September 2011

Land Reform System in Karnataka

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The principle of Keynesian economics and free market that information can be freely available is not valid in case of land and property in India

By Jaijit Bhattacharya,
Director, Government Affairs, HP

The issues of urban governance were highlighted with the case study of Karnataka where multiple urban systems have already been implemented. Technology is opening up new models of governance including new business models for government, operational model, technological model and financial models which are leading to participatory governance.

One such area where these models are used is in land records. Increase in efficiency of land and property records will have considerable impact on GDP of the country. Primary source of income in rural areas continues to be agriculture. Some issues of land and property transactions are that it is broker driven, there are significant brokerages and manipulations because there is no transparency of information. There is non transparent market, distress sale and purchase which also lead to manipulation of prices. There is very limited liquidity and it is difficult to encash particular wealth. Finally we have deed based system rather than title based system which means that property can be sold multiple times based on deeds. In Karnataka, land records are mentioned in a dead language which have to be kept because new deeds have no value. Globally, people are moving towards title based system which is if the land is in a person’s name he owns it irrespective of what the previous deeds are. Between the time of registration and actual mutation, the land could be sold to many people as the registration system does not go and check whether property is sold or not. Registration and mutation are independent.

There is Sarfaresi Act which keeps track of all assets for which loan has been taken. It ensures that new urban property follows the system because much of the old properties are embroiled in the issue of whether the deed is clean or not, whether there are competing claims on land, and so on.

In Karnataka, land property records and management system works by three sections. One is land records which is responsible for managing ownership and rights, ownership records of non- agricultural land and property. Second is registration section which is registering all transactions taking place in land and property in public record. Third is service section which is managing spatial and non spatial data about land.

There are two kinds of properties- agricultural and non agricultural urban property. In urban section there is a request for pre mutation sketch done by urban property ownership record system. Then it goes to registration system Cauvery which is where you pay taxes and then it goes to Bhoomi system where mutation happens. Essentially, the four major steps are: agreement to sell is reached without the sale deed; the seller and buyer get together through a broker; pre mutation sketch is made; it is then brought to registration or mutation system. Same is the process of sale deed and detailed process of how mutation is done. All this is converted to online system.

There is a lot of pressure on the legal infrastructure because of large number of civil suites that  are based on land records. As per one estimate, 70 percent of cases in Indian courts are related to land and property issues. The Bhoomi project and reforms improved the quality of land records. But it is still built on a foundation which is very archaic, laid down by the British focussing more on revenue collection and in providing governance. Therefore, land and property transactions continue to be a significant source of litigation in courts.

It also has significant socio- economic impacts. The sub-optimally governed land and property system leads to considerable hardships for rural and urban citizens. Moreover, it leads to family disputes and impacts the well being of the citizens. Support system is critical to facilitate land acquisition system for developmental projects at appropriate rates and compensations.

At the end of the day, the benefits are that one gets service/tax oriented administration. If government starts looking for providing services and getting revenue enhancements because of the service provided, that would increase the revenue collected by the government. As the transaction hassles goes down, the number of transaction goes up and in turn tax and revenue collection goes up significantly. At high level we need to train people, legislative and administrative changes, and training of owners, how to manage digital signatures and digital ownership of land.

The major legislative changes that are required are three rights that government should grant- apriory right to owners to sell their property without any objections; buyers to qualify on terms such as eligibility to buy agricultural property apriory right to buy land; automatic mutation of property after a certain period.

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