Today’s Question ❓

Q Increasing the supply of urban land should be a priority area if India is to achieve faster urbanization. Discuss. Also, suggest some measures in this regard.

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Approach 

• Mention the slow pace of urbanisation in India and reasons behind it.
• Establish the priority that needs to be assigned to urban land supply to increase the pace of
• Suggest measures which can be taken to improve urban land supply.
• Conclude accordingly.

Answer ✍️

Rapid urbanisation is a key feature of economies that have sustained higher growth rates for two to three decades. Despite having the second largest urban community in the world, the urbanization ratio (32%) in India is still low. The overall provision of basic urban services is poor.
There are numerous challenges related to urbanisation in India such as access to mass transit systems and road networks, division of power and financial autonomy between ULBs and other levels of government, creating a favourable environment for businesses. However, challenges related to urban land assume priority since they disproportionately affect the rate of rural to urban migration and also, on account of our developmental and infrastructural requirements.
The challenges related to urban land are as follows:
• Planning for land use and zoning
o Land management policies are limiting the availability, extent and intensity at which
land can be used and reused by industry, commerce, and housing, severely constraining the
carrying capacity of cities.
• Absence of serviced land and affordable housing in urban areas
o Lack of a cheap neighbourhood that is either close to the workplace or accessible to it via inexpensive and rapid transportation systems.
o Housing policy of the central government is focussed exclusively on subsidies on houses for people already present in the towns rather than for immigrants. There is an absence of rental housing policies.
• Functioning of the property market and property governance
o Rental laws in India are heavily tilted against the landlord so that many owners prefer to
keep their units empty rather than risk renting them to tenants.
○ Commercial rental housing is rare in Indian cities because urban land is overpriced.

Therefore, the average rental yield (which measures the return on investment in housing) becomes low and does not incentivise the investor.

The government must take steps to increase the supply of urban land and ensure its availability at affordable prices. Following steps can be taken:

• Selling of excess land with the Government: Several PSUs, Government educational institutions and ministries (such as railways, shipping and civil aviation) own vast volumes of unused and sub-optimally used urban lands. Excess government land can be hived off and sold on the market.
• Reforming laws: Land Acquisition Act needs reformation to permit acquisition of land easily and at market prices. Digitisation of land records and moving to a system of state-guaranteed land titles will make such acquisition easier
• Land Pooling: Peri-urban areas can be developed by pooling lands from villages and a portion of the value-enhanced developed area can be returned to the plot owner as incentive. Similar land pooling policy has been brought by the Delhi government.
• Relaxing Floor Space Index (FSI) criteria: Very low FSI (square footage of living space allowed to be built as a proportion of the total square footage of the plot) levels of Indian cities at around 1.3 or 1, need to be relaxed to allow buildings to go vertically up and reduce the demand for horizontal land.
• Anti-corruption drive: The culture of parking black money in real estate also raises land prices excessively. The anti-corruption drive will therefore help in urbanisation by lowering land prices.

Many of the government policies aimed towards urbanisation such as affordable Housing for All, Smart cities, infrastructure projects, etc. are stuck in the land acquisition issues. Therefore, increasing the urban land supply would be critical for achieving faster urbanisation in India.

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