Psst... wanna buy the Taj?

Since readers of this column, it’s well accepted, are among the country’s best and brightest, it’s unlikely they’d just go and buy the Taj Mahal even if offered at a rock-bottom price. What they’d do instead, is to visit the local land registry office to check if the property in question really belonged to the person selling it. And then, just to be doubly sure, they’d perhaps get the local magistrate to attest the land records as true.

Well, guess what? The records in the land registry aren’t worth the paper they’re printed on. Just because the records at Agra show the Taj belongs to me, and that I bought it from you, and that you bought it from your cousin, doesn’t necessarily mean it’s true. And all this is legal. Confused? Land records in India, you see, are only fiscal in nature — the person in whose name the property is registered has to pay the taxes but, the rules state clearly, this doesn’t necessarily mean the person owns the land.

In fact, while accepting property taxes, several municipal bodies stamp their receipts “without prejudice” — that translates into “you’re paying the tax, but this is not a certificate saying you own the land.” The statute in Maharashtra dealing with this, for instance, says, “no suit shall lie against the State Government or any officer... in respect of a claim to have an entry made in any record... that is maintained in this Chapter or to have any entry omitted or amended.” So, if the property you bought is deleted from the records, or if the records have got things wrong (as in the Taj’s ownership case), you can’t sue the government. The registry officer’s only job, the registration manual clearly says, is to ensure the papers have the correct value of revenue stamps, for instance. Most states have similar laws.

Apart from the heartbreak at the individual level — most litigation in the country relates to unclear land titles — the impact for the economy is huge. Without clear title to land, understandably a large part of the country’s productive resources cannot get used. In countries like the US, for example, clear titles allow houseowners to mortgage houses, which creates an active market for trading in mortgages and, therefore, a vibrant market for raising resources. By contrast, with title for land not clear in India, you can’t raise significant resources from land — in a nutshell, it’s “dead” capital, of little productive use to the economy. Some months ago, global consultants McKinsey & Company estimated that India’s GDP growth could be as much as 1.3 per cent higher per year if issues like land titles were sorted out as this would spur the construction sector — a 1.3 per cent higher growth rate, by the way, means our GDP figure would be around 25 per cent higher every year.

With things so bad, you’d think the government would do something to ensure land records are not just titles of responsibility (to pay property taxes) but are actually titles of ownership. Well, the good news is that successive governments, over the past 55 years, have been alive to the problem — every plan document, right from the first one, speaks of fixing the land records.

Most of our governments, sadly, believed in just talking, and nothing really moved on this subject until, as prime minister, Rajiv Gandhi decided to appoint a committee to go into the matter and make recommendations. Professor D.C. Wadhwa of the Gokhale Institute of Politics and Economics in Pune was the one-man commission, and came up with several interesting findings — such as the Maharashtra regulations cited earlier. A 1989 Supreme Court ruling, Wadhwa noted, said that “it is firmly established that the revenue records are not documents of title”. What Wadhwa then recommended is that India adopt what is called the Torrens model that originated in Australia, that the state guarantee the title to land, and compensate people in case they get defrauded while buying land based on the accuracy of the records in the registry. Wadhwa also suggested the possibility of using title insurance firms, as in the US, and recommended that pilot studies be carried out first. Accordingly, in October 1990, the ministry of urban development sent out a note on introduction of the Torrens System in India, and said an inter-ministerial committee would be set up to finalise pilot schemes for (as they were then called) Bombay and Madras.

In true sarkari style, nothing moved after that — except that in his Red Fort speeches in both 1991 and 1992 Narasimha Rao spoke of how the land record system was to be fixed. Nothing moved, that is, till McKinsey presented its report to Prime Minister Vajpayee last September. Suddenly, even the Maharashtra government woke up, and in January it decided to fix the land-records system, to be able to actually issue titles of ownership after thorough verification of the land records. Ironically, 12 years after his work gathered dust, Wadhwa was invited to help the pilot project located in his hometown of Pune. History, it would appear, does turn the full circle. Let’s try and get it right this time around. Losing 25 per cent of our GDP every year for another decade (see McKinsey), till the wheel turns around again, is too high a price for us to pay.

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