Liberation and land pooling in Delhi – A dichotomous relationship

    Liberation and land pooling in Delhi – A dichotomous relationship

    Land pooling is a more than USD 100-billion opportunity for the Capital city and the government’s flip-flop on the policy is not only causing damage to landowners, but also to the economy of Delhi

    Ramesh Menon

    ‘Too many governments, too much governance’. Sadly, that’s the challenge the landowning community is saddled with in Delhi. Governments as well as its agencies are working at cross purposes, thereby inflicting debilitating blows on the potential development and investment opportunity of more than USD 100 billion, over the next decade.

    Take a look at this:

    2007: Delhi Master Plan 2021 notified.

    2013: Land Pooling Policy notified.

    2014: India votes new government to power.

    2015: Multiple misplaced reviews and changes initiated.

    2018: We are still where we were

    It indeed was a paradigm shift when the Delhi Development Authority (DDA) announced the model for land pooling as the preferred model for the next level of urbanisation of Delhi. It was expected to unlock more than 50,000 hectares of land. Data establishes that almost 60 percent of the total land is still with the farmers or traditional land owning community. The balance 40 percent is estimated to be a ‘Non performing capital’ of institutions and high net worth individuals to the tune of USD 6 billion.

    This Independence Day is unlikely to bring any cheer to the landowners of Delhi owing to the apathy and lack of understanding of local issues by the policy makers. Hence, every proposed change or amendment would only rob the Delhi Master Plan 2021 of its credibility as the ‘largest and most profitable investment opportunity in real estate’ for the coming couple of decades.

    And here’s the dichotomy. The Delhi Development Authority (DDA), which prepared the master plan and zonal plans, has virtually outsourced its strategic policy making responsibility to the NIUA. NIUA seems to be revisiting the policy in totality, which probably may not be in the best interests of the landowners. On the other hand, the Delhi government has announced the ‘chakbandi’ (consolidation) of some villages, which may have to be excluded from the pooling process, till it is complete in all respects. The DDA, Delhi Jal Board (DJB), MCD, electricity department, etc. seem to downgrading the plans more as a ruse to hide their in built inefficiencies.

    Inefficiencies don’t liberate the truth, namely, Delhi NCT has to be developed to accommodate a population of 25 million people over the next decade. The total requirement of housing units would be in excess of 1.5 million dwelling units. The proposal of the authorities to reduce the FAR (from 400 to 200) would make it extremely unviable for the institutional investors to commit funds to this opportunity.

    It is my sense that the policy makers, specially those representing the political arm of governance, are not seized of the extent of damage their flip-flop is causing; not just to the landowners, but also the economy of Delhi. What worries more is that the landowners would exit somehow, someday, but it may be by way of plotting the land into unauthorised settlements, which would be counter productive to the stated intent.

    Do we seek a Capital of India which is home to more than 5000 unauthorised colonies? Would we want half the population to dwell in these shanties, than a planned city? Liberation would mean differently to different segments, but governments should only endeavour to trigger economic activity and enhance quality of life.

    (The author is an opinion leader on the subject of urbanisation of Delhi. He is the founder director of Certes Realty Ltd, and an Independent director on the board of SPA Capital Ltd.)

    Land pooling policy is a great chance for DDA to undo past errors

    The proposed modifications to the Delhi Development Authority’s (DDA) land pooling policy have been widely seen as a game-changer in affordable housing. But to contextually analyse the land pooling policy and the modifications proposed under chapter 19 of Master Plan of Delhi 2021 (MPD 2021), let’s look back to what happened over the preceding few years.

    MPD 2021 was notified in February 2007 (a good 11 years back) with a view to frame guidelines and norms for the development of Delhi till 2020. The entire land mass of Delhi was included for urbanisation, thereby, making it the first 100% urbanised state.

    The land pooling policy was notified by the central government in 2013, with a view to include the private sector in the process of urban development, both in strategic planning, aggregation of scattered small land holdings as well as execution and development.

    Make no mistake — it indeed is a paradigm shift from the process of urbanisation of Delhi covered under the earlier master plans, wherein the DDA used to acquire large land masses, and develop it progressively, sometimes taking decades. (examples: Rohini, Dwarka). DDA was the sole landowner, planner, developer, seller, auctioneer, and partook in every conceivable role. Under the current policy, DDA would cease to be a land aggregator cum developer, and merely remain a ‘facilitator’ and regulator.

