Source: Ideas and Institutions Issue #14
Analysis
Land Pooling: The Unanticipated Benefit of Reforming Land Acquisition Law
Making state coercion fiscally expensive can reduce state coercion. This is the lesson that emerges from the experience of reforming India’s land acquisition law. India’s urban development seems to be becoming increasingly reliant on non-coercive land pooling mechanisms, compared to the comparatively draconian mechanisms of land acquisition. This is because reforms in 2014 made land acquisition significantly more expensive, which in turn rendered its use as a mechanism for urban development unviable for many city and state governments.
State-led urban development in many states and territories (like Delhi, Noida, Punjab, Kerala, and Karnataka) relies primarily on land acquisition. This is especially so when a new stretch of land is sought to be developed and supplied with urban infrastructure. As Indian cities expand outwards, and the focus of urban development shifts to urban peripheries, land is frequently acquired by development authorities for providing urban amenities.
However, this practice has become increasingly difficult after the new law on land acquisition was enacted in 2013. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 increased the compensation payable for urban land acquired to two times the market value of the land and four times the market value for rural land. It also introduced new requirements like Social Impact Assessments that made land acquisition both more expensive and more time-consuming. This has limited the ability of already fiscally constrained development authorities to use land acquisition as a method of planning urban development.
For example, the Delhi Development Authority (DDA) introduced a land pooling scheme for developing specific parts of Delhi in 2018. Compared to land acquisition, DDA’s policy does not require the DDA to acquire land. Landowners can agree to pool their land, form consortiums, and transfer their pooled land to the DDA. Once 70 percent of the landowners in a given locality agree to pool their land, the DDA will develop this land. It will use up to 40 percent of the pooled land to provide public amenities and infrastructure like roads, hospitals, etc. Once the amenities have been provided, the remaining 60 percent of the land will be used by the landowners or their consortium for developing residential, commercial, and other facilities.
This is fiscally advantageous for the DDA, which reportedly has a cash deficit of Rs. 9,600 crores. While the DDA would have to spend money to acquire land under a policy of acquisition, land pooling does not require any such expenditure. In the latter, the DDA’s expenditure will be limited primarily to the infrastructure development in pooled areas. In fact, the DDA is charging external development charges of Rs. 2 crores per acre from every owner/consortium for providing this infrastructure.
This also has important implications for the political economy of urban development— implementing pooling the way the DDA is doing it means that it is increasingly planning for the creation of housing and real estate, rather than both, planning and providing such infrastructure themselves. The actual provision of housing will be undertaken by private developers. This is a significant shift. One of the key failures of the DDA in Delhi, for example, has been its inability to deliver housing as per its own projections for the state. The rising costs of undertaking planned development through acquisition has therefore forced the DDA to look for more voluntary and consensual systems of undertaking urban development.
As per a report prepared by the Administrative Staff College of India, land pooling has many strategic benefits for urban development bodies. First, the upfront costs are minimal, compared to those of land acquisition. Second, the cost recovery mechanism is less risky. In the conventional model, a city development authority will acquire land, build housing and real estate, and recover costs by monetizing these assets. In land pooling, by contrast, the land owners bear the costs of improvements in urban amenities and also profit from the increase in land values due to improved infrastructure. Third, conflicts are fewer. There is no permanent transfer of land ownership in land-pooling schemes, and landowners are not displaced due to the development. Some states like Gujarat and Maharashtra have followed “land readjustment” mechanisms for urban development. These share many of the same features as land pooling and are generally regarded as being less conflictual and costly.
Land pooling is being adopted steadily in Indian states and cities. The use of pooling for urban development was perhaps best exemplified in the case of Amravati. After Andhra Pradesh and Telangana were bifurcated, the state of Andhra Pradesh required a new capital. The government sought to develop this new capital city—Amravati—by pooling land rather than by acquiring it. The land pooling scheme was completely voluntary, but unlike in the case of Delhi, the land was to be transferred to the state government for development. A host of benefits was provided to all residents, irrespective of whether they owned land: one-time agricultural loan waivers, housing for homeless people, skill development for tenant farmers, annuity for crop loss, health, and education benefits, etc. The state government cited the use of a transparent and consultative process, along with the generous benefits provided, as key to its success. The imperative of requiring a new capital city, the potential for conflict and delay in using land acquisition to develop the city, and fiscal constraints probably led to the use of land pooling.
Like Delhi, other capital cities like Guwahati, the capital of Assam, have introduced land pooling schemes that seek to invite participation from private real estate developers. Punjab introduced a land pooling policy in 2013, where landowners are encouraged to transfer their land to city development authorities. The developed land will then be sold, and 80 percent of the profits will go to the landowners. Haryana, one of the fastest growing states in India, has had a land pooling policy since 2012. Hyderabad has one of the earliest policies on land pooling since 2008, which allows the private sector to propose land pooling schemes for urban development within the city. Rajasthan also introduced a law to promote urban development through land pooling in 2016.
