Capex Loans Support Land Reforms in States
Centre’s Long-term Capex Loans Fuel State-Level Reforms
The Centre’s interest-free 50-year capital expenditure (capex) loans are significantly influencing state-level updates in building regulations to promote industrial development and the digitization of rural land records, with the goal of enhancing the economy, decreasing legal disputes, and improving access to credit. These capex loans support land reform initiatives across various states.
Positive Outcomes from the Capex Loan Scheme
The Centre’s soft capex loans, which span 50 years and bear no interest, have produced favorable results, prompting states to modernize building standards to facilitate industrial expansion and digitizing land records. These reforms aim to enhance the rural economy by lowering litigation rates and broadening credit availability. The Scheme for Special Assistance to States for Capital Investment (SASCI) has expanded from an initial allocation of ₹12,000 crore in 2020-21 (during the COVID-19 pandemic) to ₹1,50,000 crore planned for 2024-25, establishing SASCI as a significant policy tool that encourages essential reforms across states.
Substantial Financial Disbursements for Reforms
Out of the ₹1,49,484 crore allocated to states in capex loans for FY25, approximately half has been dedicated to various reforms or linked projects as defined by the scheme. The funds are categorized into untied and tied funds, where untied funds are meant for priority projects and tied funds hinge on the implementation of specific reforms. Additionally, the Centre allocated ₹5,000 crore to incentivize both urban and rural land reform initiatives in FY25.
Impact of Building Code Reforms
A total of 22 states have revised their building bylaws for industrial and commercial properties. Notably, 18 states have minimized land wastage related to setbacks and parking for independent factories to below 30%. Furthermore, 12 states have increased the allowable built-up area for flatted factories, while 8 states raised the Floor Area Ratio (FAR) for commercial buildings to 5 in standard areas and 7 in Central Business Districts, as reported by the finance ministry. Such seemingly technical amendments result in substantial economic benefits, including more effective land utilization, expanded manufacturing capabilities, and improved urban efficiency.
Transforming Rural Land Administration
The most transformative changes are evident in rural land administration through the digitalization of land records, which directly benefits rural residents by lessening land disputes, curtailing corruption, and simplifying agricultural credit access. Currently, around 90% of cadastral maps are geo-referenced across the nation, with 30% of land parcels (22 crore out of 76 crore) now assigned Unique Land Parcel Identification Numbers (ULPIN), as noted by the finance ministry.
Advancements in Digital Land Registry Processes
Madhya Pradesh has implemented fully online and paperless land registry operations, and five states are making legacy records available online for citizens to search. Impressively, 91% of Records of Rights (35 crore out of 38 crore) have been digitized. To incentivize rural land reforms, states must meet several benchmarks, including the sub-division of all land parcels based on current ownership, the assignment of unique land parcel identification numbers (Bhu-Aadhar), and geo-referencing of all land parcels. The objective is to ensure a entirely online land registry process interlinked with other systems and complete saturation of land records, alongside the modernization of revenue court case management systems.
Focus on Urban Land Reforms
For urban land reforms, incentives have been provided for the digitization of land records, the use of Geographic Information System (GIS) mapping, and the establishment of an IT-based property record management system for updates and tax administration. As India aspires to be the world’s third-largest economy in the next three years and aims for developed nation status by 2047, enhancing land reforms is crucial for the nation’s trajectory.