    Consolidation of land has been the biggest challenge that the development agencies have long faced while trying to urbanise India. It is a dynamic process, and landowners have forever been influenced by each other, not by the government agency acquiring the land. Any entity that approaches a landowner with a promise of development on the land, with or without a share of the benefit, is looked at with suspicion.

    The urban design form is dictated by the seamless availability of land; the best examples of which are seen in the cities in Delhi NCR. Below is a snapshot:

    Delhi: Piecemeal expansion has led to almost half the population living in unauthorised settlements, with more than 125 sq km of land mass under unauthorised development/ occupation.

    Gurgaon: The government declared the sector boundaries in the master plan in 2006, but the infrastructure is yet to be laid owing to land acquisition issues, though dwelling units are ready for occupation. Even the connecting roads between sectors haven’t been developed.

    Noida: Access to land ensured that gridline infrastructure could be planned, and created. Development of townships/residential and commercial towers was created subsequently.

    It is imperative that the urban form and methodology of a time-bound development of infrastructure is defined, more so in the case of Delhi wherein multiple agencies would be providing services like trunk roads, arterial roads, water, power lines, sewage water treatment plants etc.

    What would be the proposed location and alignment of the trunk lines of these services within the sectors? In the absence of clarity, how can an organised Developer Entity (DE) invest time, effort and money to decide which sector would be optimally efficient?

    That the sector plans haven’t been released yet to facilitate decision-making is a different matter altogether. When would this happen?

    The launch of the land pooling policy is a brilliant opportunity for DDA to undo the shortcomings of the past, and facilitate the development of Delhi as a modern capital of the third-largest economy of the world.

    Is there any precedent in India, where a few disparate private DEs have accepted and executed such a vast responsibility — of aggregating land from the owners, investing capital for approvals, service infrastructure and development without any counter guarantees from the government on ROI?

    “A known devil is better than an unknown angel,” says an old saying. By our interactions with the land owning community, they would have had no problem in surrendering their land to a government agency like DDA. However, when the land has to be surrendered or rights shared or co-developed etc with a yet to be DE, most landowners are circumspect. Is there a trusted, capable agency that would mediate, negotiate and handhold both sides on a daily basis?

    Delhi is already suffering on account of multiple agencies laying and providing services. Landowners rightfully fear that with DDA not liable to provide (any policy document) the services in a time-bound manner, infrastructure would be a casualty, thereby delaying the development and opportunity to monetise their land assets.

    MPD 2021 might be the largest investment opportunity in India for institutional investors to partner landowners to develop a ‘modern megapolis’, and the last for at least a decade in NCR, It is generally understood that unless the services trunk lines are laid by the government, before the re-allotment against surrendered land, the interest levels would be low. Hence, the need for an approach on the lines of Public-Private-Policy-Partnership.

    What is the stated process of ‘acquisition of land for sector roads?’ In the policy document, DDA has specified that the contiguous land abutting sector roads would be chosen for licensing. When would the layout plan of sector roads be released to the public? Would they remain ‘hard coded’ or can it be subjected to change of alignment?

    Our internal research with leading investors reveals that the following factors influence their decision.

    Stability in criterion – Policy making & implementation
    Risk (Uncertainty about outcome)
    Forecasting Risk owing to resistance to policy
    History of market trend
    Investment horizon
    Expected return
    External factors
    Inflation & taxes
    Socio economic political conditions
    Information in public domain & education of landowners
    Sales velocity
    Floor Area Ratio (FAR) has to match the surrounding markets, if not exceed compared to the other markets in NCR.
    The Prime Minister’s vision for the nation talks about affordable homes for all segments of the society, while the FAR numbers are unviable for development of finished products at the price points wherein lie the real demand.

    Said the above, MPD 2021 could become a template for the urban design and development for the future, subject to DDA, the Ministry of Urban Development and other stakeholders contributing towards a ‘partnership driven model of land development’ wherein the dividends are shared in pre-agreed manner.

    And, mind you, the returns can be phenomenal for all.

    Ramesh Menon is the founding Director of Certes Realty Ltd, and an independent Director on the board of SPA Capital Group. He brings perspective on both land, investments and monetisation of real estate assets.

