Post on 20-May-2015
transcript
Satyam SinghMBA-IFM
500021421
Metropolitan population of over 6 million
Seventh largest metropolitan area in India
Area: 464 km2 (179 sq mi) Situated in prosperous western
state of Gujarat Founded in 1411 as a walled city Became a center of textile
manufacturing in the 19th century
Grew rapidly in the 20th century mostly using Town Planning Schemes (land readjustment)
A form of land readjustment
A means of expanding urban
infrastructure without
compulsory land acquisition
Promoted as equitable,
participatory and cost-effective
Originally introduced by British
Colonial Government in 1915.
Legislation updated in 1954,
1976 and 1999.
Areas designated for urban expansion in the
city’s development plan
Divided into TP schemes of ~100-250
hectares (250-500 acres), covering ~100-200
parcels
Government pools the land, uses 30-40% for
roads, open space, other public purposes,
including 5-10% for sale.
The remaining 60-70% is returned to original
owners, whose land value has increased
Urban land use is now allowed on these
parcels
Landowner consultation at various stages,
regarding their individual parcels
Land Value Capture in TPS occurs through two means:
o Betterment charges
o Sale of appropriated land
Purpose of betterment charge: to divide the increase in
land value evenly between the landowner and the
government
Betterment Charge = Final LV – Original LV 2
Offset by compensation to landowner for appropriated land,
based on original land value
Farmer A’s original
parcel: 1000 m2@
Rs.200/m2 =
Rs.200,000Rs.200,000
Govt. takes 40% from
all parcels, i.e.
Farmer A loses 400m2
For this, govt. owes
Farmer A Rs. 80,000
(=400m2 X
Rs.200/m2) as
compensation
Farmer A’s remaining
land is worth
Rs.120,000
(=600m2 X
Rs.200/m2)
60%
40%
Rs.120,000
Governmen
t
LandownerRs. 80,000
The govt. estimates the
final price after TPS to be
Rs.500/m2
Farmer A’s remaining
600m2 is now worth
Rs.300,000 (=600m2
X Rs.500/m2)
Increase in land value of
final parcel = Rs.300,000
– Rs.120,000 =
Rs.180,000
Betterment charge = 50%
of increase in LV =
Rs.90,000
Farmer A’s net gain is the
remaining Rs.90,000.
Rs.300,000(from Rs. 120,000)
Rs. 90,000 Governmen
t
Landowner
+ Rs. 180,000
Original and final land values are supposed to be based on recent sales
Sale prices are underreported by as much as 60%
Government instead bases original values on a standard “reckoner”
Final values calculated “in reverse”
Final values on paper are much lower than in reality
Betterment charges are therefore an ineffective means of land value
capture
However, creates the “perception of fairness”
While not emphasized in the rhetoric, land sales are a much
bigger source of land value capture from TP schemes
5-10% of land is “banked” by the govt. for later sale
Land sales have been lucrative for the govt.
o Govt. claims to have collected land worth $100 million from 24 TPS
o e.g. April 2006: 20 parcels sold for $35 million (including one for
Rs.61,000/m2 i.e. $1200/m2) to large real estate firms
It is hard to attribute the land value increase directly to
infrastructure
Simply allowing urban use on this land may account for
much of the land value increase
Land value increases partly due to passage of time in a
rapidly urbanizing context. It is often a very slow process:
final approvals from state governments make take 10+
years (in one case, 26 years). Implementation may have
barely begun after a decade.
Source: Google Earth
November 2003
September 2004
Source: Google Earth
January 2010
The implementation of TPS in Ahmedabad has not been
perfect, but these flaws do not reflect on the concept of land
readjustment or land value capture itself, but on broader
institutional constraints faced in Indian cities.
In Ahmedabad – TPS is an improvement over land acquisition
other cities
May be streamlined by doing away with compensation and
betterment charges, as most benefit comes for land sales by
both original landowners and government.
Land value capture relies on reliable and transparent land
valuation