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

io o

f 1 s

q. m

land

pric

e/m

onth

ly

hous

ehol

d in

com

e

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