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  1. The Backdrop

 

With the rapid growth of urban population, development of housing and other civic amenities for the population also has to accelerate. Land being most critical resource for housing and other amenities, planned development of land is necessary for its optimal utilization.

 

The Master plan of Delhi-2021 projected the population of Delhi in the Year 2021 at 230 lakh, up from 138 lakh in 2001 and an estimated 182 lakh in 2011. To meet the projected increase in population almost the whole of National Capital Territory of Delhi covering an area of 1483 sq.km will be urbanized by the year 2021 except agricultural green belt, river zone and Ridge. It is important to recognize not only the extent of  additional urban development that is required but also the speed with which development needs to take place to understand the scale of challenge that is to met.

 

  1. Planning Framework for Delhi

 

Delhi presently has a population of 167.5% lakh (census 2011), well below 182 lakh projected by the Master Plan. Delhi comprises 9 revenue districts, 12 municipal zones and 15 planning zones. Chart 1.1 provides the boundaries of the planning zones of Delhi. For balanced development of the capital in its regional context Regional Plan for capital Region 2021, envisages development of surrounding Cities, so as to diffuse pressures of population on Delhi. The Regional Plan also identifies Central NCR comprising about 2,331 Sq.km of area around Delhi as an inter-state metropolitan region around NCT of Delhi. The central NCR comprises six urban complexes in Haryana and UP-Sonipat-Kundali, Ghaziabad-Loni, NOIDA-Greater NOIDA, Faridabad-Ballabhgarh, Gurgaon-Manesar and Bahadurgarh. Trends in the Population of NCR districts are shown in Table 1.1 Master Plan for Delhi 2021, approved and notified under the Delhi Development Act, 1957, provides a roadmap for its development for a projected population of 220-230 lakh in 2021.

 

Table 1.1: District -Wise population of NCR

 

S.No. POPULATION  DISTRICT    1991 2001 2011
1 Gurgaon 11,46,090 16,60,298 26,03,491
2 Sonipat 7,54,866 12,79,175 14,80,080
3 Panipat  8,33,501  9,67,449 12,02,811
4 Faridabad 14,77,240 21,94,586 28,39,447
5 Rohtak 7,76,977  9,40,128 10,58,683
6 Meerut 24,17,676 29,97,361 34,47,405
7 Baghpat 10,30,236 11,63,991 13,02,156
8 Bulandshahar 28,49,859 29,13,122 34,98,507
9 Ghaziabad 22,35,612 32,90,586 46,61,452
10 GautamBuddha Nagar (Noida & Gr.Noida) 4,68,321 12,02,030 16,74,714
11 Alwar 22,96,580 29,92,592 36,71,999
12 NCT of Delhi 94,20,644 1,38,50,507 1,67,53,235

 

Source : Census of India. Because of creation of new districts overtime, adjustments were necessary in the population numbers. These adjustments were based on kumar and Somanathan (2009).

 

Chart 1.1: Planning Zones in Delhi

 

The size of each of the new urbanisable zones in the MPD-2021 is as given below.

            Zone J          15,178 ha

Zone K-I      5,782 ha

Zone L         22,840 ha

Zone N        13,975 ha

Zone P-II      8,534 ha

Total            66,309  ha

 

The areas given above include mandatory agricultural green belt (54 border villages) measuring about 11,000 ha, existing built-up areas/villages/Unauthorized colonies, etc. (about 7,681 ha) and land reservations for power plants, services, utilities, solid waste, sewerage, etc. (20,000 ha). Thus, after accounting for these uses which are either essential for urban life or that are already in use, an area of about 27,628 ha is to be developed as new urban area. As per MPD 2021 about 45-55% (say 14,000 ha) of this total area will be available for new residential development, 15-20% (about 5,000 ha) for greens, 10-12% (about 2,800 ha) for transportation and 7 to 9% (about 2,000 ha) for commercial and industrial uses each. If developed uniformly over the years, an average area of 3,000 ha would have to be developed every year during the period of 2013 to 2021.

