Land-based Financing in Metropolitan Cities in India: The Case of Hyderabad and Mumbai

Abstract

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.

Land-Based Financing Elements in Infrastructure Policy Formulation: A Case of India

“…The increase in attention to land-based financing models and the adoption of land monetization instruments generally coincided with the development of infrastructure projects under the public-private partnership arrangements. The stress on finances of the project proponents coupled with the anticipation of upside in the land values post-implementation of infrastructure projects has given way to consider land as a revenue source, rather than just a factor of production [9,13]. The viability assessment of the projects, particularly those in the transport sector, improved substantially with the addition of a real estate component.…”

“…The land governance structures define the extent of control or ownership of the land and real estate resources, and the flexibility of the policymakers in adapting the resources for use of non-state stakeholders. The ownership patterns of land (widely diffused through a diverse cross-section of public, private, and community owners, with substantial informal claimants in India [9]) renders the policy development more constrained. The fragmented nature of the ownership and more often than not, the unequal impact of land acquisition and land value increase is visible across most developing nations [14] An evaluation of the potential risks and challenges through the lens of guiding principles would keep the frame of evaluation grounded to the desired outcomes.…”

“…Many countries including India and global forums such as Global Land Tool Network, Royal Institution of Chartered Surveyors have adopted tools for this value capture in the form of area linked development charges, impact fees, transfer of development rights, urban land value tax, surcharges on stamp duty, etc. [8][9][10].…”

The financialisation of floor space, Mumbai 1880–2015

“…The TDR market developed rapidly and property value registers started to include the price of TDR in different areas of Mumbai. Prices fluctuated based on the release of TDR into the market or due to hoarding (Gandhi and Phatak, 2016; Nainan, 2008). The state argued in 2008 that this hoarding amounted to a cartel.…”

Cashing in on the sky: financialization and urban air rights in the Taipei Metropolitan Area

“…Moreover, building credits in forms of offsets and permits are cast as the emerging resource terrain for value capture finance that is mobilized to support both state-led public infrastructure and urban redevelopment projects (Gandhi & Phatak, 2016). The difference between offsets and permits, then, appears in its platform of circulation.…”