Landing in a mess

The image of a rural Arcadia is a figment of the imagination. Textbooks on the Indian economy still describe India as a developing economy and among characteristics of a developing economy catalogued there is the statement that a large part of the population lives in rural areas, suggesting that living in rural areas is bad. That8217;s true, because rural India usually connotes an absence of employment opportunities and physical and social infrastructure. Add to this the phenomenon of most subsidies being urban-centric. There is a question of focus here, since many government policies are targeted towards Bharat Nirman, building rural India. Create physical infrastructure there, ensure employment opportunities and delivery of public services, even if these things are unviable in habitations with fewer than 5,000 people. What is wrong if some of India8217;s 600,000 villages simply disappear, through migration, population growth they cross the threshold of a rural definition and assimilation into urban agglomerations? If transport connectivity improves, that is probably inevitable. While not either/or, is there a problem with India Nirman? Focusing not on metros, but on satellite towns that have populations of around 50,000? Notwithstanding government intentions, that8217;s precisely the kind of thing that seems to be happening to towns/cities located on the National Highway Development Programme NHDP highways. Imagine what would happen if we had the feeder roads in place.

There will be an inevitable response about slums. For the first time the 2001 Census collected data on slums and 607 cities/towns populations more than 50,000 reported such data. Four per cent of India8217;s population, 22 per cent of the population of these towns/cities, 32 per cent of Maharashtra8217;s population, 49 per cent of Mumbai8217;s population other metro figures are only slightly less lives in slums. Extrapolated, the slum argument boils down to an argument about pressures of electricity supply, water, housing, sanitation, sewage treatment, even education and health. Of two types of slum, authorised ones and those that are unauthorised, the difference is that in the latter case the government feels there is no legal obligation to provide public services in unauthorised encroachments. However, these are issues of bad urban planning, not scarcity of urban land even if one ignores the possibility of converting agricultural land into urban use. On the planning part there is no particular reason why such urban services have to be provided by the state. In fact for the vast majority of India8217;s private poor, while we debate merits and demerits of privatisation, such services are already privatised, since public supply is non-existent. These urban services aren8217;t classic public goods and even if provisioning is private, there are methods of working out public subsidies.

There is no part of India where there should be a natural shortage of urban land or housing. These are artificial scarcities caused by government policies, Centre, state and municipal, all taken together. If one eliminated legislation on urban land ceilings, rent control and tenancy, unrealistic Master Plans and restrictions on land conversion once Master Plans are in place, high stamp duties, low property taxes, unrealistic building restrictions and large tracts of land owned by the government that do not come onto the market, artificial scarcities would simply disappear. But so would corruption, which is the main reason why discretion continues. We know these unrealistic regulations are not meant to be enforced. One can bribe one8217;s way through them unless a high court intervenes to upset the status quo. Once the court intervenes, the Municipal Corporation of Delhi tells us that 70 to 80 per cent of Delhi8217;s 3.2 million buildings have major or minor legal violations, 1,600 of Delhi8217;s 3,000 colonies are illegal and that 18,299 buildings have to be demolished. Since taxes and electricity bills have often been paid on these, presumably MCD and other government officials knew about these illegalities. Artificial scarcities should lead to high prices, except that such high prices manifest themselves through bribes. That8217;s also a kind of contract, except that such contracts aren8217;t legally binding.

A court8217;s job is to interpret the law, not create it. The Supreme Court is a bit of an exception to this principle, less so high courts. This is true even if the law is a bad one. Beyond the objective of immediate demolitions wouldn8217;t hefty fines have been better? there is the efficiency objective of ensuring that such illegalities are not committed in the future and that artificial land scarcities disappear. In other areas we have now recognised the futility and inefficiency of irrational government intervention. That ought to be the main component of the National Urban Renewal Mission. Without that the rest of NURM won8217;t happen.

The writer is secretary-general, PHDCCI