The
Magic Bullet Called CLU
India is full of legal, administrative and
procedural bottle-necks cum check-points. These help people in authority to
extort payment as the price of passage. These extortionists range from the
petty, gate-keepers to the large fish of major import. But in all of it, there
is the sickening truth that one side, in power, is taking huge and unfair
advantage of the other.
And
by and large, from the beat policeman, clerk, municipality official, junior
engineer, on to the higher officers of the bureaucracy, appointed functionaries
of every hue, elected politicians and partymen, up to union ministers and political
fixers on top; everyone, is on the take.
The Modi Government wants to end this banana-republic
style corruption in Government. It has made a small but most useful move by
implementing self-attestation on most documents at the Centre, and urged the
quasi-federalised States to follow suit. This one thoughtful reduction of red-tape will
henceforth save time and money. But it is just one of thousands of such
improvements that need to be made.
With its general emphasis on toning up the
governance process, the placing of more and more time-bound clearances such as
the ‘environmental’ ones online, government sanctions and licensing are indeed
becoming much quicker, more responsive and dynamic. The Modi Government is
already poised to reap rich dividend just from an early toning up and implementation
of this greater thrust towards efficiency. This is because even marginal
improvements in various directions can gradually add up to a handsome total.
The Law Ministry is also working urgently
on judicial reform, a vital area of governance that is all but inoperative. The
legal system has too many redundant laws, too few judges and courts, rampant
corruption, and massive back-logs. Prime
Minister Narendra Modi is on record for saying ten old and outdated laws on our
statute books need to be scrapped for every new one made.
And clearly, a democracy without an
effective legal redressal system is
already degenerated into a form of goonda raj or anarchy, and many symptoms of
this are clearly evident today in all walks of life with its daily quota of
rapes, murders and swindles. Those who break the law today know it has little
hope of catching up with them, and that the law cannot deliver justice for
decades even if it does nab them.
One glaring area of massive Government
corruption that has vastly enriched the Chief Ministers of many States, as it
is a matter generally handled personally by them, is to do with ‘land use’.
Not only is an entity that wants to build
on its own land required to get its plans sanctioned and obtain various
clearances from the appropriate authorities, but before all else, it has to
make sure it has its CLU or ‘change of land use’ papers.
Since most land not already within the ever-expanding
city is designated ‘agricultural’, it must first be converted into
‘residential’, ‘commercial’, ‘institutional’, low-density development,
‘farm-house’ as distinct from ‘agricultural land, and so on.
Sometimes, the effect of this conversion
can be dramatic in terms of the land-value. The infamous Robert Vadra, whom
Modi called ‘Damaadshri’ on the
campaign trail, bought 3.5 acres of Gurgaon land in new Sector 83 for 7.5
crores, with money lent to him by obliging
associates, who also paid the stamp duty of rupees 45 lakhs on it. Using his
clout with the Hooda Government to get its land use changed to ‘commercial’,
Vadra sold it to DLF for 58 crores.
Vadra then invested the 58 crores by
booking a slew of 41 flats in the Magnolias
development on Golf Course Road by self-same listed real-estate major DLF. And
later still, sold 38 of these after paying 7 crores in delayed payment charges.
Rupees 58 crores had spun into some 350 crores by then. This, not counting the
value of the one Vadra bought outright in the ultra-luxe Aralias for 11.7 crores, and yet others he booked in DLF’s Capital Greens in Delhi.
Robert Vadra also bought a half-share of a
Hilton managed hotel otherwise owned by DLF in Saket, Delhi, for 35 crores plus
loan liabilities, the loans advanced to him by DLF. There are other deals too
but this lot was achieved in under five years, from 2008.
But Vadra’s unipolar rise, is no more than
a high profile symptom of the same phenomenon prevalent elsewhere. Quite often,
a State Government, first compulsorily acquired large tracts of agricultural
land on the edge of the expanding city, or at other strategic locations, at a
pittance, and then sold it to builders to create shops, malls, housing estates,
factories and so on.
The Government earned a trickle of CLU
charges out of this, but the officials and Chief Ministers concerned made
thousands of crores in a flood of payola, all via a stroke of a discretionary
pen exploiting a rapacious law. There were, inevitably, farmer protests and
tribal unrest in different parts of the country.
Then came an idealised land acquisition law,
in 2013, that has largely gone to the other extreme. It is now several times
more expensive and difficult to lay hands on the agricultural land, even after
the proposed amendments to the Act come into being; but it is still necessary
to obtain a CLU.
The Narendra Modi Government could well
consider abolishing the CLU provision altogether and restricting the process of
Government oversight to the plan-sanctioning, environmental clearances etc.. This
will reduce the cost of land acquisition and related expenses significantly,
and help the end-user who otherwise ends up paying for it all.
When it comes to industry, particularly
private industry, there is little choice for viability’s sake but to locate in
remote areas where land prices and CLU rates can be tolerably borne. But how do
you get men and materials to these remote corners without infrastructure being
put in by the Government or the developer? The entire matter is indeed
interlinked.
But the CLU requirement is outdated, a
piece of legislation left over from the
licence-permit raj. It is extortionate in practice, and serves no useful
purpose as a prerequisite to planning and zoning laws, usually already in place.
(1,026
words)
August
1st, 2014
Gautam
Mukherjee
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