The MPD stipulates some key initiatives, such as :

  • Synergy between public transport and land use
  • The concept of facility corridors
  • Local Area Planning
  • Incentivised redevelopment and influence zones along major corridors with additional FAR.

 

  • In-situ slum rehabilitation, redevelopment and up-gradation of resettlement colonies.
  • Optimum densification by infill housing redevelopment.
  • Accommodation Reservation (AR) and Transferable Development Rights (TDR).
  • Infill development in regularized unauthorized colonies.
  • A shift from plotted to group housing regime.

Redevelopment of existing urban areas, where possible or required is an important strategy for providing habitation to increasing population of Delhi as reflected in several of the key initiatives listed above.

The MPD 2021 also provides a policy framework and basis for private sector participation (PSP) and PPP in land assembly and development. A  focal theme of MPD 2021 is the involvement of the private sector in (1) Assembly and development of land, (2) provision of Infrastructure Services and (3) Housing and redevelopment.

In the present study, the focus is on PPP in land assembly and its development for urban use. Before describing the scope of the study we outline some relevant features of urban development of Delhi to  provide a context for the study.

Residential Development

MPD-2021 envisages development of about 24 lakh new housing units. About 1.4 lakh dwelling units (DUs) are to be provided in new urban Zones. Such development will require about 5500 ha land to build on. Remaining about 10 lakh units are to be provided by densification of existing residential areas.

The MPD-2021 emphasizes the need to make optimum use of scarce urban land, which means redevelopment and densification of the existing urban areas and suitable infrastructure improvement to support this redevelopment. It calls for a comprehensive redevelopment strategy for accommodating a larger population, strengthening of infrastructure facilities accompanied by creation of more open spaces at the local level. The focus of redevelopment is also involvement of private sector for optimizing the use of existing urban areas and by shifting from plotted development to group housing and an incentivized regime of additional FAR of 50% (maximum of 400).

A phased programs for synchronized planning and development of Infrastructure is necessary to achieve these goals. Detailed studies for infrastructure (particularly roads, water and power) for both new development areas and redevelopment areas are needed. Transportation planning is an equally critical need to synchronise with the development of housing and other land use development.

Table 1.2  : Proposed Housing and Land Development for Delhi-2021

 

S.No. Housing Type Distribution

across all

categories%

EWS/

LIG

Component

(% under each category)

No. of DUs

(lakh)

Redev

DUs

(lakh)

New

DUs

(lakh)

Net Land

For

New

Housing

(ha)

1. Slum & JJ

In-situ Rehabilitation

Relocation/

Reconstruction,

Up-gradation

     25     25 6.0 2.4 3.60 900
2. Houses on

Independent

Plots & Redevelopment

        8       4 1.92 1.22 0.70 200
3. Group Housing

(Min.35% of total DUs mandatory 2 room and less)

    42      14 10.08 2.0 8.08 4000
4. Employer

Housing

      4         2 0.96 0.34 0.62 400
5. Unauthorised

Regularised

Colonies infill

     15         6 3.60 2.60 1.0
6. Other Housing

areas, upgradation

of Old areas/ Traditional

areas/villages

       6         3 1.44 1.44
 Total      100    54% 24.0 10.0 14.0 5500

 

Source : Computed from MPD-2021

While the pace of acquiring land for urban development has to accelerate, land for Infrastructure development would be required even more urgently. The approach to assembling land for urban development will have to consider alternative methods: Traditional method of land assembly under the applicable Land Acquisition Legislation and also use of Transferable Development Rights (TDR) and Accommodation Reservation (AR), the instruments that allow assembly of land and transfer of development rights as per the planned urban development.

Land Utilisation Norms

    The norms provided in MPD 2021 require about 10-12% of neighbourhood area to be under roads / circulation, social infrastructure @about 7sqm per person and green/open space at about 4.5 sqm per person at neighbourhood level (10,000 population). The provision of community service personned / EWS and lower category housing (between 25-40 sqm carpet area) is a mandatory stipulation of MPD-2021 for which additional FAR of 15% and higher density are permitted (MOUD notification dated 19.5.2009). Thus, land utilization norms have been specified in the MPD-2021 so that urban development takes place in a holistic manner.

