Disinvestment and Government Spending Dilemma: How Smart Government can be in a Neoliberal World? /DH Business page

 

Disinvestments has been a main source of revenue mobilisation by the central government in the previous years. As of the last union budget, government plans to raise 1.75 lakh crore through disinvestment out of which 1 lakh crore should come from selling government stake in Public Sector Banks and financial institutions and 75 crores should come from the receipts of Central Public Sector Enterprises stakes. In many cases VRS and privatisation go hand in hand. For instance, the VRS announcement of Bharat Aluminium Company (BALCO) in 2001 to recent VRS announcements of employees in Indian Railways and BSNL in 2020 are some explicit examples.  Quite often, these schemes act as channels to offload workers before the ownership is moved to private sector. According to the current plans, a substantial part of Indian Railways would be managed by the private sector by 2023 (Vinoj and Ritika, 2020).

The increasing privatisation including the outsourcing of public services to private hands by and large occur as a tool for enhanced public sector efficiency. But in most of these cases which is often termed as ‘state failures’, one should not ignore that the state was trying to do something much more difficult than what many private businesses do. It is not merely the efficiency argument nor accumulation of profit the mandate behind the very establishment public sector enterprises. Rather it was to foster the essential development goals such as building infrastructure capacity, delivery of public services at an affordable rate and nation building. Moreover, the efficiency arguments do not hold true as market failures and bankruptcies of private sector firms are nor rare events in India.

These cases relating  not only  to Indian scenario as it happens all around the globe irrespective of the nature of government and stage of development. How many of us know touch pad of our mobile phones, global positioning technologies and Google’s search algorithm etc are the products of public funded research. The company, which was supposed to provide security protection in the London Olympics, was massively failed and therefore the British Army was called for. The examples do not end here.  ISRO provide its low-cost technology to manufacture Lithium-Ion Battery (LIB) to private players, which is expected to transform the automobile industry.  Product level information on the capital goods sector in India shows that it was one public sector firm (BHEL) used to dominate in terms of size of production and more importantly product diversification and forward and backward linkages. The point I try to make here is that much needed mission-oriented investments in production, infrastructure and technological innovations by and large are public funded and profits are privatised.  

As of 2017-18, top 12 corporate NPAs cost exchequer twice as much as the total farm loan waivers in India.  Privatisation of Public Sector Banks and financial institutions may now provide a case for profit run banks. But who will appropriate the profits and who carried the burden of loss and Non-Performing Assets? It was public money the loss-making banks got recapitalised. Yet another important issue in privatisation and disinvestment of public sector enterprises are lower valuation of assets. The raging controversy in the beginning of 2000s regarding the privatisation of two hotels Airport Centaur and Juhu Centaur are striking examples. It was later found that the assets were highly undervalued, and the disinvestment was done through single bidder transaction. Moreover, both hotels were profit making entities till government decided it to privatise.

The disinvestment channel of revenue mobilisation is the result of non-confidence of the government in it’s role. Scholars including Mariana Mazzucato talks about the role of the state in promoting the catching up process as an entrepreneurial risk taker of the first resort than more passive facilitator of the last resort.

Role of state: State has played an active role  in the ‘hotbeds’ of innovation and entrepreneurship  as we see in San Jose, California. Silicon Valley example shows state  not only facilitate the knowledge economy, but actively create it with a bold vision and targeted investment (Mariana Mazzucato, the Entrepreneurial State,2014). Often,  we have to learn from examples of  public sector funding ends up  than merely fixing market failures. The role of state should be that of a risk taking one. However, some of the experiences from the recent past shows the scenario of a system failure  rather than the  market failure.

Think  why Apple was able to have such a  vast  amount of  public investments  that boosted the iPhone and iPad revolution ? It has received substantial public funding in the initial stage itself.  Remember without these publicly funded ideas, there would not have been an option to  surf even! The example set by  ‘Apple’   raises  the questions that  challenge the practices of the role of the State. In the absence of government support, private actors will hesitate to undertake certain economic activities especially the research and development (R&D). The gross R&D spending in India is notably below 1 percent of GDP, but at the same time a major chunk of the R&D activities in India are carried out by central and state governments, public sector companies and research institutes, which are essentially public funded (as of 2018).

The very visible hand of state has to act smart in the challenging times and to set example with substantial state funded research. Therefore, it is important to  reflect upon how quick and smart  Government can  behave  with its better strategies of innovation, public funding of technologies rather than being non confident in playing its role in an elegant way. The role of the state should not be seen in a parasitic relationship between the public and private sectors where one party always do the necessary investments and the other appropriate the returns. It must go hand in hand where both the risk and reward are fairly shared. Instead of selling of the public assets, coordination and collaboration through effective joint ventures between the public and private sectors will prompt the private sector to carry out activities they would not have done in isolation.

