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 Property Rights
 
The original sinners of Singur
Mint, India Wednesday, October 08, 2008

Sauvik Chakraverti
The destruction of land administration, painstakingly built by the British, has undone capitalism in India, writes Sauvik Chakraverti in Mint.

After Singur, it has become obvious to every farmer — and every policy analyst, too — that property titles to farmlands are of vital importance. Without clear, transferable property titles, there cannot be a free market for land. Without a free market for land, those who own farmland cannot leverage themselves to take part in India’s budding capitalist economic system.

 

Of course, to those who understand what capitalism is, these truths were evident a long time ago. Peruvian economist and activist Hernando de Soto’s The Mystery of Capital is now old hat. In this path-breaking book, de Soto looked at many developing countries, from Egypt to Bangladesh to the Philippines — apart from his native Peru — and showed us all that capital, which is the lifeblood of capitalism, eludes the poor in these countries not because they do not possess property — they do. Rather, it is only because they do not possess clear and transferable property titles to their properties that they, and their nations, are condemned to remain poor forever. This is because, without a title, the owner of property cannot approach a bank for a loan. It is as simple as that. This is the “mystery of capital”. Once all property owners are in possession of marketable titles, capital automatically kicks in.

 

Now, if we are to look for the “original sinner” in Singur, then the so-called “steel frame” of the Indian Administrative Service (IAS) must face the music. Property titles are a basic — nay, fundamental — aspect of any civilian administration: This is what the administration of land is all about. Why is it that the IAS has totally neglected this task? The fact that this task was being neglected was pointed out in the Sixth Five-year Plan: “A systematic programme would be taken up for compilation/upgradation of land records, to be phased for completion within a period of five years, i.e., 1980–85. In states where the backlog is heavy…”

Of course, this “systematic programme” never happened. And almost three decades have passed since this pious intent of our central planners was written. Why did it remain just on paper? The answer must lie in our socialist politics, which has been all about “land reforms”: The socialist usurpation of the properties of the landed for distribution among the landless. But then, even this was “sabotaged in action”—as this comment that Communist leader S.A. Dange made in Parliament shows: “If you pass a resolution about ceilings on land holdings, you cannot keep ministers who are opposed to that in principle… But here a peculiar situation exists. When suddenly the Honourable Prime Minister takes up an issue they start opposing it; then they pass it and say: It does not matter. Let him talk, we can sabotage him in action.”

 

It is socialism that destroyed land administration. If we want capital and capitalism, we must focus on the administration of land. Indeed, this is precisely what the “civilians” who ran the country in British times did.

 

An excellent book on the manner in which the British ran India is Philip Mason’s The Men Who Ruled India. Mason was an Indian Civil Service officer, but his book starts off at the very beginning, when the civilians of East India Company took charge of the first districts in undivided Bengal. This quote is telling: “In India, by accepting the revenue for a plot a collector automatically bestows a title; gradually it comes about that the collector of land revenue spends only a few minutes a week on seeing that collections are coming in to his subordinates, but many hours deciding disputes.”

 

We can now arrive at an exact estimation of what went wrong because socialism infected the IAS. And it is this: The “collector” who collected revenue and bestowed titles in exchange was transformed into a client of the state who spent tax money. Indeed, that is all the IAS does today. The thousands of crores of rupees being foolishly spent on “employment guarantees” flow through the fingers of the IAS “district spender”. They call themselves “development administrators”. As Deepak Lal pointed out, all our poverty is the result of

This article was published in the Mint on Wednesday, October 08, 2008. Please read the original article here.
Author : Mr Chakraverti is an economist and author based in India.
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