duties, cross-state variation in duty rates is substantial; however, with rates as high as 12-14 percent in many states, and frequent instances of separate stamp incidence for land acquisition and development, these taxes tend to be at least five times higher in India than in most high-income countries (Morris and Pandey, 2007). Duranton et al. (2015a) report how these prohibitive costs discourage land transactions, thereby reducing land supply on the market, and lead to widespread under-reporting of registration, which in turn stifles investment as land cannot be used as collateral when applying for loans.

For urban land, the _Urban Land (Ceiling and Regulation) Act 1976_ (ULCRA) used to impose ceiling limits for holdings of vacant land, prohibit transfers of land and buildings, and restrict building construction in large urban agglomerations. In 1999, a largely unanticipated _Repeal Act_ gave rights to State governments to repeal it, which happened in a staggered way between 2003 and 2008. Duranton et al. (2015a, 2016) show how the repeal of the Act was associated with a decline in land and building misallocation in the country, and the more so among early-adopter States.<sup>31</sup> Despite the ULCRA repeal though, an array of Central and State policies still restricts urban land supply and lead to higher property prices (cf. Chakravorty, 2013 and Duranton et al., 2015a). Chakravorty (2013) for instance cites earmarking for (often inefficient) public use,<sup>32</sup> as well as lack of titles in slum areas, which makes the land non-marketable in practice, as examples in this direction. Other harmful measures include the enforcement of low building height and low floor space indices<sup>33</sup> (rarely higher than 1.5, compared to a range between 5 and 15 in other Asian cities), urban land ceilings in certain cities like Kolkata, and rent control measures favoring tenants over owners, which in practice transfer ownership rights to tenants, but not the actual title and ability to sell the property. After the Government of India designed a Model Rent Legislation in 1992, many States did actually start formulating new rent acts addressing these dysfunctional rent issues, but the process seems still far from complete (cf. Duranton et al., 2015a for details).

A more recent development in land administration is represented by the _Digital India Land Records Modernization Programme_ (DILRMP), launched by the Government of India in 2008. The main objective of the program is to develop a modern, comprehensive, and transparent land records management system in the country, improving the quality of the land-titling system and minimizing the scope of land and property disputes. Among the major components of the program are the computerization of all land records, the digitization of maps and integration of textual and spatial data, and the survey and re-survey of all settlement records, including the creation of original cadastral records where necessary. Land records are supposed to be handled through a single-window system, which automates processes following registration and guarantees for the correctness of land titles. The degree of implementation of the program across States varies quite substantially by the specific DILRMP component. For example, while as of today the computerization of the records of rights is complete or almost complete in most of the bigger States, the full digitization of cadastral maps seems to be far less common, and to display a significantly higher cross-State variation.<sup>34</sup>

# **5.2.1 Industrial zones**

> 31 These included Delhi, Gujarat, Haryana, Karnataka, Madhya Pradesh, Orissa, Punjab, Rajasthan, and Uttar Pradesh.

> 32 Examples include land used for defense (cantonments, army barracks), sick industries, unused airports and rail facilities.

> 33 The floor space index (FSI) is a measure of the total surface that can be built upon a plot of land. It is computed as the ratio between the floor space covered in all floors of a building to the area of the plot on which the building stands.

> 34 State-level progress on the major program components can be tracked on the dedicated DILRMP web portal. See <u>http://nlrmp.nic.in/nlrmpmap/nlrmpmap.html#.</u> The IDFC Institute, in collaboration with the World Bank, has also recently embarked on the creation of a land governance index to assess State-level performance in modernizing land records. The index will comprise sub-indicators on (i) transparency of land records; (ii) transparency of land registration; (iii) reliability of land records; (iv) reliability of land registration; and (v) reliability of spatial records.

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