DH Business Page 05 April 2021

 

Save Lives and Protect Livelihoods

 

The Covid 19,a disease caused by a novel coronavirus called SARS-CoV2,has spread quickly around the globe, creating a public health catastrophe all over the world. Although the world nations are taking measures to control this menace, the lives and livelihoods of the people are on hold at a significant social and economic cost to the society. This pandemic has wide spread and hit the market economies hard with the growing toll of illness and lost lives.“ The outbreak of coronavirus is disrupting people’s lives and interrupting business and other economic activities around the world.”(Masatsugu Asakawa,President ADB).This is  first  and foremost a health crisis put nations and individuals at great risk. Therefore the  challenge we face today is different in its  nature and scope than we faced before.

At this juncture, there is a dire need of  the revival of a short-term fiscal policy, provision of public good and relief package to low- and middle-income  farm households and to state and local government. In this context “ short term fiscal policy should aim at channelizing the public expenditure to equip medical personnel, and people who affected by Covid 19 pandemic” said Cesar Calderon, World Bank Lead Economist. “But it is also important to consider that most workers in the region are engaged in the large informal sector where they lack benefits of insurance, unemployment benefits and paid leave.  They usually need to work every day  to earn their living and pay for the their basic household necessities. A large prolonged lockdown would put their basic survival at great risk.”

Therefore, the fiscal policy approach is with two primary objectives-to save lives and protect livelihoods. Immediate actions to consider include  strengthening health system, implementing social protection programs including cash transfers and social grants.

Unfortunately the burden is on the grass root level of the society.  The provision of public good is necessary to offer relief to those who are suffering. And there is a requirement of safe drinking water, sanitation amidst urban sprawling, weak health systems in a large informal economy of major  metropolitan regions  of  the nation while battling with this  plaguing situation.

Certainly, this pandemic led to various undesirable  consequences  in enormous population centres of  UP and Bihar to the sprawling  cities like Maharashtra,  TamilNadu, Andra Pradesh,  Delhi and to great extent to Kerala in search of employment. Finally various state governments had to play a significant role to fight the battle. One such example is of Kerala State which was under Communist rule more than three decades and  invested tremendously in public health and education.

The Kerala Model

Although Kerala was the first state to report a  Covid 19 case in late January, the success of Kerala model proved it could stop the spread of a contagion  amidst the challenge of high population density through its proactive measures like early detection, longer quarantine, contact tracing, building shelters for migrant workers, distributing cooked meals  and adequate social support. According to Henk Bekedam, the World Health Organisation’s representative in India, this is mainly attributed to its past experience of combating Nippah Virus and its investment in emergency preparedness  with community engagement. Indeed it was a disastrous challenge with high number of foreign arrivals, one sixth of its 33 million citizens are expatriates, thousands of its students study in China, UK and Europe and millions  of its nurses are   in the health care profession  all over the world.

In the first week of April Kerala had conducted more than 13000 tests ,that is 10 percentage of  all test across India, By comparison ,Andhra Pradesh ,nearly 6000 tests, while Tamil Nadu 8000 tests. However “ cluster cases” are first reported in Karnataka, the state government has decided to ensure designated quarantine facilities. A third of all cases are in Maharashra and Tamil Nadu. Research shows that some of the 15 states and /UTs need to make a deliberate effort to flatten the  Covid curve.

The so-called exponential curve is a cause of great worry to the experts all over the world. Researches shows Covid 19 will continue to spread exponentially for months. In a country like the United States, with its 330 million people, the curve steepen for a long time. Therefore the articulation of forced quarantine strategy( Chinese government imposed on Hubei Province) is a rational solution to slow spread of the virus before it infects the masses in any state or region.

Developing countries in East Asia and the Pacific(EAP) suffer from trade tensions as the virus that triggered a supply shock  in China has ultimately caused a global shock resulting financial jerk and recession across the world. In a rapidly changing environment, the entire globe stand still and the developing countries like India has to follow sound macroeconomic policies to deal with the tremours. There is severe supply shock in the Indian cities and towns as well since the virus hit hard the supply chain and the logistics, such circumstances are evident in metropolitan cities like Bengaluru as there are cases of delayed deliveries by online stores like Bigbasket which cater the need of many in the city.

