KEEP IT UP UPA

Mint reports today that cabinet has approved changes in titling law that will make ownership of land more transparent by introducing amendments to the Registration Act of 1908.  The act governs the registration of documents and sales transactions for movable and immovable property within the country. This move has far reaching positive implications, maybe more than the lawmakers themselves realise at the moment.

If well conceived and successfully implemented, these reform measures will go a long way in changing the way land markets operate in India. It would make it easier for companies to acquire land for industrial projects as the land ownership will be clear and undisputed. It is estimated that 70-80 percent of land cases pending in courts are on “title issues”. Clear titling with universal digitisation will reduce these numbers dramatically. It will also make it easier for land owners to gain access to credit from institutional sources.

While talking about the dead capital in the third world and former communist nation, economist Hernando de Soto in the inaugural chapter of his book “The Mystery of Capital” says

The poor inhabitants of these nations – five-sixths of humanity – do have things, but they lack the process to represent their property and create capital. They have houses but not titles; crops but not deeds; businesses but not statues of incorporation. It is the unavailability of these essential representations that explains why people who have adapted every other Western invention, from the paper clip to the nuclear reactor, have not been able to produce sufficient capital to make their domestic capitalism work.

It is the absence of this process that prevents transformation of assets into capital that can then be put to best possible use. The proposed changes to the law could change that.

De Soto’s ideas have become more widely known and accepted.  But we already know that our titling system is dysfunctional. In a statement to Parliament last year, rural development minister Jairam Ramesh pointed out that the land survey records in different parts of the country are still archaic.

He also said:

India is one of the few countries in the world where the record of rights on land is presumptive it is not conclusive unlike many other countries. We are presumed to be owners of land unless proved otherwise. That is why we have lots of disputes and lots of problems in land acquisition.

It is great the minister has diagnosed the problem correctly and has said that the government is aggressively moving towards conclusive titles. However, website of the Department of Land Resources under Ministry of Rural Development says that the basic scheme of Computerisation of Land Records (CLR) was started in 1988-89! It has been 24 years since then. While complimenting the government for moving ahead in the right direction, I do hope that the aggressiveness talked about by the minister translates into action as well. I hope that the government persist with this great initiative and see it through to its conclusion at the earliest.