“Location of a land holding plays a far more pivotal role than the quality or fertility of land, irrespective of whether the land parcel is in a rural or urban area.”
“The farmers engaged in agriculture on fertile land which has locational advantages get lower economic returns from agriculture than if they were to sell that land. However such depletion of fertile land has its implications on the country’s food security
problem,” the report said.
The report ‘Study on Fair Pricing of Land and its Compensation in an Emerging Economy: Case for India’ done by Germany’s GIZ
was released by Vandana Jena, Secretary, Department of Land Resources, Pronab Sen, Chairman, National Statistical Commission and Alok Sheel, Secretary, Prime Minister’s Economic Advisory Council.
GIZ supports the German government in international cooperation for sustainable development and international education.
According to the study, location and the level of industrialisation are the determinants of pricing gains for a land over successive decades while fertility loses as a determinant factor.
Fertile land is being lost due to industrialisation, there is a strong case for not touching fertile land for acquisition which is also mentioned in the Land Bill, the study said.
The study said that the circle rates are arbitrary that give rise to social conflicts and there is a need for a fair price discovery.
“There is a rampant violation of circle rates…People are generally more aware of the true price of their land in a more developed region. In a backward district, such transactions are pervasively undervalued, raising a potential for future conflicts,” it said.
Proximity to road/highways and railway stations or future development of these facilities affect land prices across India, found the report.
“The distance from municipal centre or nearest city were next factors that drive land prices. In terms of acquisition by industry or government, intended use of land that might give rise to any of these infrastructure developments may be integrated into pricing model for sellers to reflect a fair pricing that reduces conflict and overall costs in short and long run.”
The report said that land sales in any region are mostly guided by economic and market considerations and there is a close correlation of land prices with variables including inflation and size of land being sold or purchased.
The report has suggested an approach which is neither government mandated nor tantamount to an auction but is based on an informed understanding of the price dynamics for land.