The Covid 19  also has a serious impact on poverty. Nearly 24 million fewer people will escape poverty across the region in 2020 than would have in the absence of the pandemic(using poverty line of  US$5.50/day).If the situation deteriorate further, the repercussions will be more on developing countries. Therefore, the targeted fiscal measures are inevitable. In addition to national action international cooperation is a must to vaccine against this crisis.

It is a twin challenge of doctors treating patients  and policy maker articulating strategy, hence various state governments find it tough to relax the lockdowns as the potential cost to the human life is huge. Thanks to the people on the frontline  trying to defeat the outbreaks risking their lives, those working in health care,  doctors and nurses, delivery agents and countless many to care  for us and to ensure the necessities at this difficult time. Mitigating measures need to be lifted as an exit strategy from Covid 19 that  flattens the epidemic curve while overcoming extraordinarily challenging times.

(an article in the backdrop of first wave of covid in India,in February 2020)

Mechanics of Fuel Price in Deregulated Regime /DH Business Page

 

 A litre of petrol costs Rs.90.44 and a litre of diesel costs  Rs.80.77 in the state capital, Delhi  and Rs.96.81 and Rs.87.79  in financial capital, Mumbai ( as per data, IOC, April 16,2021). The scenario of the retail price surge is not different in states like  Kerala (petrol- Rs.92.26 per litre and diesel- Rs.86.74, as per April 16, 2021) the electoral battles  grounds of  South India. Mainstream political parties are damn silent about the ever time  spike  in  oil prices  which   affects the lives and livelihoods of  people. The inherent upward trend has lost some momentum after the election commission announced results in some states. 

Both centre and state governments blame the international price fluctuations when there is a hike in petrol price. India imports more than 82 % of crude oil from other countries and  fuel price  is correlated with the international price of brent crude oil. But as everyone knows, by the same token, domestic prices also must decline followed by a decline in global prices. Quite often the upward movement go hand in hand but not downward movement. Why? Theoretically the demand-supply factors determine  the high prices, but often   economic theory alone  cannot explain the rise in oil prices as it has other components of central and state taxes and dealer commission. The high price is always associated with the ‘dynamic pricing’ by the government.

Deregulation of Fuel Prices

In order to understand how fuel prices are being decided, we should see a bit of the deregulation of petrol and diesel prices. Government had periodically  intervened in the  retail prices of fuel, in  2010  (Dr. Manmohan Singh) deregulated the price  of petrol and gave  liberty to Oil Marketing Companies to  fix price of petrol based on calculation of their cost and profit. Further deregulation of diesel was implemented in 2015(Mr. Narendra Modi).  The rationale of deregulation is to manage the cost of  the oil prices by  retailers like BPCL, Indian Oil Corporation, HPCL as these companies were suffering due to losses and the compensation from government do never reach them on time. The deregulation of petrol prices in 2010 and diesel prices 2014 gave companies the rights to revise the prices. Despite these changes made in the system, the oil prices are at a skyrocketing level, and the progressive promises made by the political parties during the times of election nowhere helpful at this critical juncture.

Why a small country like Nepal has no refinery and mainly depending on India for its oil requirement has a lower price of fuel ? Would fuel prices be lower than what actually is ? Major oil producing countries had a cut in oil production since  there is a steep fall in the demand  especially  when transportation sector was stand still  during the  days of pandemic. Why high oil prices in India  despite fall in the international prices of crude oil ?  the trend in prices gives a clear picture.

Trends in the Fuel Price

The  trend shows the  domestic prices are not coupled with the  fall in international prices. Then what would be the reason for the current surge  in the oil prices ? Therefore, it is important to look at the methodology of oil prices in India.

Fuel price dynamics

The composition of oil prices  consists  of three factors. 1. Processing and cost of refining crude oil – base price. The OMC’s purchase crude oil from the international markets, after the processing  the fuels like Petrol and diesel produced also requires substantial freight charges 2. state and central tax 3.dealer commission. And the prices are calculated based on this criterion.

                                                         

Price Buildup	May 2014	April 2021
Base Price	47.12 (66%)	30.09 (33 %)
Centre’s Tax	10.39 (14%)	36.47 (40 %)
State’s Tax	11.9 (17%)	20.96 (23 %)
Dealer Commission	2 (3 %)	3.65 (4 %)
Total Retail Price	71.41 (100%)	91.17 (100 %)

 Petrol prices build up for State Capital.

