An enigmatic Crusade

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Last week witnessed offices of real estate brokers were sealed in a few Kashmir districts. Officials say the initiative is intended at preventing dubious deals and protecting the interests of the commoners. Kashmir Life, however, finds out that the ‘crusade’ will push the otherwise better-performing sector to beyond greyer boundaries and complicate the life in absence of an adequate legal framework.

Tax collections are up in the state mostly because the increase in population has swelled the consumption. But that is not true for the Stamp Duty. The impressive growth in Stamp Duty is not because of volumes but as a result of certain key interventions. The sector still requires certain policy shifts including taking away registrations and stamp collections from the judiciary- a process that has been stalled by a stay order.

Officials informed Kashmir Life the state collected a record stamp duty of Rs 150.51 crore in 2011-12, a  116.28%  growth over the previous year. “There is a potential of doubling the figure this year beacause an enabling environment in place encourages people to pay and not escape the systems in place,” a senior officer said.

Kashmir is performing much better, if compared to Jammu in this regard. “In 2010-11 the stamp duty collections from Kashmir were at Rs 24.69 crore that jumped to Rs 81.78 crore last year,” an officer in state’s finance ministry said. “In the first quarter of the current fiscal, we have collected Rs 27 crore even as we anticipate collecting Rs 120 crore from Kashmir alone this year.”

Land continues to be the fundamental requirement for expansion and principal sector for investment in J&K, especially in Kashmir. But improved collections do not mean residents across J&K have given up everything for the land, though it is a scarce and expensive commodity. This sector has witnessed two interventions in the recent past.

Firstly, a reasonable duty tariff structure was implemented. Now it is seven percent in urban areas and five percent in the countryside. This is a Himalayan shift if compared to 23 percent duty in urban areas at one point of time not far away. After certain arbitrary intetventions, the new tariff regime finally took over in April 2012. “This is the most reasonable duty regime that we can have,” a senior officer said. “Now we have many places across India where stamp duty is huge ias compare to that in J&K. J&K is now one of the few state in India where stamp duty is low.” People usually pay stamp duty if it is reasonably affordable.

Secondly, the low duty regime works in a system where the entire state is categorized in zones with every place in rural, semi urban and urban areas having a minimum price tag per kanal. No registration can take place anywhere across India unless a sale deed does not establish that it has strictly followed the price norms prevailing in the state. This has increased the revenue. “It can touch Rs 500 crore a year if duties and registrations are managed by professionals far away from the court,” an officer associated with the exercise said.

It is at the peak of this growth that the government comes up with an order. Lat week, Deputy Commissioner Srinagar issued an executive order directing “seizing the offices of land brokers operating in and around Srinagar ” because the government received “large scale complaints regarding sale of migrant property.” It has also been alleged, an official statement announcing the decision said, that “land brokers in connivance with unscrupulous elements and some Revenue officials are managing change of land use in the records, especially on either sides of the National Highway.”

Baseer A Khan, DC Srinagar insists that the government had received complaints where a single plot was sold four times by the brokers. “In many cases, the ownership papers are fake and then there are some temple properties also.” Khan said, insisting his officers will seize records, scrutinize them and fix responsibility.

It is not the case with Srinagar alone. Divisional Commissioner, Kashmir Asgar Samoon, the top policymaker behind the idea, said he has also asked the administrations in Budgam and Baramulla to implement the order. The move, Samoon said, is aimed at discouraging arbitrary conversion of land use especially agricultural land into housing areas. A law to the effect has already been discussed in the state assembly and is currently before with an expert committee. Samoon says such executive orders will help them to regulate the market till the law comes into force. “We are currently invoking section 133(a) of the land revenue act to intervene,” Samoon said, adding the initiative is also motivated by the impact of land use conversions on the food security of Kashmir.

The impact has been instant and visible. “Right now there must be around 500 offices of the property dealers across Kashmir which have been sealed ,” Mohammad Yousuf who is building a small colony in Baramulla said. “Somebody might have committed a mistake and we all are paying for that.”

The real estate sector has however reacted sharply. “It is ridiculous at the best,” commented a builder Reyaz Ahmad. “Brokering is an established business worldwide including India but if J&K has inadequate laws, practising professionals can not be blamed for that.” He said the order might help government target some individuals but it will not trigger a major impact on the sector.

