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  • India Property Rights: Not a New Problem


    For the past few weeks, India’s internal turmoil has been on display via news headlines on rape, widespread poverty, and continued civil conflict. Foreign Affairs recently published an article exploring one of the root causes of India’s widespread poverty and a perpetrator of its social challenges: landlessness.

    The article explains the connection between the “landless”—Indians who either own no land and/or lack the legal rights to own land—and poverty. Lack of land ownership is a major limitation to Indian economic growth and hinders the country’s ability to develop and compete in the international sphere.

    On a scale ranking “the easiest places to do business in Asia,” India has been ranked 29 out of 36 countries in the region. It also ranks second worst in the world in enforcing contracts and fourth worst in “dealing with construction permits.” India’s neighbors, Pakistan and Bangladesh, have been ranked more business friendly.

    The issue of land ownership and its negative impact on both domestic issues and foreign investment is not new. Heritage expert Derek Scissors has called for India to address its land issues in order to bolster productivity and improve the investment environment.

    Agricultural productivity is the bedrock of development. But hazy state ownership of “assets associated with land,” such as minerals, has lead to disputes between foreign and domestic companies, locals, and even the government. Scissors suggests that weak property rights are a primary reason for the inefficiency of Indian agriculture.

    Poor to nonexistent laws have left investors wary of land purchase because true ownership of parcels is unclear. The prevalence of ambiguous land ownership has left very little land clearly available; thus further constraining India’s property offerings to foreign investors. A major impediment to Indian road projects, both “foreign and domestic, public and private,” has been land acquisition.

    Scissors and others applaud recent state-level actions to create “land banks,” which generate competition among Indian states for investment, identify viable land for development, and help circumnavigate problematic land laws. However, there is still much room for improvement. India is already the world’s largest democracy and will soon have the world’s largest population. Careful reforms, such as those surrounding property rights and land ownership, will lead to a stronger, more prosperous India—where freedom, opportunity, and civil society flourish.

    Posted in Economics [slideshow_deploy]

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