Methodology of prices shows the  various costs involved in the production of fuels from initial stages to final stage. Petrol and diesel are refined and processed  from the crude oil  and  it is distributed by the retailers in  the final stage. The cost involved in the initial stage of processing, refining and freight charges of  Petrol include in the base price  of Rs. 30.09  (April 2021). The Central excise duty is Rs.36.47, the state duty is  Rs.20.96, the dealer commission is Rs.3.65. and the final retail price is Rs.91.17 which includes a major portion as tax. Although   the base price was high, the retail price was comparatively low in May 2014. Hence the pricing shows the increase in fuel prices is correlated with the tax by the central and the state government and not always due to the spike in the price of crude oil in the international market.

Thus, the common man is forced to pay a high tax for fuel, which is nearly 200 % percent of the cost of refining. India  has more than 256 refineries like  Jwalamukhi, Digboy, KG Basin etc and two oil producing authorities such as   IOC and ONGC. The government stopped the subsidy to the oil marketing  companies and the fuel prices are under the control of state and central  government and there is a habitual increase in the fuel price bimonthly since July 2016. Now that it is not a surprise  as it changes  in every 24 hours. Even if  there is fall in the international prices, Government still charges fresh taxes to assimilate profit from the fall in prices.

Often a  clear picture of the situation can be brought into light  with an  interaction to auto men/taxi drivers which  divulge the pain of  common man  in the scenario of escalating fuel prices creating heavy burden  on people’s lives. This despair  continues in  every Indian  household   irrespective of  their ownership of a vehicle. Lives of the people  cannot be improved without adequate measures to boost the  demand in the rural-urban households. Although the trend in headline inflation remains at  moderate rate of  5 % , the core inflation increased to 5.96 % in March 2021, the rising prices put pressure on the cost of inputs and other commodity prices.

Surprisingly  state like Meghalaya reduced tax from 31.62% to 20 % in the recent past, however  Rajasthan has highest duty of  36 %. Lackadaisical attitude of the state and the political parties leads to cascading effects in the lives of the people. The hike in oil prices impacts the transportation sector, hitting the lives of many with the increase in the prices of necessary items and the  increase in freight charges and it leads to the slowing down of manufacturing sector  which leads to the vicious circle of low income and low productivity. Keeping  high oil prices and reducing fuel subsidies to the oil producing companies create a detrimental situation to the economic growth as oil is a commodity which fuel the dreams and development of the nation.

 

 https://www.deccanherald.com/business/mechanics-of-fuel-price-in-a-deregulated-regime-978701.html

 DH Business Page/26.04.2021

 

 

Ever growing Bengaluru Periphery and Ineffective Planning/ DH panorama

 

Bengaluru is one of the fast-growing cities of India. With   urbanization and increase in  population, people are migrating   from other states to Bangalore city causing urban sprawl. Peri-urbanization has brought some important changes in the fringe areas of Bengaluru. Land use land cover changes is a major challenge of Bengaluru periphery. Land use in urban and peri-urban areas has grown with the increasing population and urbanization.  Prior to the industrialization, cities and towns were not developed , however the modern cities of the 18th, 19th and 20th centuries sprawled into the countryside, resulting in the structural changes due to the demands of urban dwellers. The peri-urban areas exhibit an intimate relationship between the city and its surroundings.

Peri-urban phenomenon of  countries like U.S, China, Thailand, Indonesia and Chile shows that peripheries of each countries are different. According to Kundu, peripheries of the U.S is considered rich , however in the case of India it is a degenerated periphery. Hence there arises a question why do countries develop such fundamentally different types of peri-urban spaces  ? In Indian cities like Bengaluru, Chennai and Jaipur peripheries are different .Bengaluru is one of the best examples of peri-urban transition in the recent past .Peri-urban growth of Bengaluru  is attributed to population growth, IT  corridors and industrial developments.

Bengaluru became one among the million cities of India since 1961. Bengaluru has emerged as a fastest changing city and the major reason for the transition is the growth of industrial and IT corridors .However the rapid transition has led to unplanned growth and management especially in terms of infrastructure and services. The area of the city recorded significant increase by 92.1 percent and the population by 37.8 during 1991-01. The spatial expansion of the   urbanized area has increased from 226 sq.km in 1995 to 710 sq.km. Such an explosive growth cannot sustain without   sound city planning.

