Capital & Land Pooling

Since the bifurcation of the state, the politics of residuary Andhra Pradesh are revolving round the capital. Laying to rest all speculation, Chandrababu Naidu acted with remarkable alacrity and announced that the capital will come around Vijayawada. In the run-up to the declaration of the capital, speculative forces were allowed to have a field day. Even after finalising the capital, the government still gave an opportunity to market manipulators by keeping suspense over the exact location of the capital. Earlier, the firm indication was that the capital would come up between Vijayawada and Guntur.

But, when it came to the announcement, the government continued the suspense by stating that the capital would come up in the surroundings of Vijayawada. This led to a spurt in land values around Vijayawada in all directions. The government is yet to reveal its mind over the exact location. The surroundings could mean Amaravati, Nujividu, Kanchikacherla, Mangalagiri, Kondapally, Ibrahimpatnam or even as far as Tenali. Without coming to a conclusion, the government could not have made the announcement that it would be around Vijayawada. Why did it still keep everyone guessing on the exact location?

Adding to this, the often contradictory statements over the extent of land required for building the capital is further boosting the real estate boom. Realising that acquiring land would be a difficult task, the government did not opt for a greenfield capital. On the other hand the government has also announced that it would go for decentralisation of administration and development. But, still it talks about capital in one lakh acres. The ruling Telugu Desam is still selling the capital dream that changed its fortunes. The frenzy over capital helps the ruling dispensation divert people’s attention from the unfulfilled promises like loan waiver, jobs for all, etc. Therefore in all likelihood, the capital hallucination would continue for more time to come. Meanwhile, the Bharatiya Janata Party has distanced itself from the capital dream project. The central government has already given enough indication that it is not going to support the state government in any unusual manner. The state government is under severe fiscal stress, which is compounded by wounds of bifurcation and political populism. Given these fiscal constraints and populist profligacy, the government is left with meager resources for any major capital expenditure. But, still, the capital euphoria continues.

The new-found mantra is land pooling. The land acquisition has not only proved to be costlier for governments but also politically counterproductive. People’s resistance to forcible land acquisition is often turning out to be politically disastrous. Chandrababu Naidu can’t afford to take this fiscal and political risk. Therefore, the innovative alternative would be land pooling.

What is land pooling?
The government is legally empowered to acquire even private land for a public purpose by paying legally mandated compensation. With the real estate boom, the land acquisition is incurring the wrath of land owners. The people’s resistance is even turning violent at times. The land pooling entails the participation of land owners. Thus the land acquisition is an involuntary process while land pooling is voluntary mobilisation of land owners. Thus the concept of land pooling works as follows.

The government pools double the land required. The land owners would be given a share of developed land.The value of the developed land is expected to be more than the cost of the original land even though it is less in size. Thus it would be theoretically a win-win situation. The fruits of development would be shared with the displaced. Certainly land pooling is much better alternative than land acquisition. But there is many a slip between the cup and the lip before the process reaches the stage of fruition.

There are hidden dangers if the concept of land pooling is not properly implemented. The land pooling would be profitable for the land owners only if there is expected development that would offer higher price.

This can only happen if government does not indulge in speculation over the growth of the economy in the capital. If the government mobilises more land than the growth potential, the land values do not give adequate dividend. A mere political capital would not be a growth engine. The land values in Hyderabad did not register an abnormal increase only because there is Assembly and Secretariat.

There are a host of reasons for the real estate boom in Hyderabad. The city has 400 years of history. The growth of Information Technology sector gave the city a global image. Its cosmopolitan character, congenial climate, connectivity etc., have all contributed to the growth of Hyderabad economy. The growth of the economy rather than the political status has contributed to the costly land market in Hyderabad. The economic boom in India and the world in the first-half of the last decade is the primary reason for the real boom in Hyderabad too. The speculators added their might to this phenomenon.

The new capital of Andhra Pradesh can’t transplant all this into its social and economic landscape. Meanwhile, the real estate has already sky-rocketed in and around Vijayawada, thanks to the political maneuvers.

Any growth from this level is a difficult possibility. This is the context in which the land pooling has to fetch golden returns to the land owners. This is not to denigrate the potential for the new capital. But, the people and the government have to make the correct calculations to prevent possible social unrest if the expected returns do not become a reality.