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A transparent land record system is needed for conversion and purchase

Earlier this month, the UPA cabinet approved for introduction in Parliament several amendments to the Registration Act, 1908, which governs the registration and documentation of property transactions. Most citizens encounter its provisions when they buy or sell land or housing. The rural development ministry suggests that the proposed amendments will make ownership of land more transparent, land transactions safer, and ease the process of land acquisition for industrial projects by reducing the land-title related litigation that has choked the courts.

It is no secret that India's land market is opaque, and that it is a den of fraud. One reason for this is the antiquity of the Registration Act and the many deceitful practices institutionalised over the decades. The two most common sources of problems are under-reporting sales prices to under-pay stamp duty and selling land without holding a clear title to it. The former leads to revenue losses and the latter to voluminous litigation and uncertainty among buyers. Attention to this arena is welcome, but the rosy scenarios outlined by the ministry may be unduly optimistic.

Why has the state neglected this problem for so long? The primary reason is that land has been an unimportant source of revenue for independent India. This was not true throughout history. For as long as records have been kept, land was the primary source of revenue. Taxes were as high as 75 per cent during the Mughal and early colonial periods and the source of much misery for the peasantry. Maintaining land records was one of the main tasks of the state. But by the early 20th century, land had become much less important as a source of revenue. Mid-century, the independent Indian state eliminated taxes on agricultural production. It focused instead on land reform and land acquisition (for new development projects). Independent India had little incentive to maintain land records because land did not provide revenue any longer.

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