    Source: CNBC TV18
    Dated: 5th July 2018

    Land pooling policy: Public suggestions to be heard by board on July 2-3, says DDA

    Experts welcome the move as a step in the right direction, but say clarity required on how the urban body intends to integrate functions of other government departments

    Public suggestions and objections on DDA’s land pooling policy, which is expected to meet the residential needs of about 95 lakh people besides stimulating economic growth, will be put before the authority’s Board of Enquiry and Hearing on July 2-3, an official statement has said.

    Urban planners and experts have welcomed the move but said clarity required on how the urban body intends to integrate functions of other government agencies.

    “It’s a step in the positive direction to involve the suggestions of the stakeholders pre notification. However, it’s not clear yet on how DDA intends to integrate the functions of other government departments such as revenue, MCD etc to facilitate land pooling. An exercise of this scale cannot be executed without a robust technology support, which is yet to be commissioned by DDA. Urbanization through land pooling is the future and large scale institutional investment, both domestic and international needs be solicited. Hence, it’s important that their point of view also be considered along with the landowners,” says Ramesh Menon, Certes Realty.

    In December last year, the policy was simplified for speedy execution. DDA was to act as a facilitator and planner as against the role initially envisaged for it as a part of simplification of execution of land pooling policy. What that means was that the transfer of pooled land to the DDA will not be required.

    Originally, land pooled under the policy was to be transferred to DDA which was to act as the Developer Entity (DE) and undertake further sectoral planning and development of infrastructure in the pooled land. At the December meeting it had decided to do away with this requirement and said that land title will continue to be with the original land owners.

    “For implementation of land pooling policy, public notices were published in newspapers on January 11-12 for inviting objections, suggestions and observations or views within a period of 45 days from the general public. In all, 734 objections, suggestions and observations or views have been received,” the DDA said in a statement.

    Individual hearing of the persons who have filed their objections, suggestions and observations or views will now be held on July 2-3 before the DDA’s Board of Enquiry and Hearing at the DDA headquarters in Vikas Sadan, it said.

    In December last year, DDA was also asked to ensure single-window clearance mechanism for according necessary approvals for speedy implementation.

    Land Pooling Policy covers the greenfield areas in five zones viz., J, K-1, L, N and P-II coming under the Master Plan of Delhi-2021. To incentivise dense development for effective utilisation of scarce land resource in the national capital, the policy permits enhanced FAR of 400 as against the present 150. To promote affordable housing, an additional FAR of 15 percent is also allowed.

    About 22,000 hectares of land is expected to be pooled which could meet the needs of about 95 lakh people. Land pooling would catalyse economic, social and civic development of the national capital besides triggering substantial investments and employment generation.

    Affordable houses for economically weaker sections to be built under the policy shall be of the size of 32-40 sq mt. Half of this housing stock shall be retained by the Developer Entity to house Community Service People working for the residents/owners of the Group Housing. These houses will be built at the site or at premises contiguous to the site allotted. The other half of affordable houses shall be sold to DDA at the base cost of Rs 2,000 per sq ft for further sale to beneficiaries.

    Issues pending with the Delhi government, such as, notification of 89 villages under the DMC Act, 1957, and declaration of 95 villages as development area of the DDA under Section 12 of Delhi Development Act, 1957, were resolved in May and June last year respectively.

    Dated: 22nd June 2018

    Farmers stage protest outside Nirman Bhawan

    A group of farmers led by Swaraj India today protested outside Nirman Bhawan, which houses the office of the Housing and Urban Affairs (HUA) Ministry, against the delay in implementation of land pooling policy, the party said.

    Earlier, Delhi Development Authority (DDA) vice-chairman Udai Pratap Singh had said that the land pooling policy was ready and hopefully” by July-end, it would be submitted to the ministry which would then notify it.

    Swaraj India Delhi State President Anupam tweeted about the protest and alleged that HUA Minister Hardeep Singh Puri got the farmers, who had come to ask for their rights, detained at a police station.

    Responding to his allegations, Puri in a tweet said, I never cease to be amazed by the extent to which people go to spread #FakeNews. I am in Lucknow, & not even in Delhi today. By the way, I regularly meet concerned citizens including farmers, traders & residents in my office. Better luck next time.

    Anupam replied back saying he don’t expect one of the rare sensible ministers like you (Puri) to term everything that doesn’t suit as fake news.

