India : Land Policies for Growth and Poverty Reduction

Abstract

In India, land continues to be of enormous economic, social, and symbolic relevance. The way in which land can be accessed and its ownership documented is at the core of the livelihood of the large majority of the poor, especially in rural and tribal areas and determines the extent to which increasingly scarce natural resources are managed. Land policies and administration are critical determinants of the transaction cost associated with modalities to access land for productive, residential, and business use and, through the ease of using land as collateral for credit, the development of the financial sector. Land is also a major source of government revenue and a key element for implementing government programs. This implies that land policies and institutions will have a far-reaching impact on the ability to sustain India's current high rate of growth, the extent to which such growth reaches the poor, and the level and spatial distribution of economic activity. At the same time, the policies put in place by different states and the institutions tasked to implement them often fail to live up to the importance of the issue. In fact, land administration institutions seem to impose high costs without generating commensurate benefits and are generally perceived as corrupt, mismanaged, and lacking transparency. With land reform policies having largely run their course, and growing evidence that restricting land rental may do little to help the poor, many observers have lost confidence in the ability of land institutions to contribute to the welfare of the poor or the potential for improving the performance of land administration. In this chapter the author first show that land administration in India does indeed have shortcomings but also use data from India to show that addressing the shortcomings of the land administration system is necessary. The report then highlights some of the recent success stories to argue that doing so is entirely feasible but only if, in addition to focusing on technical aspects, a number of policy issues are addressed as well.