The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Major cities in developing countries face infrastructure shortage and inadequate financial outlays to overcome it. One way to raise finances is by leveraging the increasing urban land values using different mechanisms. This article studies the experience of land-based financing in the metropolitan cities of Hyderabad and Mumbai in India. It assesses the performance of various mechanisms implemented by the principal urban local bodies and development authorities in these cities by examining their design, collections and utilisation of revenues from land-based financing mechanisms for infrastructure provision. It finds that although land-based financing contributes substantially to revenues of public bodies, there are issues regarding efficacy of design and legal validity that need to be addressed to make it sustainable. Further, the article finds that to a certain extent, some of the public organisations use revenues from land-based financing for capital expenditure.

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

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