The enactment and introduction of new laws and policies are, in themselves, not a measure of an idea’s success. However, they do provide a measure of the prevalence of the idea. The steady increase in land pooling policies indicates a willingness to move away from using more coercive eminent domain measures where feasible. Like any policy, its success is contingent on local circumstances and the specific design of the policy. For example, while land pooling was successful in Amravati, the DDA land pooling scheme is mired in problems. The fact that these policies exist, however, means that state and city governments are increasingly open to the benefits of consensual and less costly mechanisms for urban development.
The use of land pooling, specifically where private sector developers are encouraged to develop real estate in pooling schemes (as opposed to development authorities), can potentially also lead to better use of land in urban areas. This is because the private sector will face higher market pressures to maximize the land available to it and will only participate in schemes that allow it to do so. This is likely to lead policymakers to allow a more liberal and intense use of land than they otherwise would. In Delhi, for example, the land pooling scheme was tweaked to make it more attractive—allowances for plotted housing and high-intensity, mixed-use development being two of them.
Urban development could possibly become much more market-oriented than it otherwise would because of reforms in land acquisition laws in 2013. Development authorities and municipalities will be incentivized to pay greater heed to the demands and concerns of stakeholders wherever land pooling relies mostly on consensus and encourages private sector activity. Conversely, it may be advantageous for policymakers to design land pooling schemes that encourage private sector-led development of real estate, precisely to force local urban development authorities to pay greater heed to market conditions.
India’s patterns of planned urban development could therefore shift slowly but inexorably from high-state modernism to market-based development because Parliament has made it costlier to acquire land.
—By Anirudh Burman
Review
The Aristocratic Liberalism of Alexis de Tocqueville
Blaise Pascal writes in Pensées, “What a great advantage to be of noble birth, since it gives a man of eighteen the standing, recognition and respect that another man might not earn before he was fifty. That means winning thirty years’ start with no effort.” This is one side of the ledger of life. The other side is that when one gets such a start, great things are expected. Alexis de Tocqueville made the most of the advantages that arose from his “noble birth.”
In his mid-twenties, Tocqueville traveled to the United States to study its prison system. He got his family to finance his voyage and leveraged his contacts to meet the who’s who, including then president Andrew Jackson. He and his friend Gustave de Beaumont published the prison study. But his fame is owed to the other output of his time in America—the two-volume work Democracy in America, which is probably still the best study of democracy.
The Man Who Understood Democracy: The Life of Alexis de Tocqueville by Olivier Zunz is a new biography that gives a fair portrait of the man. Focusing mainly on the development of his ideas, Zunz’s book is essentially an intellectual biography. Tocqueville had a penchant for combining analysis with prophetic insight, making him a great subject for such a project. While one can never fully explain how ideas develop, understanding the context, the interactions, the methods, and the motivations can help us see Tocqueville’s work in a new light.
Never satisfied with simply recounting facts, Tocqueville tried to understand the real drivers of change. He observed, “One cannot ever be sure of all the facts.” So, he focused on what matters most for understanding. He shunned purely materialist explanations that were beginning to become fashionable at that time, because he saw them as diminishing the element of human choice and oversimplifying the complexity of social phenomena. His most insightful work was on two phenomena—democracy and revolution.
Tocqueville saw the promises and perils of democracy. He prophesied that democracy is the future. While he warned about its excesses, he saw in the rise of democracy the workings of providence. Since democracy was not yet common, it took remarkable acuity to not just understand democracy but also to foresee its march that came many years later.
His fundamental insight was that for democracy to work, a certain congruence between liberty and equality is necessary. Like most thinkers until the early modern period, Tocqueville used the term “liberty” very differently from the way we use it. It was a demanding conception that focused on the freedom to pursue moral and material improvements within a well-functioning order. Similarly, when it came to equality, he emphasized political rights that enable an elevating equality that empowers people to raise themselves rather than raze others.
This insight also points at the risks of democracy. Congruence between liberty and equality requires considerable patience and effort on the citizens’ part. It is easy to give into the temptation to surrender liberty to pursue equality, as the socialists often advocated, or to preserve political inequality in the name of liberty for the majority, as the slaveowners in the American South demanded. As democracy strengthens the whole while weakening the parts, Tocqueville worried about the excesses of majoritarianism and soft despotism. He saw religion and voluntary associations as potential antidotes against these tendencies. At their best, they can, Tocqueville argued, cultivate the virtues and mores beneficial for democracy and create participatory structures between the individual and the state.
The biography shows that while he did read the federalist papers and other documents on the American democracy, Tocqueville developed his understanding of democracy mainly by observation, conversation, and reflection. His work on the French Revolution was done differently. Zunz writes that Tocqueville was quite puzzled by the seemingly sudden intensity of the revolution and the rise of the empire under Napoleon. He had experienced a similar cycle in the rise and demise of the Second Republic (1848–1852) and the advent of the Second Empire under Louis Napoleon. Marx described it, quoting Hegel, as history repeating itself as farce. However, Tocqueville experienced it as tragedy, deeply disappointed by the ease with which the republic turned into an empire.
