NOTES AgriculTurAl & rurAl DEvElOpmENT 42694 Land Policy and Administration A Strategy for improving land Administration in india iSSuE 33 FEBruAry 2008 By KlAuS DEiNiNgEr iNTrODucTiON long been the subject of animated debate. There is In India, as in many developing countries, land contin- consensus that land administration--which fell into ues to have enormous economic, social, and symbolic neglect after independence--is in urgent need of relevance. How access to land can be obtained, and improvement. How to bring about such improvement how ownership of land can be documented, are ques- most effectively, to improve land access and productiv- tions essential to the livelihoods of the large majority ity of land use in a sustainable fashion are important of the poor, especially in rural and tribal areas. Answers questions. The issue is not `whether' but rather `how' to these questions will determine to what extent India's to do so most effectively and how to sequence policy increasingly scarce natural resources are managed. interventions. Moreover, land policy and administration are critical determinants of the transaction costs associated with iNSTiTuTiONAl STrucTurE accessing and transferring land, both for business and AND chAllENgES residential use. This will affect how easily land can be used as collateral for credit and the development of the Most of the institutions and processes for administer- financial sector. Land continues to be a major source ing land in India were adopted from the British at of government revenue through stamp duties, and is a Independence and have been modified only slightly key element in implementing a wide range of govern- since. The principal purpose of those institutions was ment programs. Land policies and institutions will have to generate tax revenues, and as such they focused a far-reaching impact on the country's ability to sustain on productive rural areas, leaving `marginal' rural and high rates of growth, on the degree that economic urban areas outside the system. The distinction was growth benefits the poor, and on the level and spatial difficult to justify in the first place, but has become distribution of economic activity. even more archaic in three respects. This importance of land, together with the central First, and most importantly, any piece of rural land institutional role of land administration that dates that had been transacted through sale at any point back to colonial days, implies that land policy has after 1882 thereby entered the land registry system. This implies that records about the transaction are maintained by both the revenue department and the stamps and registration department. The overlap increases transaction costs and creates the potential for fraud resulting from inconsistent records. While merging the two departments is unlikely, clarifying the legal situation of land records and ensuring back- office integration will be essential. Second, rural areas near the urban fringe have become increasingly urbanized, with marked increases in land values. This warranted surveys, but survey departments' responsibility to maintain accurate spa- tial records of land ownership often lapsed, passing de facto to municipal corporations that maintain spatial records for strictly tax purposes. Some have done so relatively well, implying that spatial records that were established for tax purposes could, in principle, be used as a basis for ownership records. Other munici- ThE WOrlD BANK pal corporations did not live up to partnerships to deal with public the task, resulting in outdated map sector weaknesses, and focused on products of inferior quality that broad coverage and quick roll-out. appear to be one reason for high It also points towards a number of levels of land-related conflict. Such remaining challenges in the area conflict affected 28 percent of all of spatial data and policy regard- peri-urban parcels according to one ing registration fees and integration pilot study. Clarifying institutional of systems. responsibilities to eliminate the `spatial data vacuum,' and entrust- Computerized land registries and ing one single agency with suf- revenue records are now operation- ficient capacity to maintain spatial al in Gujarat, Karnataka, Madhya records in rural and urban areas will Pradesh, Maharashtra, Rajasthan, be important. and Tamil Nadu, and reviewing data from these sources yields a number Third, revenue lands that were once of practical insights on best prac- wastelands and therefore not sub- tices and challenges. These comput- ject to survey, have increasingly erized innovations draw on India's been brought under cultivation. comparative strengths in informa- Because they are home to the most tion technology and extensively uti- marginalized populations, confirm- lize subcontracting and public-pri- ing land ownership and extending administration to vate partnerships to overcome weaknesses in the public these areas is critical for poverty reduction as well as sector. Computerization has significantly reduced the for environmental sustainability. Doing so will require scope for the kinds of petty corruption that traditionally clarification of the interface between revenue and forest characterized access to land records. It has also improved departments and a broadening of the types of tenure the quality of government service delivery, generating formally recognized to include, for example, forms of large surpluses from user fees in states where manual communal ownership. The recent passage of the Forest records have been abolished, and helping to improve Rights Bill opens up a wide range of opportunities for access to credit. Computerization has an effect on villag- implementation in this respect. ers' attitudes towards state bureaucracies that may be very important in environments where governance is an imprOviNg TExTuAl issue. A number of states have used computer technol- lAND rEcOrDS ogy to help integrate revenue records and the registry, and sometimes spatial data. Undertaking surveys before Experience with computerization suggests that best mutation can provide registry officials with access to the practice built on innovative solutions by states that was database of land records before registering a document. then scaled up, drew on India's strengths in IT, made These developments point to important potential for fur- extensive use of sub-contracting and public-private ther improvements that