The other key parameter determining the development of built up area is the Floor Area Ratio (FAR). The FAR has been increased under MPD 2021 by about 50% from the basic FAR provided in MPD 2021. We have summarized the basic allowed average FAR along with its range in Table 1.3 below.

Table 1.3 : Allowed Basic FAR under MPD 2021

Land use FAR (% of net land)
Residential 2.0*
Commercial 1.25 (1.0 to 2.5)
Industrial 1.2(1.5 to 2.0)
Public and semi-public 1.2(2.0 to 4.0)

 

There is enhancement of FAR in redevelopment areas etc. subject to a ceiling of 4.0. There is also provision of additional 15% FAR for EWS and social housing.

MPD 2021 accordingly envisages a land policy based on aptima utilization of available resources, both public and private in land assembly development and housing.

  1. Approach to Land Assembly for Urban Development

Delhi has been a forerunner in planned urban development of which land policy is an integral part. The policy for large scale acquisition of land was framed in 1961 and it has been reviewed periodically to taking into account the past experience and new conditions. However, large scale land acquisition for urban development was last carried out in 1982. Since then there has not been large scale acquisition of land by the development authority. There have been a number of initiatives to develop a public-private partnership approach to land assembly and development starting in the early 1990s. However, there was no actual implementation of such an approach.

In its efforts to initiate a fresh look at policy towards land assembly for planned Development of Delhi, Delhi Development Authority sponsored a study by the Association of Municipalities an Development Authorities (AMDA) in 2003 and which was again updated in 2009. Findings of the study are summarized in the Report “Alternative Modes of Assembly and Development of Land and Housing in the NCT of Delhi” (AMDA, September 2009).

The AMDA report provides valuable summary of the development of land policy in Delhi. It notes that between 1961 and 1981, the total land proposed to be acquired was 27,487 hectares but only 15,540 hectares was actually acquired by 1981. Between 1982 and 1992, 6.763 hectares of land was acquired and between 1992 and 2000, another 2,744 hectares o land was acquired. The pace of acquisition was far short of the requirements. The annual acquisition during 1981-2001 was 475 hectares as compared to the planned requirement of 1200 hectares (AMDS, 2009).

Land acquired between 2002 and 2011 is even smaller than what was done during 1981-2001. There is, thus, need to assemble more land to build housing for the expanding population in Delhi and to make optimal use of the scarce land resource that is available.

It is in this context that alternatives to traditional approach to land assemble need to be examined and MPD 2021 also takes cognizance of this point.

The guiding principles for a policy of land pooling involving sharing of land for development of various properties and infrastructure have been spelt out by the MOUD as follows:

  • Government to act as a facilitator with minimum intervention to facilitate and speed up integrated planned development.

 

  • A land owner or a group of land owners (who have grouped together on their own volition/will for this purpose) or a developer hereinafter referred to as the ‘private participant’ shall be permitted to pool the land in identified area or other for unified planning, servicing and sub-division/share of the land for development as per prescribed norms and guidelines.

 

  • Each of the land owners (offering 4 hectare land or more for development) to get an equitable return irrespective of land uses assigned to their land in the Zonal Development Plan (ZDP) with minimum displacement.

 

  • To ensure speedy development of Master Plan Roads and other essential physical and social infrastructure and recreational areas.

 

  • To ensure inclusive development by adequate provisions of

EWS/LIG Housing.

 

In order to implement this policy we require specific operational framework. Three alternative models of land pooling have been put forward by different agencies:

 

  • Alternative modes of assemble and development of land and housing in the NCT of Delhi by Association of Municipal and Development Authorities (AMDA).

 

  • PPP Model of Land pooling and Development within the present Framework of MPD 2021 by planning Department, DDA.

 

  • PPP Model of Land pooling and Development by New Policy Initiatives and International Cooperation Cell (NPIIC), DDA.

 

  1. The  Present Study

DDA commissioned a study to NCAER to evaluate the three alternative models of land assembly with respect to their economic viability. The main purpose of this study is to undertake an evaluation of proposed models from financial viability point of view to encourage the participation of private developers in provision of land and affordable housing for various sections of society while ensuring planned development of city as per Master Plan for Delhi-2021.

