman had to check whether the developer selling the property had a rightful claim to it or there were any outstanding mortgages, and also get permission from the village panchayat that had jurisdiction over the area.

This would have entailed visits to a host of government departments.

Not willing to make the effort, Venkatraman hired the services of a lawyer. “If somebody was going to sue us later, there was nothing I could have done," he recalls.

Venkatraman’s case is not an isolated instance. The lack of a single window to address these clearances has not only created additional tiers of bureaucracy but also raises the cost of the land transaction substantially.

A 2004 World Bank study, Doing Business, found that the cost of registering land transactions as a percentage of property value in India was among the highest in the world; the country ranked 123 out of 240 countries that were studied.

This, officials say, complicates the task of ascertaining and guaranteeing titles, as part of a reforms process mandated by the Jawaharlal Nehru National Urban Renewal Mission, a centrally sponsored scheme that provides as much as 90% of the cost of urban development projects in 63 cities across the country.

Since some of the states such as Rajasthan did not have freehold land and therefore do not have a history of disputes over land claims, would be at an advantage over other states, the success of the programme to guarantee titles would be uneven across the country.

Mint reported on 13 November, in the first part of this story, that three states—Rajasthan, Andhra Pradesh and Karnataka—were readying a land title roll-out.

“Currently, if I have to buy a piece of property, I have to check back for claims from the registrar or the encumbrance office," said Sachit Mathur, an attorney with Luthra and Luthra. “We have to check back for 12 years, to feel comfortable."

According to lawyers, part of the problem is the wording of the Indian Registration Act. “All the Act says is ‘registering documents’. As a result, people are allowed to hold properties without registering them," said Priti Ramani, another Luthra and Luthra lawyer.

Bureaucrats attribute this to the fact that land ownership in India is associated with land revenues. As long as land revenue was a major source of income for the state, the land records maintained by the state revenue departments were updated. With land revenue, important in the colonial era, becoming a negligible source of income, however, departments have stopped updating records on a regular basis. This consequently makes it harder for states to ascertain claims prior to establishing ownership.

“Since land revenues have declined, officers such as the deputy commissioners and tahsildars (the equivalent of a district collector in district subdivisions), who were supposed to handle these things now handle a variety of other duties, such as relief work during natural disasters and overseeing elections. So obviously, updating these records have lagged. They have to update it and then keep updating (the mutations in title)," said Anil Baijal, former urban development secretary and an adviser with infrastructure finance company Infrastructure Development Finance Co. Ltd. “That is the biggest problem now."

At the same time, multiplicity of laws, the administrative involvement of several Union government ministries and the fact that land is a state subject, are all proving to be impediments, say analysts and government officials.

Since independence, successive governments have enacted a slew of legislations on land reforms. In the rural segment, they included ceilings on land holdings and reforms empowering agriculture tenants. Laws such as rent control acts for urban accommodation, too, were enacted by several state governments.

To address the multiplicity of laws, the urban development ministry is now considering an inter-ministerial dialogue involving the finance, rural development, urban development and law ministries.

“A regulation (involving land) like this covers many different ministries," said urban development secretary M. Ramachandran. “We are considering initiating a dialogue with those concerned. It will take some time."

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