Does Delhi’s land pooling plan give owners a better deal than similar schemes in other cities?

How can urban land be developed in a way that benefits both land owners and the government? Delhi is hoping to answer this question with its new land pooling policy that was notified by the Centre in October 2018. Rather than the government acquiring the land, the policy envisions the state acting as a facilitator between landowners and the private sector. But will it work?

The policy, which aims to provide 17 lakh homes to a population of around 76 lakh residents in areas that have been earmarked by the Delhi Development Authority, was drafted by the authority under the Master Plan 2021, a blueprint for what the capital should look like going forward.

The land pooling scheme is only applicable to the city’s 95 “urban villages”. These villages have been divided into five different zones.

Landowners interested in participating in the scheme were supposed to register their parcels through a website by August 4. But by the end of July, the Delhi Development Authority had received only about 2,000 registrations – totalling around 1,548 hectares of land, the authority’s Vice Chairman Tarun Kapoor told Scroll.in.

Despite this, as interest in the idea of land pooling slowly gathers steam, residents of these villages pointed to gaps in the policy, even as experts raised concerns about its environmental and social impact.

A better deal

The process of landpooling usually involves landowners voluntarily putting together their parcels of land to get a better deal when an area is being developed and more bargaining power over what is done with it afterwards. The policy has been used in several cities for governments to acquire land for development, such as in Amravati, the planned new capital of bifurcated Andhra Pradesh.

Delhi is trying something different. Instead of the government acquiring the bulk of the pooled land and then contracting developers, the state will simply act as the middle man. The Delhi Development Authority’s policy allows the landowners to retain some of their property, but connects the pooled land to developers and the government agency to build commercial and residential real estate. For this, the pooling landowners have to pay a fee.

Delhi’s land pooling policy

In Delhi, land pooling can only involve plots that are vacant and have been notified by the government, said Leenu Sehgal, a commissioner in the DDA’s planning department. She added that the policy was applicable only to “urban villages” where agriculture was no longer the sole means of income for residents.

The outcome of land pooling in Delhi will create “world class ‘smart’ and sustainable neighbourhoods”, the policy claims. The main requirement for work to begin under this policy is for “70% contiguous land” to be available.

Landowners can register for the policy by forming consortiums with other owners, until they have a substantial amount of land. However, the policy does not provide comprehensive guidelines on how landowners can form these consortiums. The absence of such guidelines has made it difficult for landowners to register, said Bhupender Bazad of Delhi Dehat Vikas Munch, a farmers’ association formed to address concerns about the initiative.

Consortiums and development

A defining aspect of land pooling is how much of the land the owner gets back after it has been developed. Delhi’s policy states that from the pooled land, the consortium will retain 60% for residential and commercial purposes. The remaining 40% will be surrendered to the Delhi Development Authority to develop “physical infrastructure, recreational and public/semi-public (PSP) facilities”.

How will this development be funded? The expenses will be raised from the external development charge levied on landowners and consortiums. In an earlier draft of the policy, the Delhi Development Authority had earmarked a charge of Rs 2 crore to be paid by land owners for every acre pooled. But this amount was later scrapped as the policy was revised in 2018.

The external development charge, according to the revised policy, is to be calculated on the basis of “actual cost of providing city-level infrastructure” for the pooled land. “In this policy, the government is not acquiring land, so everything has to come from the EDC [external development charge],” Kapoor said. However, he said that the DDA was yet to work out a rate for this.

The charge needs to be paid either lump sum over 90 days from the date DDA issues the final development licence or through eight instalments every six months spread over 48 months with an interest rate notified by the authority.

What if the work remains incomplete even after these charges have been made?

In such a case, a penalty of 2% on the external development charge per year for the first two years will be paid by the service provider or DDA to the consortium. If the work remains unfinished even after two years then this rate will be increased to 3% for the next five years.

“There is a problem with this and we agree that we are still looking for solutions to address it,” said Sehgal about the lack of guarantee of the completion of the development of land pooled.

Land pooling in other states

Other states like Maharashtra, Gujarat and Andhra Pradesh among others have also used land pooling to outline a plan for new cities.

However, the concept was introduced in India in 1915 as a Town Planning Scheme under the Bombay Town Planning Act in Maharashtra. The first town planning scheme was prepared for seven acres in the suburb of Bandra.

The most prominent version of the policy currently is being used to build a city from scratch in Andhra Pradesh. It needed a new capital after it was bifurcated in 2013 by then United Progressive Alliance government. Amravati, the new capital city, was formed after farmers pooled in nearly 33,000 hectares of agricultural land.

The capital came up near Guntur and Vijayawada. A farmer would receive a quarter of every acre of land they pooled for the scheme. A fifth of this quarter would be for residential purposes while the remaining would be for commercial spaces. This meant that the landowner got only 30% of their land back and the rest of the 70% went to the state government.

Additionally, farmers also received an annual compensation of Rs 30,000 per acre for a fixed period of ten years. If they owned fertile land then this amount would go up to Rs 50,000 for the same time period. Provisions were also made for landless families by creating a fund of Rs 2,500 for a monthly pension for the next ten years.

But the implementation was not without its flaws. A study by the World Resources Institute on state-led initiatives to acquire and develop land in July 2018, noted that land pooling in Amravati was criticised because fertile land was also pooled. Furthermore, the study noted that the state relied on law enforcement to curb resistance against the scheme.

Environmental impact?

Land pooling is widely seen as a better alternative to land acquisition. While acquiring land, money is the main exchange between the two parties. In pooling, the land owner gives the land, receives compensation and gets a smaller share of the land back with more facilities thereby increasing its value.

But unlike in land acquisition, there are no social or environmental impact assessments done before land pooling. Delhi’s policy is silent on these aspects including compensation and plans to address air and water quality.

Kanchi Kohli, a legal researcher at the Centre for Policy Research said that DDA’s land pooling policy was primarily aimed at private land owners. “This policy is just responding to the demands of urbanisation,” she said. “But we do not yet know the social and environmental impact it could have.”

Sehgal said that the authority planned to treat water internally to avoid a discharge into other water bodies. But the policy does not mention a detailed plan to do so. It only states that DDA or the relevant government agency will oversee water supply lines, power supply, rain water harvesting, sewage treatment plants and water treatment plants. But it does not go beyond that by detailing a comprehensive plan.

The policy does not address other aspects such as owning land parcels fragmented across different zones and transfer of land ownership. Landowners do not expect to receive the 60% at the exact piece of land they own, so how will ownership be transferred?

“This is a major issue for us,” Bazad said. “We do not know if the new owner will have to pay the previous owner a stamp duty fee.”

Additionally, the external development charge has also created some uncertainty about signing up for the initiative among land owners and farmers who may not be able to pay it. “We want this charge to be let go for farmers and their families,” Bazad said. “But it is also a very long process till they calculate the rate applicable.”