The matter of major concern is the lack of ability to absorb exodus population in the name of IT and the giant leap that is taking place in the recent past. The physical spread of the city is mainly attributed to the following factors   such as institutional establishments, large scale industries, IT corridors, growth of Infrastructure and Transportation facilities. The city has expanded much more  in the last two decades because of the growth of IT corridors, places like ITPL, White field ,Electronic city and Manyata Tech park regions are the typical examples .That had leads the out growths to the immediate neighbourhoods demanding more housing and infrastructural facilities. The physical spread of Bangalore is attributed to establishment of transportation facilities, airports, metros etc. Gradually more developments are taking place in area beyond the Central Business District. Bengaluru periphery is acting as an engine of economic growth due to the setting up of   industries and IT parks in the peripheral areas.

Bengaluru city has undergone different phases   of economic growth .In   the first phase (1951-61) growth is due to the public sector undertakings with the employment generation avenues. The second Phase (1960-70) is mainly because of the industries and state-run businesses. The third phase was due to the off shoot of private sectors since 1980s. The fourth phase is since 2000, this is due to the growth of IT and other services. This phase continues till the present day of  Bengaluru.(Heitzman ,2004 and Sastry,1988). Some writers have compared the unprecedented growth of Bengaluru with the situations of Delhi and Paris. At present area beyond the 198 wards of BBMP is considered as the peri-urban Bengaluru (as per BMRDA).

 

The peri-urban cluster of Bengaluru include the above eight Taluks.An empirical research   is done for the East Bengaluru periphery Hoskote region  and South Periphery Kanakapura region. Research   shows that   there is a rapid transition in the East Periphery Hoskote Region compared to the South Periphery in the case of Bengaluru city. Hoskote  has close proximity to Whitefield that is a major IT hub of the city. There is a surge in demand of residential units, nearby areas such as Hoskote is also on the continuous spree of development to feed the rising demand from Whitefield. Peri urban   transition sets forth in the form of transition in the usage of land as a resource and it leads to various further changes. Peri urban transition takes place because the city slowly progress towards the rural country side. However in the case of Bengaluru city, the pace of transition is very high due to the rapid   industrial, IT and infrastructural developments.  The analysis   reveals that there is declining core and expanding periphery   in the case of Bengaluru Metropolitan City.

There is a  rapid land use changes in and around peripheries of Bengaluru city. The land use changes is mainly due to the recent upsurge in urban growth   and concentration of  IT industries in the periphery. Hence there is spatial expansion and rapid spread of the population in the peripheries.  Peripheral areas have gradually become the engine of economic growth   with the   establishment of IT industries in the peripheral areas   of   Bengaluru. However, this rapid expansion of the peri urban interface is a challenge to the development.  They include the   competition of land resources for agricultural and non -agricultural uses, inflated land values ,unrestricted and uncontrolled expansion causes adverse environmental conditions  thereby a substantial cost to the environment.

Although   most   economic costs are figured into the land use decisions, most environmental externalities are not. These environmental externalities lead to considerable social cost to the society   and   leads to inefficient results. The fundamental challenges include market failures- environmental externalities and lack of   proper city planning in the context of expanding periphery of the Bengaluru city.  The state of urban sprawl in the Bengaluru city highlights the threat for effectively managing the urban sprawl.

Unlike the developed countries  where there is a strong institution for policy enforcement, the problem of rapid spatial expansion in Bengaluru  and other cities of India is observed to be an outcome of ineffective planning ,inadequate policy enforcement. Therefore,   in the present context   we need to arrive   at an integrated spatial planning support system   and   sustainable urban planning   and policy measures.

  /http://www.deccanheraldepaper.com/ 12.11.18/DH Panorma

 

 

Land Administration : A long way to go/ DH Main Article

 

The rapid urbanization has led to the complexities in land transaction in India, it is   further exacerbated by   migration, industrialization and frequent land use changes with the expansion of the cities. Land continues to be a major source of income to government   through stamp duties, and is a key element in implementing a wide range of government programs.  Experts such as land administrators, lawyers   and surveyors are involved in the process of creating and defining land parcels and land rights,   but   the land registration process does not guarantee title ownership , though the right to property is a legal right in India. Hence there arises complication in the land administration in India.

Land administration is the way in which the rules of  land tenure are applied and made operational. Land administration     comprises a wide   range of systems and processes to administer. The processes of land administration include the transfer of rights in land from one party to another through sale, lease, loan, gift and inheritance; the regulating of land and property development; the use and conservation of the land; the gathering of revenues from the land through sales, leasing, and taxation; and the resolving of conflicts concerning the ownership and the use of land.

The Global Plan of Action for Sustainable Development adopted by the Rio Conference 1992 (Agenda 21), pointed out   the   major issues the world faces at present. They are    poverty, problems of   sustainable settlement, deforestation and environmental degradation. And these are directly related to the land issue. The major problems are related to   access to land for the urban and rural poor, to create efficient and accessible land markets and the lack of proper land records in certain states.

