Recommended IT Driven reforms in property ownership for unleashing an accelerated economic growth

(Proceedings from a talk given at an eGov conference)

http://www.upor.karnataka.gov.in/Newfolder/News7.aspx

http://egov.eletsonline.com/2011/09/land-reform-system-in-karnataka/

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

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 kept in a dead language which need to be preserved as new deeds have no value unless the trail of deeds are maintained. 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 Sarfaesi 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. For rural property, the owner needs to request for a pre mutation sketch (PMS) before it can be sold and registered in the registration system, Kaveri. Kaveri manages the registration taxes. After registering in the Kaveri system, the transaction needs to be entered in the Bhoomi system where the mutation is recorded. 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; the sale deed along with the PMS is then brought for registration and thereafter mutation system. This entire process can potentially be converted to an online system, thereby cleaning up the records and therefore increasing the value of the property.

There is significant pressure on the legal infrastructure because of large number of civil cases 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 related reforms improved the quality of land records. But it is still built on a foundation which is very archaic, laid down by the British, focusing more on revenue collection than 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- (a) apriory right to sell for owners to sell their property without any objections; (b) right to buy for potential buyers to qualify on terms such as eligibility to buy agricultural property ; and (c) automatic mutation of property after a certain period.