Cleaning up land records

Context: Instead of forcing a top-down approach to clean up all the land records at once, it is more prudent to consolidate land records already collateralised under the formal financial systems.

Failures in Land Reforms:

• Distorted Policies: due to the incapacity of states in addressing the issues has led to the deterioration of both landowners and farmers alike.
• Poor Record Keeping: adding to the cost and risk to the lenders and non-updation leads to fewer incentives for the borrowers who are using the land as collateral.

Way Forward: Creating a land register with the already present collateralised land data with banks and financial institutions. This has the following advantages:

• Quick and Easy Gains: As the data is already available with the financial institution, it will be easy to implement.
• Distributed Risks: As with the case of Dematerialisation of stock records where the risks were distributed among various stakeholders.
• Objectivity: Similar to credit profiling of borrowers to minimise the risks, banks can be objective in credit disbursal.
• Minimum Government: There is minimal state interven­tion needed since it does not infringe the sovereignty of the government over the land records.
• Technology Upgradation: The use of technology like blockchain to ensure integrity through distributed responsibilities becomes easier in this model.
• Lower interest rates: With lower risks, banks are likely to increase loan to value ratio and could lower their interest as well.

Conclusion:

• Real reform takes place when the incentives of multiple stakeholders are naturally aligned. The proposed land registry works in the best interests of all.