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This is an archive article published on June 21, 2006

Unreal estate

Haryana, Bangalore, now Punjab: look at land to maximise social value, not rate per square foot

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Why do politicians everywhere have an objection to the land aspects of industrial/infrastructure projects? This was the case with the Rs 40000-crore special economic zone in Haryana and the 111-km Mysore-Bangalore expressway which the state government wants to take over. This could be the case in Punjab next. Maharashtra has seen countless controversies like this. So has Delhi. The standard answers are in fact not answers at all but part of the problem. They all assume that land is something the government, meaning politicians, have to extract the “maximum” value from. That the government must act like a builder who looks at a piece of land and calculates how much money can be made per square foot. But governments are not landowners in that sense at all. Their job is not to use land as solely a money-making asset. Rather, to use land as an asset that maximises social value — creates new industry, builds new infrastructure, creates new jobs, brings in new technology and, in general, increases economic dynamism.

It doesn’t take more than a casual reading of economic history to know that development cannot happen if the governing classes see land as something that only business classes can exploit. But despite this, if the attitude persists in India across all political parties, it must be because politicians have a fundamental psychological notion of land as something precious for its own sake. Perhaps, the agrarian links many of our netas have has something to do with this. Perhaps, the socialist theorem that a businessman is up to no good and any state effort to “help” business is therefore ipso facto dodgy still has a hold over our politics. Perhaps, land controversies arise because they are the easiest way to stir up the people. Or score points against rivals, as evident in Haryana and Punjab, where both Congress Chief Ministers have had to face “rebel” colleagues.

Whatever the reasons, they don’t matter: the fact, the requirement, the imperative is that this attitude must change.

India needs land for projects on a scale bigger than ever. If every allocation starts a controversy based on an illogical premise — and controversy can kill a project — the India story rests on a shaky foundation. That’s the point the Centre needs to make and the Congress needs to underline—to its members, its party, and its governments.

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