The players are approaching the court against the order. “We will secure a stay and then sit with the government to sort out issues if any,” one player said. “We are not thieves that we will go underground and become fugitives.”

Sector insiders and a section in the government accept the larger reality that the rise of private sector in the housing is outcome of the failure of the government, especially the housing ministry. “We lack prospective planning and have no estimates of our requirements for today or for future.” an officer said. “Had the housing ministry been able to provide affordable housing solutions, the land prices would have been automatically checked. But the government seems to be wrking in reverse. Interestingly, the housing Board that is supposed to offer solutions has become a larger brokering house that increases the rates and helps a section to hoard real estate for future businesses.  “In Kashmir, invariably the same set of people gets allotments everywhere whenever the Housing Board sets up a colony,” an officer alleged.

“When the government fails, the private sector takes off and it always works for profit,” a senior officer said. “They innovate ways to make money and in this process they trigger the market appetite for housing that can even devour even agriculture and even Saffron.” The government informed the state legislature last year that land use has been arbitrarily converted in case of 357306 kanals of land across the state of which 326697 kanals fall in Kashmir alone. The land conversion took place from agriculture land to horticulture orchards in Shopian, Baramulla as Srinagar and Budgam witnessed the conversion from agriculture to housing. Most of this conversion, however, is converting irrigated paddy land into apple orchards. But orders of sealing brokers’ offices will not solve the problem. It will increase costs and pave way for corruption.

Commoners like Hilal Ahmed feel that the order has unnecessarily raked up the migrant property issue. He says the government officilas should explain what was the proportion of migrant land deals in the total reported land deals worth Rs 385 crores in current fiscal. “If there is one percent of sale that pertains to migrant properties, the order justifies the motive and if not the officials should explain why is the issue being raked up.,” Hilal said. “The language of the order implies that entire real estate in Kashmir is about migrant properties which is wrong. It is a baseless condemnation of the society and the officials must offer explanations.”

Sale of migrant properties is banned by law and any sale has to be permitted by none other than the Divisional Commssioner. If the designated office is bypassed then the system is malfunctioning for which society can not be blamed. At the same time, however, it is adequately documented that a gang of non-local purohits who have occupied some of the temples and sold their properties with the help of officials and interested parties. But these “sales” do not make even a fraction of around Rs 2100 crore land sale deals registered across J&K last year.

Kashmir is a place where real estate has not emerged on professional lines. It is a place where the sector is being termed as “mafia”, a term that may not apply to most of the players. But that does not essentially mean that the sector is not growing. In the last few years, the number of players has nearly tripled as the demands soared. This is despite the fact that the “mafia” – mostly comprising politicians, bureaucrats and police officers in Srinagar and Jammu who have invested immensely in land, have not openly came out to bid!

Given the status of J&K as a state with lowest per family land holding, the land rates have actually gone through the roof. In villages where every inch is under apple cultivation, orchard land sales are like high-end palace auctions. In the ever expanding Srinagar city, land prices double every fourth year. The cultural disdain for skyscrapping housing structures and categorization of the area in seismic zone-V are adding to the pressure on land as every new nuclear family wants its own piece of land.

Given the appetite for land and the scale of operations, there are problems. It took government around two decades to unravel the fact that certain posh localities in uptown had come up on the government land that some middle rung revenue officials had literally sold to the private parties. By the time the discovery was made, the officials had retired and were the prominent members of the civil society. There are instances about brokers selling the same piece of land to different people and even offering fake papers.

“While I served in Budgam, I came across number of such cases and we did make arrests,” a senior police officer said. “But at the end of the day we had to set them free because cheating is a smaller offence, under section 420,  that anybody can be granted a bail for.” The law of the land does not make a distinction between cheating worth Rs 10 or Rs 10 crore and that works against the common man.

Sealing of offices of the brokers or their arrest will only add to the problems. The only option is to offer a standard legal framework to the sector and push it to growth on professional lines. Government can contribute in reducing the costs of living by offering vertical housing at affordable costs. That will change the system “mafia” that is encouraged to work in Kashmir. If a builder violates the ‘Ribbon act’, let him face the music but the who official who took his cut for maintaining silenced should also be brought the the book

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A journalist with seven years of working experience in Kashmir.

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