 

The three alternative models propose voluntary assembly of land by the land owners and transfer of this land to DDA in return for a share of the land that is assembled with rights of its development. In other words, while land would become available for planned development, the land owners would be active participants in this development. The private sector participation in planned development of the city would become possible by sharing the development program with the public agency. The models differ essentially in the manner in which the pooled land is allocated between the public and private sector participants in development and the FAR. The issue is which of the models are likely to be attractive enough for the private sector including the land owners to participate in the proposed land assembly arrangement and would lead to creation of additional housing stock so essential to meet the needs to the City’s growing population including that of economically weaker segments.

 

 

Specific Objectives of the Study

 

  1. For the Government/DDA to act as a facilitator with minimum intervention for facilitating and speeding up integrated development, what should be the approach to create a land pool in the area identified for development, that is

 

  1. Whether DDA would create a land pool through acquisition which will cover roads, Master Plan greens and the land required to be given in exchange under the non-remunerative uses, or alternatively, permit the entire land to be pooled by the private developers and obtain the land in exchange for Master Plan roads/greens and the utilities and services. The cost of acquisition may be factored suitably in the external development charges.

 

  1. Whether government should act as first mover for acquiring and for the MPD roads to give impetus to speedy development of the area without waiting for the private developers to pool the land.

 

  1. For enabling the land owners/group of land owners to pool the land in an identified area, it is necessary that unified planning, services and subdivision of land for development as per prescribed norms and guidelines of the Master Plan be prepared by DDA in a time bound manner. For this mandatory job to be performed by DDA Planning Department, we should be looking at a period of 24 to 30 months for completion of layout plans in the Urban Extension Areas.

 

  1. The land owners (offering 4 ha of land or more for development) are to get an equitable return on land for housing “irrespective of the land use of their land in the ZDP (lay out plan) with minimum displacement. In this context, it is relevant to ask whether DDA should exchange land at a minimum rate irrespective of the size of the pooled land or opt for a graduated scale on return of developed land to the developer who is pooling land of 40 ha and lesser percentage of land to smaller modules.

 

  1. The aspect of the modification of Development Control Norms of MPD-2021 required for making the models financially viable particularly with respect to the issue of grant of higher FAR besides suggesting the option of granting of FAR either on gross residential area or net area needs to be explored. To ensure inclusive development, every neighbourhood should have 15% of FAR or 35% of Dwelling Units whichever is higher for the economically weaker sections within this parameter an option has to be suggested for constructing the Dwelling Units for EWS

 

  1. To suggest a financial model with revenue projections, estimation of costs and benefits and specifications of assumptions used and the reasoning for assumptions.

 

  1. To suggest an implementation module with sensitivity analysis for FAR values for various uses, its applicability on gross or net, varying costs of land and land to be returned maximum and minimum based on the land area assembled. A matrix may be developed showing on the different indices how the parameters such as costs, land return, IRR, FAR values change and at a reasonable IRR what should be the optimum model for land pooling.

 

The study would attempt to carry out the economic evaluation of the alternative models of land pooling and development on the basis of realistic land values, market trends, land holding costs during the project period, admin charges, promotional charges, taxes, approval expenses and realistic sale price of built up area.

 

Approach to the Study

 

The core objective of the present study is the economic analysis of alternative land pooling models indicated earlier. The other objectives of the present study require us to examine the process of implementation of the models so that the role of government and private sector can be clearly defined to achieve faster development.  There are divergent interests and different constraints faced by each stake holder. For instance, the land owner will expect to maximize return from the land owned, the private developer and builder will seek to obtain a rate of return which may be earned in any other alternative investment opportunity, the government will have to ensure that housing development takes place to meet the emerging demand for housing in a planned manner while respecting its own fiscal constraints.

 

In order to achieve these objectives, the study relies on following activities:

 

  1. Review of other major approaches to land assembly adopted in the country.
  2. Consultations with stake holders.
  3. To identify the critical legal issues that may need to be overcome to implement the various approaches to land assembly.
  4. Development of the economic model to assess economic viability of alternative models of land pooling involving private parties.
  5. Development of data base to assess economic viability of alternative models of land pooling for urban development.
  6. Assessment of the alternative models to identify a suitable model for land assembly and development.

