How land greed is likely to kill our growth story

What is the strand that links the following? Urban housing is completely unaffordable to anyone but the super-rich. Karnataka MLAs have been offering themselves like cattle to the highest bidder. A Supreme Court nominee who comes under a cloud for alleged illegalities still finds a place in Sikkim’s high court.

The former owner of Satyam confesses to defalcating thousands of crores, but, oddly, the Andhra high court let him out on bail till the Supreme Court ordered him back in. Even when he was in ‘jail’, he spent most of his time in hospital, apparently for treatment of hepatitis C. A Commonwealth corruption scandal running into thousands of crores is discovered, but the media and politicians focus on the one person who controls the smallest part of the games budget.

The common element linking all these facts is land — dubious land dealings. Driven by personal greed and electoral need, land has become the most important store of benami wealth, corporate profits and laundered money in India. There is no politician worth his salt who does not dabble in land; there is no worthwhile businessman who does not look at land as the key to value. The two — political power and corporate money — are stitched together by a land mafia which does the dirty work on their behalf.

Thanks to the ever-rising costs of winning an election, politicians need a currency that does not depreciate in value and which can be well hidden. Land — especially urban land — is in short supply and hence meets their criteria. It can be held anonymously with the help of the corrupt and the crooked, and this is where the mafia comes in. Almost all moneyed politicians and businessmen thus have underworld links.

Consider recent developments. Keeping the Karnataka BJP government in power (or toppling it) means spending Rs800-1,000 crore on buying up marginal MLAs. But this amount is only the tip of the iceberg. If MLAs with purchasable loyalties are worth so much (Rs25 crore per head is the figure being mentioned in the Bangalore media), why would loyal MLAs stay in the party for free? Rest assured, even staunch party MLAs have to be thrown a bone or two to keep them with the herd.

Now, who is going to pay Rs800-1,000 crore just for the love of a BJP government? Obviously, only those who can recover the costs from it. This means the BJP government will, for the rest of its term, be paying back its debts through sweetheart mining or land deals. The citizens of Bangalore and the rest of Karnataka will pay for this in the form of sky-high real estate prices and costlier lifestyles.

For businessmen, too, land is the ultimate guarantor of profits. Making money from land is easier than trying to become competitive in exporting textiles or (maybe) even software, as Satyam’s Rajus were trying to do. India’s former textile tycoons — Birlas, Mafatlals, Wadias, etc — are all property tycoons today. The only ones kicking themselves are those who made their companies sick by asset-stripping them and allowing the state to take them over. Decades after handing over their loss-making textile mills to the National Textile Corporation (NTC), the latter is laughing all the way to the bank.

There’s more. Even land cannot have infinite value beyond its obvious utility. Those who hold wealth in land have a vested interest in keeping its prices high and rising. This is why Mumbai’s builders keep jacking up prices even when they hold huge inventories of unsold flats. This is why despite the abolition of the urban land ceiling law, new land is still not coming to the market in adequate quantities.

How can this happen? Simple. Remember, the politician is the one deciding policies on land. Is it any surprise that in almost all states, the urban development departments are run by the chief ministers themselves? Now you know why you can’t afford that flat in suburban Mumbai or Delhi. The high cost of elections and political wheeling-dealing has made urban land rise to stratospheric levels.

But that’s only the sad part of the middle class story. What this land mania is doing to us as a nation is something worse. Just think. A few politicians and businessmen aided by the land mafia control huge chunks of the nation’s wealth to keep themselves in power. This land-grab will become unsustainable as housing goes beyond the reach of even the upper middle classes — destroying the very constituency that is building the India growth story.

The central problem in making land the key to political and business power is that it will bring growth itself to a crashing halt in the not-too-distant future. Every bit of development — infrastructure, housing, new factories — needs land. Concentrating all the levers of power in a few hands is the exact opposite of a broadbased democracy with diffused power. The land mania is making our democracy
itself unaffordable.