Contrary to popular impression there is too little planning in India at the operational level of Panchayats, Nagarpalikas, Towns, Cities and Metro agglomerations. Many years ago the Secretary of the Urban Affairs ministry of UP, the largest State in the country, told me that he had only three planners in his Urban planning department and even their skills were badly rusted. The most urgent need is to devise curricula for all aspects of urban planning, train the trainers who can then produce dozens of urban planners for this fast urbanizing nation, and ensure that they are placed in planning departments in all towns and cities. Among the important areas of planning are 'land use', public transport, roads & parking, water & drainage, sewage & sanitation.  These new urban planners must be familiar with systems that were adopted by Advanced countries a century ago; For instance every modern city in the World has a system of underground conduits for carrying electricity wires, gas pipelines, water lines etc. obviating the digging up of roads every time a new item has to be put. 

Land Use
   The quality of land use planning and implementation has to be raised by training city officials and changing the rules.  Involve stake holders in land use change decisions through land use hearings & appropriate change of land use based on these hearings, before acquisition starts.  Once this is done market price will reflect the true value of the land as long as government makes the information available to all land owners and potential land acquirers. 

            The new land acquisition and rehabilitation law, instead of leveling the playing field for all participants (land owners, land buyers and land users) has created a vast bureaucratic system that will be a great disincentive for economic development and growth.

Land Supply

Despite some attempts by the Central government, reforms to free up the land markets and introduce competition have been extremely limited, partly because most land related policies come under the purview of the State governments. The basic most visible manifestation of the urban problem is the stratospheric price of land, equaling or exceeding that of countries that have more than 10 times our per capita GDP.  This is due to the acute shortage of “urban land”, public transport (in metros) and basic urban public goods. The gap between demand and supply of urban land has started increasing rapidly since the rate of per capita GDP growth accelerated.  The wider the gap, the sharper the effect on wealth inequality, and more the opportunity for rent seeking and corruption. Only by increasing dramatically the supply of habitable and accessible urban land can we help the low income residents, reduce urban wealth inequalities and minimize corruption.  Much of the extreme inequality noticed by foreign visitors is due to the abysmal supply of basic public goods and services (clean drinking water, sewerage, drainage, sanitation, public toilets, durable roads, primary education outcomes, public knowledge of nutrition and hygiene) that affects the bottom 20 per cent to 40 per cent of the population most acutely.

How can we increase the supply of Urban Land? There are only two long term ways (and one short term one):

(1) To grow horizontally by incorporating villages and rural land on the periphery. There must be transparent systems for changing land use from 'agriculture/rural' to 'urban' and then allowing the free market to operate in terms of sale, purchase and lease between private parties. Most corruption takes place through purchase of land by politicians prior to a change in land use by their government, which increases land values through a stroke of the pen.  Horizontal growth requires public transport and road systems that can move residents into and out of the central areas and provide parking spaces in the Central areas to take care of the daily influx.

In China, auctioning of agricultural land on the periphery of Cities has paid for over 75% of the cost of high quality infrastructure to support urbanization. The new Land Acquisition Relief and Rehabilitation Act may make it difficult to use this route to finance even half the cost of Urban infrastructure development (though it is difficult to know till rules are framed and implemented).

(2) To grow vertically by increasing the Floor space index (FSI). The FSI in India's largest cities is less than 4, compared to 10 in the World's major cities. However, the higher a city grows vertically the "deeper" the basic infrastructure (capacity & quality of water mains, sewers, treatment plants) must be to cater to the higher density of usage. The most neglected element is parking- street parking is now choking our roads to the point of dysfunction & road rage!   A modern, efficient property tax system is critical to building the 'deep' infrastructure needed to sustain these higher FSI. Currently our cities & towns generate only 0.2% of GDP in property taxes, compared to 3-4% in developed countries.

(3) In India, Public sector units (PSUs), Departmental Public Enterprises (DPEs) like railways and Port trusts, Military Cantonments and Government own unutilized land inside cities. This can and must be used to increase the supply of land, particularly in metros and large cities with exorbitant land prices. This can and should be sold through well designed, transparent and competitive auctions. A critical prerequisite for sucessful auction of land is to define and notify the "land use" that will apply after the auction and all infrastructure development requirements that the land developer must fulfill and those that the urban govt will fulfill (using the auction money received).


            Urban governance reform requires genuine decentralization from State governments to the city governments and the modernization of laws, policy and procedures for specifying / changing land use and for sale of government land (through competitive auctions).  The Land acquisition and Relief and Rehabilitation Act creates an enormous bureaucratic structure which (unless reined in sharply) is likely to delay urban land acquisition for building infrastructure. The suggestion for leasing of land should be incorporated. The law should be amended to take voluntary land transaction between private parties outside its purview.

Rent Control

    Rent control laws, that make it impossible to evict tenants or raise their rents, also means that no commercial developer will build rental housing for poor and lower middle income people. This contrasts with what happens in most developed countries, where the poor and lower middle income groups live in apartment complexes rather than in slums.