Similar challenges are being faced in the other urban centres in the country as in the case of Delhi. There have also been a  few other initiatives to address the challenges. Experience with alternative approaches to land assembly would be examined to assess the relative advantages or weaknesses of the proposed models in Delhi as compared to the other approaches.

5       Structure of the study report

 

In the next chapter of this report, we present a review of some of the other experiences in land pooling for urban development both within the country and elsewhere to draw some lessons for land pooling in Delhi. In Chapter 3, we provide a description of three models proposed for analysis. Chapter 4 provides a detailed economic analysis of the three alternative models of land pooling and development. In the final Chapter, we discuss implementation issues relating to land pooling.

Some other aspects of the LARR Bill relevant to the present study are :

-Acquisition of multi-cropped land

-Allowed upto 5% in a district with riders.

 

States are free to frame their own laws and if they so desire, are free to improve upon the provision stipulate under the proposed bill. It allows flexibility to the state government on whether or not to intervene on behalf of private players in land acquisition.

 

The urgency clause can only be invoked for national defence and for security purposes, and also in the event of emergencies or natural calamities.

The R&R package will be applicable when the private parties acquire 100 acres or more land in the rural areas and 50 acres or more in urban areas.

The R&R for those subsisting on the acquired land will be applicable to those dependent on the said land for livelihood for at least three years on that piece of land.

The purpose of acquisition can’t be changed. The Bill, however, allows transfer of land with the approval of state government; if the transfer is made without any development of the land, the farmers will have to be paid 20% of the appreciated value. The bill specifies timelines for the payment of compensation. The price of land has to be paid within three months of the award, and the other monetary compensation within six months and the infrastructure entitlement under the R&R package within 18 months. Penalties will be levied on violation.

Apart from subsistence allowance, 20% of appreciated value within 20 years is to be shared with original owner.

For those who have lost livelihood, apart from subsistence and one time resettlement allowance, mandatory  job for one person per affected family or Rs 2,00,000/- as one-time payment.

 

While the new Bill has many positive features, it is also being criticised  on some of its features :

Acquisition of agricultural land : The Bill says maximum of 5% of multi-cropped land can be acquired in the district, provided equivalent wasteland is developed. The cost of land acquisition, therefore, increases further. Non-availability of waste land for development and transfer to the land owners from whom land is acquired would also delay the process of land acquisition.

Displacement :  The bill provides for long term obligations and liabilities against land acquisition by the private developer. This will generate large administrative work and delay transfer/sale of properties.

 

Compensation issue : The Bill increases compensation significantly and therefore also cost of projects for which the land is acquired.

Acquisition for private companies : Present Bill provides for ‘partial’ state acquisition for companies, but does not indicate which portion of land would be acquired by the government : in which there is difficulty for acquisition by the private sector because of litigation, procedural issues; or would the state acquire land initially or do so for the balance of land acquired.

Rehabilitation : ‘Land for Land’ principle figures only in case of irrigation projects, this may become necessary for any other use in future.

Although the involvement of the private sector and PPP mode of urban development may bring in larger resources of development projects and achieve faster development, it also brings to the fore the need for mechanisms to resolve concerns of equity and justice for those who are adversely affected by the development. The recent agitations and court cases have also forced the governments to revisit the land acquisition policy, to ensure a fair deal to the land owner and also protect the livelihood of the poor dependent upon land/agricultural activity which may be disrupted or may have to be abandoned as a consequence of land acquisition for development purposes.

In principle, land acquisition by the government for urban housing construction is likely to become difficult as a result of the bill. Land may be acquired by the acquired by the government for urban infrastructure such as roads, laying water pipes or sanitation projects under the provisions of the new Act which may result from the bill. Even here, cost of land would increase significantly both as a consequence of the minimum price set under the bill and also the R & R requirements when agricultural land is acquired. Active collaboration with the private sector in urban development will become even more important for the government as a result of the provisions of the Bill.