    Anupam also posed questions regarding landholding, development charges and time of implementation of policy.

    In response to the queries, Puri asked him to wait for the real facts on land pooling and advised him not to use social media for disinformation.

    The farmers also pressed for scrapping of the mandatory provision of five acre landholding and development charges in the yet-to-be-notified policy.

    Source: Business Standard
    Dated: 19th June 2018

    Land pooling policy stuck because of confusion over classification

    While the Delhi Development Authority notified the Land Pooling Policy a month ago after years of waiting, the project cannot proceed further unless Delhi government classifies the identified agricultural lands as ‘urbanisable’.

    The DDA had notified the policy in May, and was looking to start registration of lands in 89 villages for pooling by August. The matter then went to the Delhi government for consideration, and the DDA hasn’t heard from them since.

    “We are waiting to hear from the Delhi government. Unless that happens, we will not be able to move any further. The land use has to change for us to start building residential and commercial complexes there. As of now, that land is agricultural land,” said a DDA official.

    However, sources said the Delhi government was still considering whether to change the land use, lest they be perceived as being anti-farmer.

    “The plan is to carry out various mohalla sabhas and find out if the residents of these areas want the policy. Once that happens, a final decision will be taken,” said an official.

    “Since the land pooling policy has been notified, land acquisition cannot happen, unless it is compulsory (for public infrastructure projects). So any residential or commercial development in the area will be completely stalled till a decision is taken,” the DDA official added.

    DDA has recognised close to 20,000 hectares of land that developed in North, North West, West and some parts of South West Delhi, spanning 89 villages. According to DDA, even if half this area is developed under land pooling, it would be sufficient to meet Delhi’s housing need of 250,000 homes.

    Under the land pooling policy, land parcels owned by individuals or group of owners can be handed over to DDA which will take a fraction of it and develop the common areas. The remaining will be handed over to the developers.

    The policy is applicable in the proposed urbanisable areas of the urban extensions for which zonal plans have been approved. Even an individual who owns two hectares of land can become a developer, under the project.

    According to the DDA’s land pooling model, there are two categories of land pooling — (i) if the developer owns 20 or more than 20 hectares of land, the DDA will return 60% of the land (ii) if the developer’s land parcel is less than 20 hectare, the DDA will return 48% of land.

    Source: Hindustan Times
    Dated: 30th July 2015

    A blueprint for land pooling

    What is land pooling policy?
    Under the  land pooling policy, the land parcels owned by individuals or a group of owners are legally consolidated, via transfer of ownership rights to the designated land pooling agency which later transfers the ownership back to the land owners. These land owners are then entrusted with the development of such areas.

    Why has DDA introduced the land pooling policy in Delhi in the proposed ‘urbanisable’ areas?
    According to DDA, land acquisition and planned development has not kept pace with the increasing demand of urbanisation during the last five decades. Moreover, the process of acquisition is being increasingly challenged by land owners due to low compensation as compared to the market value. So in the land pooling policy either the developers buy land from farmers at the market rate and hand it over to DDA or the farmers can themselves become developers by tying up with construction companies. This will avert land acquisition complications.

    How much land will a developer get back from DDA?
    According to the DDA’s land pooling model, there are two categories of land pooling – (i) if the developer owns 20 or more than 20 hectare of land, DDA will return 60% of land to him and retain 40%.
    (II) If the developer’s land parcel measures less than 20 hectare, DDA will return 48% of land and retain 52%

    Zones which will be a part of the policy
    According to the land pooling policy, notified on September, 2013, the immediate urban extension is to be in the zones of J, L, M, N and P (I&II).

    How long will it take for the scheme to get operational?
    On November 18, 2014, DDA sent the final regulation of the scheme to the Ministry of Urban Development, which has to give its approval for notification. Once the regulations get notified, DDA will invite developers to apply for deposit of land.

    What’s the minimum size of the land parcel that a developer must have to participate in the land pooling scheme?
    The minimum size of the land parcel that the developer will have to hand over to DDA is five acres.
    He can even own various plots of different sizes in the land pooling zones and the consolidated size of the plots should not be less than five acres.

    How is land ‘returned’?
    According to DDA, whenever it acquires around 60% land from a particular sector of the land pooling zones, it will hold a draw and return land to the developers. It is not necessary that the developer get the same parcel that he handed over to DDA.

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