There are conflicts and challenges for the land management  in the Indian context. Initial  land administration focused on land revenue only, but the scenario has completely changed with urbanization and growth of the cities . It is  difficult   to  define  land parcels and to describe  associated rights especially in the metropolitan cities  since the cities are expanding to the fringe areas at a rapid rate. Land  administration  and policy  has not  clearly demarcated  land markets  both in urban ,rural areas as well as the peri urban areas in most of the Indian cities. Illegal transfers of land and  lack of coherent management of restrictive land and their updated information , boundary dispute, ownership rows, land re-measurements, payment of land taxes, land possession and non- encumbrance certificates are vexatious issues in Indian context.

 In most of the   countries, land administration is one of the most corrupt public services. According to (Transparency International, 2006) bribes paid annually by users of land administration services are estimated at $700 million in India. Moreover rural land transacted   after 1882   are maintained by both the revenue department and the stamps and registration department. This overlap   further increases transaction costs and frauds in the records.

There are   complaints   related to the   land administrators because they   are not able to provide immediate relief to the people because our land records are manual and they cannot be immediately checked. However there is a paradigm shift in the   recent years.  Most of the States in India now have digital information about land and digital parcel maps. At some places both are integrated. Computerized land registries are   operational in states like   Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, and Tamil Nadu. To great extent it helps to overcome weaknesses in the public sector. It has   reduced the scope of   corruption associated with the land administration. Changing form of ownership is another major challenge.

The land related conflicts leads to court cases and litigations resulting in social cost , creation of fake documents where single property is sold to several persons ,encroachments ,illegal constructions are the major loopholes. Hence   more control at the official level is required to tackle these irregularities. The E-governance in the context of complicated land management practices is a innovative remedy .Interestingly  the considerable efforts taken by GoK via Bhoomi, KAVERI and Mojini projects is a promising approach to overcome the hurdles of land administration of the state.

Hence the need of the hour is the counteractive measures such as   computerization and integration of land records   allowing   private sector participation in surveying,  reduction of  stamp duty  that reduces the malpractices in the process of land registration. In order to achieve  the sustainable  and rational outcomes  appropriate laws are required and their implementation will be focus  of the land administrators. Countries like Australia are advanced with E-land. The advent of  technology and pressures on land administrators created by increased population and land use changes  necessitated E-land administration.The latest concept is I-land. I-land is integrated, spatially enabled land information available on internet which facilitates government policies by information such as people, interests, rights, prices and transactions. Proper execution is required so that each state   makes a fast journey from on-line to E-land and I-land administration.

 The  commodity ‘ Land ’  has  the power to transform the   governments  and institutions of the economies of modern societies and their functioning.  Land information with spatial data infrastructure has the power   to transform economies and   societal   functions through the ways in which tax is collected, services are delivered, spatial expansion etc. Effective   land administration system is the sole motive   of   an efficient   land market. Hence   better   land management   policies are required   for the land markets of modern economies. Therefore, the challenges    ahead   for the administration   and policy makers is to capitalize the opportunities   of modern world for better  service delivery.

   http://www.deccanheraldepaper.com/ DH main article 03.01.19

Peri-Urban : Contested land /DH Main Article

 

“   Land   as an economic variable is exceedingly hard to get at. The fact that   land is open and above board, physical and concrete, and legally divided into neat, carefully described parcels or lots does not help one determine the supply of land.”- Schultz

Peri urban areas signal the outward movement of the edges of cities. Land resources in the peri-urban areas undergo rapid changes   due to   multiple   land uses, rapid population densification, frequent land transactions and incipient rises in land values. Land is a multifunctional and multidimensional physical resource at the heart of complex processes that define territories and regions ( Anseeuw & Alden, 2010). There is rapid changes in the land resources in the   peri-urban areas, it further leads to land use changes. Over the years the influence of the city has spread to the peri urban zones. In course of time IT parks, industries are set up in the peripheral areas of the city. Therefore   peri urban areas emerged as the engine of   economic growth. There is dynamic changes in the peripheral location with the establishment of IT parks and subsequent developments   and creation of external economies. 

