Prosperity Unbound

The government of India has proposed a new law to guarantee property titles, based largely on the Torrens system in Australia and England. The draft was open to public debate and input till June 15, 2010.

Details of the draft law are available in the document below:

http://dolr.nic.in/Draft%20Final%20Model%20Land%20Titling%20Act-04.5.10.doc

Recent article on the topic was published in the “Financial Express” on May 27, 2010 by Ravish Tiwari

New law drafted to guarantee property titles in India

To bring uniformity across the country and replace the existing deeds system fraught with litigation due to inaccuracies in property records, the rural development ministry has drafted a model law to usher in a system of conclusive property titles with title guarantees through registration of immovable properties.

The department of land resources under the ministry has drafted the Land Titling Bill, 2010 that provides for establishment and management of a system of conclusive property titles with title guarantees and indemnification against losses due to inaccuracies in property titles, through registration of immovable properties.

“We have prepared the draft Land Titling Bill, 2010 and have invited public comments. We will soon be consulting state governments for their comments on the draft Bill. We will also be organising a workshop with state authorities to create awareness about the Land Titling system,” Rita Sinha, secretary, department of land resources, said.

The system envisaged under the Bill is currently operational in countries like England, Australia and New Zealand. It hopes to replace the existing deeds system under which the government does not give any title to any individual or organisation.

In fact, in the deeds system, all titles of immovable property are ‘presumed titles’, where title to property is claimed by people through diverse legally recognisable instruments. Usually it is the sale deed which is used as the prime instrument to claim title to property. But it gives rise to litigation with different persons furnishing different instruments to contest title claims.

In contrast, under the land titling system, the government guarantees conclusive title, as against presumed title, for every immovable property which is tagged with an unique property identification number.

Titles under the new system would be indefeasible—title of any immovable property entered in the register of titles cannot be altered or made void.

After sale, the register of titles will erase the earlier assignee in the register and replace it with the new holder. In the register will, on behalf of the government, grant a certificate of conclusive title to the new holder.

The proposed draft model Bill envisages a land titling authority which will have four different divisions—title registry, survey settlement and land information system, property valuation, and legal services and title guarantee—to ensure uniformity and usher in the new system. It also envisages instituting a Land Titling Tribunal to adjudicate issues arising at the time of ushering in the system.

Sinha said the National Land Records Modernisation Programme (NLRMP), approved by the Cabinet in the year 2008, has undertaken a massive programme that can be used as a platform to usher in the new system that seeks to address property rights concerns.

The NLRMP has undertaken computerisation of land records which includes data entry, digitisation of cadastral maps and integration of textual and spatial data, strengthening of revenue and survey training institutions, village index maps and core GIS, legal changes and programme management.

“I am given to understand that the West Bengal government has almost completed digitisation of its land records and is now ready to usher in the new system. I hope the model Act will help the state government modernise the property rights system in the state,” said Sinha, expressing the hope that the model law will provide the basis for uniformity across the country.

The Bank of Oliver Twist was posted by: lettrist on: June 26, 2009

URL: http://utopiaorbust.wordpress.com/2009/06/26/the-bank-of-oliver-twist/

Guest Contributor: Rachel Beach

Following the logic of Amartya Sen in Development as Freedom, individual property rights in a transparent system is a fundamental means as well as an end to development.  The Lettrist (blogger) is right to remind us that “the poor have always had ‘sizeable amount of assets’”.  The point is to find a way to secure their assets for their own benefit.  For many, one of their most valuable assets, land, is not secure.  Unable to use it as collateral, the poor lose one of their only means to access credit.  Mohammed Yunus, founder of the ever growing micro-credit banking movement, realized how critical access to credit is to upward mobility of the poor.  Just imagine your life without credit cards, access to loans, or any other means of credit. 

There is a plethora of property titling and land reform regimes gone wrong.  Think Zimbabwe.  In the wake of Peru’s achievements, the World Bank and many other well-meaning development agencies have bungled property titling projects by seeing property rights as a panacea for all ills. 

The problem, as Lettrist was right to point out, is looking at “titling” as a solution in a vacuum … a problem that pervades much development work today.  He cannot, however deny the unique successes of Peru.  I understand that advocates such as DeSoto invite strong criticism, but strong property rights is a cornerstone of development.  This is what Elena Panaritis, when at the World Bank and together with the Peruvian government carried out and proved in Peru (as outlined in her book Prosperity Unbound).  The reforms have been noted world wide for a specific reason.  They were not carried out in a vacuum.  Panaritis studied the political institutions, social motivations, and historical backdrop of the property titling mess, using a method she calls Reality Check Analysis.  Elena and her team went door-to-door surveying potential participants and proscribed a complete overhaul the agencies responsible for registering property.  Under a succession of presidents and parliaments, reforms responded to growing public demands for recognition of property.  It was not something foisted upon them, nor was it gentrification.  The reforms followed a specific sequencing of policy and events designed to address problems unique to Peru’s history, regulation, institutions.  This generated their rare success in property rights reform. 

Lettrist must not be aware of the actual benefits a properly-enacted property rights reform given his statement that “no one can be sure if land titling would benefit the poor at all”.  The results spoke for themselves in Peru.  The reforms were designed to cater not to large scale developers, but the poor and middle class who had experienced long-term insecurity of property.  Within three years the markets welcomed seven million new players.  Security of private ownership increased by 94%, initial property values increased by 42%, personal investment [i.e. home improvements, extensions] increased by more than 72%, the probability of child labor among participants decreased by more than 28%.  These are the positive elements of a reform designed to bring excluded sections of a society into the formal market. 

On the other hand the Lettrist was very right in saying that “capitalism has no serious strategy for reaching the poor in the extra-legal sector”.  Those in the extra-legal sector are entrepreneurs.  They simply lack access to formal markets and capital, and create their own informal markets.  Security of property rights is the fundamental bridge to the formal sector.  It provides a capitalist answer for bringing informal activity into the formal economy.

Appropriate community-based property rights systems empower citizens.  Rather than being a “wolf in sheep’s clothing”, they give both citizens a restored trust and mutual gain: the government gains revenue streams, but in return has a responsibility to provide public goods which citizens had previously been deprived of such as access to water, electricity, and roads.  Entrepreneurs can register businesses and invest in the formal economy.  They can secure loans and improve their lives and livelihood, assured that all their efforts will not be swept away by arbitrary expropriation.  Entrepreneurs in the informal sector function, but not efficiently.  Panaritis was not primarily concerned with preventing extra-legals from “bringing down the game” but bringing excluded entrepreneurs into the game.  The point being that as the percentage of citizens forced to live in a semi-informal state (parts of their daily lives secured in the legal sector, and parts outside where they cannot find access) increases, the legitimacy of a government decreases.  If the current government has not found a way to secure the property and person of a large portion of its citizens, nor provide public services to them, nor include them in formal market structures, it has failed to fulfill its role.  It is only expected that citizens would seek an alternative governing body i.e. Abimael Guzman, founder of the Sendero Luminoso aka The Shining Path.