Government intervention and land development:New Town, Kolkata
Sujeet SharmaWansbeck District Council
Urmi SenguptaUniversity of Newcastle
Context: Urban Land and Housing• Massive population pressure - 14.96 million in 2001
and 17.3 million by 2015• 2.5% of the land coverage to accommodate 8% of
the country’s population• Serious shortage of developable land to
accommodate new housing - up to 800 ha land for 90,000 units per annum requirement
• Renewed surge in housing/industrial investments in the post-reform era – over 20,000 ha immediate land sought
• 53% LIG population and 27% EWS –Affordability problems
Context: Past government intervention• Past government
intervention in land – Kalyani(1954) & Salt Lake (1964-1984)
• Suffered from classic weaknesses of provider regime – short-termism, budget deficit, bureaucratic, protracted time scale, unrealised development
• Resulted in biased and underdeveloped land market
Salt LakeKalyani
New Town
The New Town project• Most ambitious and largest
land development project in Kolkata/country – second only to Navi Mumbai
• Comprises 3,075 ha –for 1 million population
• Further expansion to adjoining areas - expected to cover some 5,000 ha land area with 2 million permanent population and 500,000 floating population.
2 Key Questions• Given widely shared belief that the government has
the ultimate responsibility to manage land supply in Kolkata
• Is the New Town land development efficient?• sustainable land supply in Kolkata• Reviving dormant housing market
• Is the outcome equitable?• To city’s 80% EWS and LIG population?• Balancing land needs of both urban poor and the
new economy
Methodology• Empirical observation • Application of indicators:
• Land development multiplier• Land price to income ratio
• Semi-structured interviews with officials • Informal interviews with potential beneficiaries
Mode of procurement
No. of Mouzas Proposal Total area acquired in acres
Total compensation paid
5849.03 INR3.98 billion
INR120 million251
7,11926
13
Land acquisition ProcessDirect purchase from land owners
Progress status
Location Action Area I Action Area II Action Area III
1,050 ha 1,365ha
OngoingOngoing
669 ha
Almost complete
Area
Infrastructure development
Land procured so far
Source: Biswas (2006)
Key observation: Onerous land assembly• Protracted land assembly
process• Lack of transparency -
government transactions not in public domain
• Dissatisfaction with package of compensation - Increasing concerns on equity has been raised as HIDCO selling developed parcels at much higher prices: legal battle
Key observation – Beneficiaries (residential)
Share of residential land for different income groups
Income groups %
Economically Weaker Section (EWS)
4
Low Income Group (LIG) 17
Middle Income Group (MIG) 35
High Income Group (HIG) 44
Land development multiplierInternational Comparison
9
3.5
4.33
2.33
2.38
2.9
3.8
0 1 2 3 4 5 6 7 8 9 10
New Tow n
Latin America
Sub-Sharan Af rica
Industrialized countries
East Asia
South Asia
Dhaka
Land development multiplier
• High land development multiplier as a result of
• high costs of ‘servicing’ the land in two distinctive stages – infrastructure development process and building development process.
• existence of monopolistic practices in residential land development
• transaction costs
Categories Median Prices per Cottah(66.9 sq. m) (INR)
Median prices per sq. m (INR)
Median Income(INR)
Median price to
income ratio
Raw land 10,000-12,000 929-1,115 0.18-0.22
Developed land
100,000 9,293 1.85
Highly developed land
300,000-400,000
27,881-37,174 5.5 – 7.43
5,000
Median prices, income and land price to income ratio in Kolkata
• low raw land price to income ratio
• Fairly low developed land to income ratio
• High developed land to income ratio
Land to income ratio
Relatively Affordable
Un-affordability
0.18
1.85
5.5
Despite subsidy, prices of highly developed land beyond the reach of the poor
Land to income ratio : International comparison
0.150.41
0.81
1.45
3.02
5.5
0.070.26 0.33 0.31
1.04
1.85
0.03 0.06 0.08 0.090.31 0.18
0
1
2
3
4
5
6
Africa Transition Arab States LAC Asia Pacific Kolkata
Rat
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f 1 s
q. m
land
pric
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onth
ly
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ehol
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com
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Very higly developed land Developed land Raw land
Prices of raw land in adjoining areas• Establishment of BRADA (Bhangor Rajarhat Area
Development Authority) to monitor and regulate development activities of the neighbouring area
• Regulations distorting the land market first by increasing and then reducing the value of their assets
• Blighting the ‘hope’ or floating value important for informal and low income
• BRADA in controversy - accused of subsidising the Singursmall car project and giving away 300-400 acres of land to Tata Housing Development Company
New Town: Step toward land market liberalization I
• Government-led enabling development
• Based on public participation/public private partnership
• Off-budget scheme: minimal strain on the State or Central budget
• Tested many of the regulatory and legislative barriers at different stages of the project
• Government-led and regulated to ensure the social content
New Town: Step toward land market liberalization II
• Speedier development approval system. Relatively less development restriction.
• Offsite provisions benefiting from multiplier effect
• Comprehensiveness of the development & Self containment
• More socially-orientated than other townships
• Cross-subsidy approach for the poor
New Town: Irrelevant to the poor I
• Fails to establish a sustainable land supply system in the long term and making land affordable
• Fails to rationalize laws and regulations - High transaction cost still hiking land price
• Monopolistic behaviour of HIDCO artificially raising the stake
• BRADA blighting land market on the periphery
• Residential land disposal: Upfront payment
New Town: Irrelevant to the poor II• Urban poor increasingly
priced out - High price to income ratio; lack of room for informal economy
• Low share of land for the majority poor - 4% EWS share as compared to 27% population
• Exclusion of medium and small developers -Concentration of national players
Summary & future direction
• Land regulations creating upward pressure land development multiplier higher
Repeal land regulations such as ULCRA • Biased land market, favouritism and low social
content – balance in favour of big businesses/HIGPublic agencies should operate strategically
• Not part of overall land development strategy of the city
Must follow land and housing needs assessment• Irrelevant to the poor
Increase the share of the poor significantly