As cities spread and expand further into the countryside, they always absorb farmland and villages. As a result, the extent of   land transactions increase in the peri urban areas because supply of land at CBD is limited. Land Market is centered   in the peripheral areas of the city .It include mainly residential commercial and industrial land transactions. In general, peri-urban areas experience unprecedented levels of land transactions to prospective buyers and developers for various land use purposes (Chirisa, 2010a; Chirisa, 2010b). There is a rapid growth of real estate activities in the peri urban land market though there is a general neglect of the peri-urban areas by the responsible authorities, lack of appropriate administrative policies, as well as the nature of the peri-urban spaces themselves. The unprecedented growth of fringes bring dynamic changes and frequent land transactions. The peripheral land markets surrounded   the CBD invites buyers and sellers for various residential, industrial and commercial transactions. The prevalence of land transactions in the periphery of cities and its complexities   are    always a debatable research topic.

 The World Bank’s World Development Report, Reshaping Economic Geography (2008) emphasizes that the policy problem of achieving greater economic density remains fundamental for areas at all stages of urbanization. And it identifies the main market failures related to  urbanization policies  associated with land markets and to improve  functioning of (rural and urban) land markets and the provision of (rural and urban) social services. In peri-urban areas (PUAs) the interface between urban and rural areas, common and interlinked characteristics exists, transition leads to land markets expanding and land becoming increasingly commoditized.  As a result, land transactions in peri-urban areas become more frequent, and pressure increases to sub-divide land into smaller parcels in order to increase supply and financial returns. Authorities in peri-urban areas tend to be thinly spread and unable to carry out land governance and administration functions effectively in line with the transitional nature of those areas (Siechiping et al. 2015, Wehrmann and Antonio 2015). This undermines the capacity of the land administration   and land management practices in the peri-urban areas.

Enforcement of contracts and economic transactions are at the core of well-functioning market economies. As emphasized by North, winner of the 1993 Nobel Prize in Economics, “the inability of societies to develop effective, low-cost enforcement of contracts is the most important source of both historical stagnation and contemporary underdevelopment in the Third World”. Cross-country empirical research shows   where the social and legal institutions that support land and real estate transactions are weak, as in Africa, Latin America, and South Asia, the most urgent urban land policy issue may be to establish institutions (rule of law) that facilitate economic transactions and lower transaction costs. The critical question at this context is   what happens to the land rights and land tenure relations as the local peri-urban communities themselves become part of the city; as their farm lands are turned into urban built-up properties and as the area become residence to large number of urbanities both formally and informally? The   peri urban land market research   seeks to reveal the nature   of   land markets located in the fringe areas of the metropolitan cities like Bengaluru where IT industries are located in the peripheral areas of the city. There is more demand for land resources at the city center, the supply of land is limited.

Studies on peri urban land transaction   at global level and in India   estimates   the extent of land transactions, demand  and supply relationship ,effects of land markets . Peri-urban areas, where there is a rising demand of land for non-agricultural or urban land uses ,there is competition for land resources for agricultural and non   agricultural purposes . The unprecedented growth of urban population causes   an exceptionally rapid increase in the demand for urban land. The rising demand for urban land therefore tends to be met primarily by converting peri-urban agricultural land at the periphery of the existing built-up area. Peri urban   villages   of major metropolitan cities of  India    are   subject to frequent land transaction in the past two decades , this drives up the land prices and the land markets are thriving in the peripheral locations. There is mounting competition for peri-urban land located adjacent to towns and cities by people of diverse backgrounds. As a result of these pressures and rapid socio-economic change, space in the peri-urban area is becoming scarce and conflicts over land rights are also becoming very noticeable.

The peri urban edge is the most active frontier of urban development. In the last decade   the urbanization of these rural fringes has proceeded with high momentum due to the growth of IT corridors in major cities like Bengaluru. This   uncertain dynamic of peri urban is explained in the context of contested land in the major cities of India.

 /http://www.deccanheraldepaper.com/ DH Main article/ 13.12.18

 

 

The Great Divergence/DH Main article

                            Great Divergence is a term made popular by Kenneth Pomeranz book titled  European Miracle- a term coined by Eric Jones in 1981. Scholars have proposed a wide variety of theories to establish great divergence in the context of geography, culture, colonialism, resources, urbanization etc. Changes in the fringe areas of the cities are widely studied in the United States and the Western States since 1940. The term urban fringe was coined by American geographers describing changes in the population composition of Louisiana, and during the 1940s and 1950s.

The peri-urban context of various countries is different, especially the fringe areas of European countries and Sub-Saharan countries are divergent. Some writers have compared the unprecedented growth of Bengaluru with the situations of Delhi and Paris. In the case of India, peri-urban growth   pattern of each city is different. However peripheral areas of   Bengaluru Metropolitan City has undergone rapid transition due to the unprecedented growth in urbanization, population expansion and IT corridors. Although Bengaluru has eight peri-urban clusters, each periphery is diverse, the growth of    two divergent periphery is traced using Gis based analysis.