should be capitalized upon. Box 1. using land records to improve governance In many countries, land administration is one of the most corrupt public services, together with the courts and the police. In addition to outright fraud in the allocation and management of public lands, a key reason for this is that users are often required to pay bribes to receive regular services.The sums involved can be large very large. In India, bribes paid annually by users of land administration services are estimated at $700 million (Transparency International, 2006), three-quarters of total public spending on science, tech- nology, and environment. At the same time, modernization can have significant benefits. For example, in Karnataka, computerization of textual records is estimated to have saved users $16 million in bribes (Lobo and Balakrishnan, 2002). Using this as a basis to automate registration and the associated valuation allowed cuts in stamp duty from 14 percent to 8 percent and quadrupled tax revenue from $120 to $480 million. Source: By Klaus Deininger 2 private sector surveying is not allowed in most states and complement restrictions on tribal alienation with flex- heavily circumscribed even where it is permitted. There ible mechanisms providing them with property rights. are many examples of proper regulatory frameworks While this is a tall agenda, the ingenuity demonstrated for private sector surveying, and drawing upon these in computerizing textual records and the ability to draw examples could enable the public sector to concentrate on pilot initiatives in many states as well as the experi- its survey activities on critical areas and to improve ser- ence of other countries suggests that a concerted effort vice delivery. India's tradition of self-help groups offers to set benchmarks and standards, which can then be considerable--but so far severely underutilized--poten- scaled up rapidly, has considerable potential to over- tial to employ `barefoot surveyors' to provide a range of come current bottlenecks, create synergies, and bring land administration services to the poor. about significant improvement. ConClusion and next steps FuRtHeR ReadinG Land administration and policy in India are complex and World Bank 2007. India: Land Policies for Growth and Poverty vary considerably across states. The above experience Reduction. New Delhi: Oxford University Press. suggests that they form an integrated system and that Ministry of Rural Development and World Bank, 2006. trying to separate out different but unconnected `boxes' Workshop on Land Policies & Administration, January 2006 ­e.g. registry and records or survey or rural-urban- is unlikely to help improve the performance of the system. GovernmentofIndia,MinistryofRuralDevelopmentDepartment of Land Resources. Land Reforms Monitoring System. In this sense, most past efforts have made a promising start but still only solved part of the problem. Policy mak- ers also underestimate the intimate links between land ReFeRenCes administration and policy, in both directions, at their Ahuja, M. and A. P. Singh. 2006. "Evaluation of Computerization peril. Although land administration is highly technical, of Land Records in Karnataka." Economic and Political Weekly no amount of technical sophistication will neutralize the January 7, 2006 69-77. impact of adverse policies that discourage the use of Alm, J., P. Annez, and A. Modi. 2004. "Stamp duty in Indian these very systems. At the same time, land administra- states: A case for reform." World Bank Policy Research Paper tion provides important tools with which to implement 3413. Washington DC: World Bank. policies. In fact one reason why India has no shortage of Appu, P. S. 1997. Land Reforms in India: A Survey of bold land policy initiatives for the poor which look very Policy, Legislation and Implementation. New Delhi: Vikas attractive on paper but could not be implemented in Publishing House. practice, is the fact that its land administration system is weak in general and often non-existent or dysfunctional Deininger, K., S. Jin, and H. K. Nagarajan. 2006. "Land reforms, in the areas where the poorest live. poverty reduction, and economic growth: Evidence from India." Journal of Development Studies, forthcoming. To make progress towards the long term goal of Deininger, K., S. Jin and H. K. Nagarajan. 2007. "Efficiency and improved land administration and policy in India, a equity impacts of rural land market restrictions: Evidence from number of immediate steps are recommended. First, India." European Economic Review forthcoming. expand computerization and integration and use of Lobo, A. and S. Balakrishnan. 2002. "Report card on service of textual records to ensure full coverage. Second, establish bhoomi kiosks: An assessment of benefits by users of the com- a spatial framework capable of achieving full coverage puterized land records system in Karnataka." Working Paper. with reasonable time and resource requirements, at lest Bangalore: Public Affairs Centre. in the medium term. Third, pilot ways to improve textual and spatial records for well-defined situations to estab- Transparency International India. 2005. "India corruption study lish processes that can be scaled up rapidly, improving 2005." . New Delhi: Transparency International. textual and spatial records. Fourth, allow private sector World Bank. 2007. "India: Land policies for growth and participation in surveying, focusing government on a poverty reduction." New Delhi: World Bank Agriculture and regulatory role, reduce stamp duty rates, and explore Rural Development Sector Unit South Asia Region and Oxford the scope for replacing them with a land tax. Finally, University Press. The ARD Notes series on Land Policy and Administration aims to disseminate results from research and Bank ESW, describe innova- tive operational practices, or point towards areas meriting further analytical attention. Significant contributions to their publication and content come from the DFID-World Bank land policy partnership, the World Bank-FAO collaborative program, the Knowledge for Change Trust Fund, the Global Land Tools Network, the multi-donor trust fund supporting implementation of the Gender Action Plan, and the Norwegian ESSD Trust Fund. The views expressed are those of the author(s) and not necessarily those of the World Bank Group or supporting institutions. tHe WoRld BanK 1818 H Street. NW Washington, DC 20433 www.worldbank.org/rural