DDA To Auction Vacant Land Parcels. Why This Matters

A shortage of urban space in India's cities is seen as one of the greatest barriers to the mission to build homes for everyone. Among reasons behind this shortage is underutilisation urban land.

Keeping this in mind, the Delhi Development Authority (DDA) has decided to auction land parcels in densely populated areas of the city to protect its vacant land parcels from encroachment.

A look at why is this important:

Big data can change urbanism

The DDA plans to compile data on vacant land near residential areas in the city, using Geographic Information System (GIS) data. It will collect information on the size of the land in Delhi, extent of encroachment and the legal status of the land. Such information is crucial in urban planning. Recently, when the World Bank conducted a study in Ahmedabad using GIS to take a stock of underutilised land, researchers found that 32 per cent of the developed or developable land in the city was owned by the government. The study estimated that by selling this land, local authorities can raise anywhere from $3.6 to $9.8 billion, an amount sufficient to meet the infrastructural needs of Ahmedabad for the next 20 years. Such a study could help bigger cities such as Delhi to a great extent. This data could also help future developments of underutilised land parcels.

Every penny counts

In 2005, former World Bank Researcher Alain Bertaud estimated that roughly 1,800 acre of the port trust, 600 acre of lands of the long-closed public textile mills, 300 acre of railway land and 800 acre of Brihanmumbai Municipal Corporation (BMC) land can help Mumbai city earn a billion dollars a year. This was at that time nearly two-third of the annual budget of the municipal corporation. When the land that belonged to the long-closed textile mills was auctioned in 2009, price reached nearly $2,200 per square metre. Such studies can help the government exchequer to a great extent.

Revenues matter

When valuable land that could be used for residential projects remain idle, many low-income households encroach on government infrastructure. While this diminishes the returns from such infrastructure, it is estimated that such encroachment leads to a loss of millions of dollars a year in a city such as Mumbai. Re-development of the government's encroached infrastructural assets would also be difficult, hindering the development of real estate in Delhi and other Indian cities. In most Indian cities, including Mumbai, idle public land is enough to build dwelling units for low-income households that encroach on public infrastructure.

Optimising under-utilised land

Idle land in urban areas are often served by government-built infrastructure. Even though the value of such land rises when the government undertakes major infrastructure projects or maintains and upgrades infrastructure, such land is not put to its most valuable use. While this leads to wastage and shortage of valuable urban land, property tax revenues from such land holdings is unusually low.