The Centre for Social and Economic Progress hosted a seminar titled “Why Land is Expensive in India and What can be Done About it” on Wednesday, September 25, 2024.

The seminar featured a discussion between Gurbachan Singh, Independent Economist and Shishir Gupta, Senior Fellow, CSEP.

The event video is available on YouTube.

About the event

Metrics like house price to income ratio and price to rent ratio are useful, but for valuation we need to consider the ratio of market price to fundamental value. In India, this ratio is high for land. But unlike the case of the stock market, this ratio is not a good indicator of a bubble in the real estate market.

The high price of land in India is mainly due to a broadly defined variant of the license-permit-quota (LPQ) Raj in real estate development in urban India and the pricing provision in the Land Acquisition Act, 2013 in rural India. A corollary is that factors like scarcity of land, population size, black money, urbanisation, and nuclear families are not very important here. The main policy solution is to phase out such LPQ Raj in urban India. This can, in turn, pave the way for amendment of the Land Acquisition Act.

A change in policy has implications for affordability of homes, high-rise construction, and vacant homes. Enabling public policy can reduce the need for public money in providing cheaper housing. Also, a change in policy can lead to higher economic growth, greater employment, possibly less e-commerce, and less wealth but greater happiness.

Speaker

• Gurbachan Singh is an Independent Economist. He was previously Visiting Professor at Ashoka University. He has taught at the Indian Statistical Institute (ISI), Delhi Centre, Jawaharlal Nehru University, and University of Delhi. His writings are primarily on the interface between macroeconomics and finance. The work is mainly in theory to explain the real world and to devise better economic policies.Besides publications in academic journals, he has contributed substantially to Ideas for India, and written a monthly column for Business Standard. He published a book on Banking Crisis, Liquidity, and Credit Lines with Routledge, Abingdon. His new book on Macroeconomics and Asset Prices – Thinking Afresh on Basic Principles and Policy is nearly complete. This includes a new interest rate policy that is BEST – Better-targeted, Effective, Small-sized and Transparent compared to the prevailing interest rate policy.He received his PhD from ISI (Delhi Centre), and MA from the Delhi School of Economics.

Moderator

•  Shishir Gupta is a Senior Fellow at CSEP in New Delhi. His work focuses on many aspects of the Indian economy, including economic growth, governance and institutions, urbanisation, and sub-national reforms, among others. Before joining CSEP in August 2020, Shishir was a Fellow with the McKinsey Global Institute for 14 years, where he led multi-ethnic teams in India and the US on policy research and client studies across multiple domains. He has written widely on these topics in MGI reports and research papers as well as in popular media. He is an economist by education, with an MA and MPhil from the Delhi School of Economics.

Please contact Gurmeet Kaur at GKaur@csep.org for general queries and Ayesha Manocha at AManocha@csep.org for media queries.