How land pooling scores over land acquisition in infrastructure development

Farmers agree to become partners in a land pooling scheme proposed by the Hyderabad Metropolitan Development Authority, for the development of the upcoming Andhra Pradesh state capital at Amaravati, contributing about 33,000 acre to the government for the purpose.

The Delhi Development Authority (DDA) identifies 200 villages along the outskirts of Delhi in a land pooling scheme, to convert around 90 villages into development areas and another 90 into urban villages. DDA has recently passed a modified land pooling policy within the Master Plan Delhi 2021

CIDCO is developing an international airport at Navi Mumbai and villages coming under Navi Mumbai Airport Influence Notified Area (NAINA) are participating in a land pooling scheme to facilitate its construction.

Land pooling as a concept was first introduced in India under the Bombay Town Planning Act, 1915 in the erstwhile Bombay Presidency. Few decades later it became the basis of the Town Planning Scheme in Gujarat.

States, such as Maharashtra, Gujarat, Tamil Nadu, Punjab, Andhra Pradeshand Kerala have used this instrument as a viable alternative to land acquisition.

What is land pooling?

The concept involves amassing small rural land parcels into a large parcel, provide it with infrastructure and return approximately 60 per cent of the redeveloped land to the owners after the development is complete and appropriating the costs of infrastructure and public spaces. Of the 40 per cent that remains with the local town planning or state government authority, a substantial portion is reserved for setting up infrastructure such as roads, hospitals, schools, parks, provide electricity, water, sewerage and such like. The local planning or developing authority usually sells the rest forfinancing the costs for the infrastructure and amenities. The target parcels are usually agricultural holdings which are converted to urban use.

Since contiguous parcels are required by the government authority, the land owner usually gets a percentage of his holding back at another location within a radius of 5 km from his original holding. He may also get additional floor space index (FSI), due to which the value of the returned land will be a multiple of the worth of his original holding, even though the plot size has shrunk.

History

Land pooling has been used internationally for urban development in Europe, Australia,Tokyo,South Korea,Seoul,Asia. The policy is primarily used for mofussil expansion.

Why it is necessary

Pooling is seen as a viable alternative to land acquisition primarily because of the difficulties involved in acquiring clear, marketable and litigation-free appropriately sized contiguous land parcels for development –it is sensitive issue in various parts of the country. Development of projects invites hostility from locals as it requires them to uproot from their eco-system and sell their land, being their revenue generating asset and force them into a gloomy future when the money is gone. Under Land Acquisition Rehabilitation and Resettlement Act, 2013, the compensation is higher, making the project expensive and unviable. In land pooling resistance is least and compensation is way less and Land Acquisition Rehabilitation and Resettlement Act. Land pooling benefits the government as well as the land owners as it aids in expediting development of infrastructure and urban areas.

The recent land pooling policy is a step toward addressing the issue and expediting the development of urban infrastructure. In addition to allowing private participation, land pooling policy also includes providing features such as tradable FSI and single window sanction mechanism.

Prerequisites for land pooling
Provision of regulations and guidelines for ensuring fairness in the system;
Support from national, state and local governments/authorities;
Local planning/developing authority to facilitate coordination and assistance from various government departments;
Proficient metropolis planners and architects for delivering quality metropolitan setting;
Negotiations with land owners is by the planning/developing authority at the local level, instead of directly with the state government;
Public/private co-operation, with support from majority of land owners.

Benefits

Land pooling is very beneficial- It is fairer to the original land owner who does not lose all his land, unlike in many acquisitions, which is why the resistance to this mechanism is much lower. The value of the land he retains increases way beyond that of his original holding and he also gets access to substantially better infrastructure.

The policy partly addresses the issue of chronic housing shortage due the increase in FSI to each individual parcel of land returned. This, in turn, may help check the perpetual rise in property prices in cities and provide land for economically weaker section and lower income housing.

In CIDCO’s case for instance, land pooling is expected to release approximately 3,500-3,700 hectares of land for township development.

Land pooling also fosters more planned development and avoids unplanned development characterised by mixed land use.

It is difficult to get support from affected communities and other stakeholders for mandatory takeover of land for initiatives of public interest. Pooling, on the other hand, is typically supported and sometimes even initiated by the landowners since they would make considerable profit on their returned land. The mechanism also makes it easier for the developing authority to recover costs incurred setting up the infrastructure –by levying tax on the redeveloped parcels.

Pitfalls

A section of experts believe that the enormous differences in the value of land across urban regions such as Mumbai or Delhi, and a track record of delays in timely implementation of projects by local/government authorities may deter landowners from participating. There has to be some kind of assurance in the form of a timeline with a provision of fines to owners who are giving their parcels away in case of default. The financial strength and technical expertise of the developing authority and/or local urban body is therefore critical.

Better clarity is required on what the owner will get after the project is complete or infrastructure set up. Uncertainties about the location of the proposed ‘returned’ land must be detached for ensuring more involvement from the affected people.

The policy requires incorporating features such as allowing higher FSI and promoting mixed land use, for which integration with various authorities such as water and electricity boards, municipal corporations and such like assumes significance.

Another issue is that of distinct sizes of the original plots capitulated to land pooling. The larger the bulk of individual holdings, the easier the reallocation of developed plots.

Stamp duty, registration costs andtax aspects also require examination, since there are different implications at each point of project implementation starting from land contribution made to the local planning/developing authority by landowners, allotment of the another developed land to the land owner and applicability of withholding tax on transfer of immovable property.

Bottom line

Despite some of its pitfalls, pooling certainly scores over acquisition and it is matter of time before the mechanism becomes more and more popular with the administrative machinery in India. That said, the mechanism can only become effective if the pooling process is executed promptly in partnership between the implementing government authority and the land owners.