Town Planning Schemes as a Hybrid Land Readjustment Process in Ahmedabad, India

In India, local governments have increasingly relied on town planning schemes (TPS) to influence urban growth and to finance affordable housing and basic infrastructure. TPS is a hybrid land readjustment system that requires owners of agricultural land on the urban fringe to transfer up to 40 percent of their land to the government for redevelopment. In return, they receive cash compensation for the land taken and retain the remaining 60 percent of their land, which is reconstituted as urban plots with public infrastructure. The landowners can either build new homes on these serviced plots or sell the plots to developers. The government builds roads and other public facilities on a portion of the land received from the landowners and reserves a portion to sell at auction to cover the costs of infrastructure development. Bishwapriya Sanyal and Chandan Deuskar examine the use of TPS in Ahmedabad, Gujarat, and offer five observations.

First, TPS is an incremental approach to implementing urban planning and thus relies on master planning to guide the process of land redevelopment toward a long-term vision of the city. TPS does not replace master planning, but is instead only an instrument of urban planning and of the economic development strategy of the region. Second, only registered landowners are allowed to participate in the design of TPS. Poor renters and informal settlers are marginalized. As the authors admit, the Indian approach is not in accord with the spirit of conventional land readjustment, which emphasizes inclusion and public participation in the decision-making process. Third, despite the attempt to use TPS to speed up infrastructure development, the process remains slow due to bureaucratic procedures imposed by the state government. Without any authority to sanction plans, manage land auctions, or revise land use rules and regulations, local governments are not able to take advantage of TPS. Fourth, although TPS calls for the equitable sharing of profits between government and landowners, the latter receive the lion’s share of the redevelopment benefits.

In calculating the value of the land returned to landowners, local authorities have the opportunity to ask landowners to return part of the acquisition compensation if the land value of the returned land exceeds the value of the acquired land. Local authorities, however, underestimate, and thereby fail to recoup, the increments in value. Fifth, although one of the major policy functions of TPS is to allocate land for low-income housing, few affordable-housing units have been built. Sanyal and Deuskar argue that this pro-poor component of TPS might only have been a strategy for gaining public support for this urban growth management program. In sum, there is room for improvement of TPS, but that will depend largely on the institutional feasibility of future policy revisions.

This paper was presented at the Lincoln Institute’s annual Land Policy Conference in 2011 and is Chapter 7 of the book Value Capture and Land Policies.