South   Bengaluru   Periphery   Kanakapura   Taluk is one among the eight peri urban clusters of Bengaluru. Kanakapura Taluk witnessed gradual expansion as result of rapid growth of Bengaluru city. For the past decade the Taluk has been known relatively large in its population and size. Kanakapura   Taluk is known for its connectivity, Physical Infrastructure , Social Infrastructure and Affordable housing and industrial developments. Therefore it is paramount to detect the lulc changes in order to determine its direction of future expansion. Kanakapura   Taluk  is easily accessible from other suburbs such as Bannerghatta Road, Electronic City and Jayanagar. Connectivity and strong infrastructure has fueled the growth of real estate in Kanakapura Road. The peri-urban influence of Kanakapura Taluk is mainly because of the Bengaluru city influence.

The land use land cover pattern analysis shows there is a gradual change in the lulc pattern in Kanakapura Taluk , Bengaluru .  Kanapura Taluk has more of green cover, agricultural land ,over a period of 17 years there is a gradual transition .The agricultural land is gradually changed for other purposes. The South Bengaluru is a growing commercial and residential space. Kanakapura is 56 km from Bengaluru city, however the peri urban growth is due to Bengaluru city influence says Experts. The key drivers of growth include upcoming Metro line, NICE road connectivity, widening of National Highway 209 etc. Kanakapura Taluk   has significant development due to industrial and manufacturing units within Kanakapura .As a peripheral location it has gained attention because of influence of Bengaluru, especially NICE road  says T.L. Lakshmipathi, Joint Director, Kanakapura LPA. Land Use pattern has changed mainly because of significant infrastructural changes , changing industrial commercial and residential land uses.

East Periphery   Hoskote  is 25km away from Bangalore city. It is one the surrounding satellite towns of Bangalore to Chennai on the North eastern part of Bangalore. Hoskote is a Taluk headquarter   and situated on major transport corridors .The development in the Metropolitan area of Bangalore extending beyond the green belt have created lot of potential for areas in and around Hoskote town .Hoskote located on the eastern side of Bengaluru laying at the intersection of National Highway (NH) 4 and NH 207.Hoskote is most   sought-after by property investors. There is growing demand   for residential options ,his is due to its  proximity to the IT hub of Whitefield   as well as the industrial activity in the region. The peripheral   area around Hoskote are surrounded by IT/ITeS hubs on Old Madras Road, Whitefield, and commercial development in the north-east quadrant of the Outer Ring Road (ORR). This region is developed due to demand for residential areas. Moreover   development of the proposed apparel park, self-contained townships, hospitality projects and improved connectivity via metro has changed the scenario.

The  land use land cover analysis  shows the land use changes in Hoskote  Taluk from 2000 to 2017.There is change in the land use pattern over 17 years. Hoskote   Taluk has 54,857 hectares of land.  In 2000 major portion of it was farm land, 32580 ha. That is 59.34 % of the total land use. However the waste land or fallow land constituted second, 15901 Ha. It is 28.96 % of total land use. But over a period of 17 years the agrarian land is converted to different other purposes. By the year 2017 farm land was reduced to 25064 that is 45.69 % where as the built up land has increased to 3153.95, it is 5.74  % of the total land use and waste land is 21325.2 that is 38.87% of the total land use. There is a significant   change in the land use land cover pattern in the Hoskote Taluk. Hoskote is a peripheral area located on the eastern side of Bengaluru laying at the intersection of National Highway (NH) 4 and NH 207.Hoskote has close proximity to Whitefield that is a major IT hub of the city. There is a surge in demand of residential units, nearby areas such as Hoskote is also on the continuous spree of development to feed the rising demand from Whitefield. Transition in Hoskote has taken place after 2010 says Mr.Nagabhooshan, Land expert, Hoskote LPA.

The   study reveals     divergent   nature of   Bengaluru periphery. Challenges arise from the ways that cities grow and change especially   the emerging mega cities in developing countries. The above two dynamic clusters of South East Bengaluru explore  physical  and socio economic dynamics of change and helps to understand different levels of change in the peri urban systems in city’s context. Urban sprawl   in the form high density, discontinues and dispersed urban development is now a common phenomenon throughout Indian cities. The peri urban acts as a litmus test of change and transition not just locally but in the whole city region or the ‘rural urban region’.

please find the link /http://www.deccanheraldepaper.com/ DH Main article. 06.10.18