Tocqueville did secondary research and considerable archival work to write a remarkable but controversial revisionist account of the lead-up to the revolution. First, he documented how there had been significant improvements in the situation of the masses before the revolution, which raised their expectations. As he put it, “he better the situation of the French became, the more unbearable they found it.” Second, he did not see the revolution as coming directly and spontaneously from the so-called proletariat, which most socialists had argued. He instead posited that before the French Revolution, there was an aristocratic revolution against the king by the nobility, who were being weakened by him. This progressed to a mass revolution through the spread of ideas of political philosophers like Rousseau. Third, he found that administrative centralization had increased substantially before the revolution. While weakening the powers and reducing the obligations of local nobility, local liberties had also got diminished. Tocqueville argued that the centralized administrative regime under Napoleon was not a creation but a restoration of what existed prior to the revolution.
While wary of revolutions, Tocqueville remained supportive of the French Revolution’s initial moment of unity, liberation, and equality. He did not share the sweeping rejection of the revolution that was common for people in his milieu.
Although Tocqueville sought coherence, there were contradictions in some of his positions. He promoted equality while supporting colonization. He wrestled with doubt while trying to reconcile democracy and religion. Zunz describes these carefully without either papering over them or offering presentist critiques. He also shows how Tocqueville tried to deal with the contradictions by obsessively revising his writings.
Tocqueville’s traits that shine through are perseverance, open-mindedness, and autonomy. In spite of many bouts of poor health, he traveled extensively and did considerable archival work to find things out. He seriously engaged with thinkers of different persuasions. For instance, his discomfort with the socialists’ role in destabilizing the Second Republic did not come in the way of maintaining some measure of respect for prominent socialists like Louis Blanc. He also remained independent of contemporary ideological factions. To the credit of his peers, his autonomy did not always lead to isolation.
For Tocqueville, intellectualism was not just an aesthetic enterprise. He cared for the practical relevance of ideas. He did public service in many ways—from picking up the musket to join the national guard as a private in the July Revolution of 1830 (and again in 1848) to serving his local community and entering electoral politics. He achieved some policy successes and also became the foreign minister for a brief period. However, as the Second Republic fell and the Second Empire rose, Tocqueville became quite disappointed with active politics. He concluded that there was limited practical overlap between intellectualism and politics, but he did see potential for mutual moral enrichment. In a lecture, he defined the role of intellectuals in politics in terms of providing the larger framework for political life while staying above political action.
Tocqueville has received many book-length treatments—from the exhaustive biographies by André Jardin and Hugh Brogan to the philosophical portraits by Harvey Mansfield, Alan Ryan, Pierre Manent, and others. In spite of covering a well-covered life, Zunz adds value to this literature.
Zunz’s book is enriched by his efforts to show how Tocqueville’s ideas developed in conversation with his friends and associates. At crucial moments, he received support from others. From the dependable Beaumont to a dutiful young archivist who was crucial for the research on the revolution, Tocqueville’s intellectual life was significantly shaped by interactions with these virtuous others. Great achievements are often touched by virtues. Perhaps the only major omission in Zunz’s book in this sense is the limited discussion on the role played by Tocqueville’s wife Mary Mottley. While Zunz does discuss her role in community service and in the family, some recent scholarship has described her as Tocqueville’s spiritual confidant, political advisor, critic and editor.
Zunz’s familiarity with the details of American history helps place in context what Tocqueville saw and understood in America. Particularly useful is Zunz’s analysis of what Tocqueville missed or misinterpreted. For instance, Tocqueville visited at the time of the revival of evangelical Protestantism but saw the denominational fragmentation as a sign of tolerance of differences, and not the search for purity that was driving the revival. He also missed seeing the significance of the Industrial Revolution that was underway in America at the time. While one can accuse Zunz of expecting too much, the expectation is perhaps fair when imposed on Tocqueville, who saw plenty and understood better than most.
Zunz keeps moving the narrative forward without being waylaid by details that are not directly related to the major themes of Tocqueville’s life. This makes the book quite readable. In comparison, Jardin’s and Brogan’s excellent tomes seem excessive.
Tocqueville was born in an empire, lived through two constitutional monarchies and a republic, and died in another empire. But he was devoted to the promotion of democracy. He was perhaps the greatest of nineteenth century liberals, especially because he thought about liberty not in doctrinal terms but as something complex, demanding, and situated in a specific moral order. Although not easily recruited for contemporary causes, Tocqueville has a lot to offer us. The publication of this biography is as much an occasion to engage with his ideas as it is to be inspired by his longing for truth and his commitment to creating conditions conducive to human flourishing.
—By Suyash Rai