Are property cards a game-changer?

In today's Finshots, we talk about property cards and the government's plan to help rural land owners.

The Story

India has a big problem. We don’t know who owns what piece of land in this country. This issue has persisted since the Zamindari system when record-keeping was largely a by-product of manual intervention. This inevitably led to discrepancies in the demarcation of properties, and the same errors have crept into records now maintained by the Revenue Department.

And this creates a unique complication because the Indian legal framework continues to recognise “presumptive” titling instead of the more robust “conclusive” titling of land. Think of it this way. On most occasions, the buying and selling of property happen via a sale deed, where a seller transfers his/her property to the buyer.

However, even if the transaction is registered, the document alone does not guarantee land ownership. Meaning, the transfer can be challenged in a court of law. And therefore, the burden of ensuring a clean title lies on the buyer and not the registrar. So although a sale deed gives you legal possession, you might not have complete ownership. I know it's weird.

But if you want to make sure you do have complete ownership, then you’ll likely have to visit the Revenue Department and skim through years of land records which probably haven’t been updated since the Indira Gandhi era. And you’ll also need to corroborate this information with previous sale deeds, maps, and property tax receipts. Unfortunately, the sale deeds are stored in the registration department. Maps are stored in the survey department. And property tax receipts are with the revenue department. You’ll have to go to several departments, and back several years of documents if you want to be absolutely sure your ownership is incontestable. And since most people don’t have the time or the patience, to do all this, land-related disputes are common in this country. One study from 2007 estimates that land disputes account for 66% of the pending civil cases in India.

Also, this ownership conundrum hampers investments in infrastructure and land. Several new projects are witnessing delays because businesses can’t find land that’s unencumbered and free from any monetary or legal liability. Even if they did, they would then have to worry about dealing with potential suits from previous landowners. But forget businesses, what about India’s largest group of landowners — Farmers.

Small and marginal farmers account for more than half of the total land holdings, and most of these people can’t use this land as collateral since they don’t hold formal land titles. As a result, they often have to rely on moneylenders, friends and relatives — who often charge exorbitant interest rates while extending new loans.

However, if they had some document conclusively proving beyond all reasonable doubt that they were true owners, that would alleviate a lot of their problems. And this leads us to the “Conclusive titling” system where the state provides guarantees on land titles and compensates the owners in the event of a dispute. So now the onus is on the registrar and the state to make sure that the records aren’t dubious.

And it’s within this context that the recent launch of the SVAMITVA scheme becomes all the more important. The fully-funded central government initiative is primarily aimed at ensuring that farmers have access to conclusive land titles. The hope is that these documents will allow them to pledge their land as collateral and help them access loans with cheap interest rates.

The process will begin with the Ministry of Panchayati Raj, state revenue departments and the Survey of India working together to demarcate the inhabited areas in villages to create land records by using drone cameras. On completion of the drone survey, generation of final maps, data processing and other inquiries, inhabitants will receive ‘property cards’. And this card will become a valid legal document of property ownership.

It’s actually pretty neat.

However, while there is considerable merit in pursuing this agenda, implementation challenges are always going to persist. For instance, what if the state cannot verify all the documents? Or what if they issue a property card and then have to mediate disputes regarding the original claim? Does the state have the financial capacity to compensate farmers? Or will it go to the courts once again?

Obviously, there are no straightforward answers. However, this time around the government can work through these problems and make a dent in solving a problem that has persisted since time immemorial.

Until then…

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Also don't forget to check our daily brief. In today's issue we talk about child marriage in India, India's decision to open its borders further, and vehicle dealers' inventory woes. Do read the full draft here.