Land-incentivized joint ventures for infrastructure development in India

Abstract

Over the next 20 years, it is projected that India will make the transition from a primarily rural economy to one in which more than half of its 1.1 billion strong population will live in urban areas. As this demographic shift occurs, the Indian Government is tasked with providing the necessary urban and regional infrastructure to accommodate this growth. At present, existing urban infrastructure systems are operating well above capacity so that any response must address both the existing shortfall and impending demand. To meet its massive infrastructure requirements, India must mobilize resources at an unprecedented scale and speed. This thesis examines the use of land-based public finance as one avenue through which a significant portion of this financing might be obtained. In particular, I focus on one type of land-based public financing recently undertaken in India - a land-incentivized joint venture. I suggest that this 'tool' is premised on a set of assumptions or enabling preconditions that are largely necessary for its success. Thus I use this thesis first to outline what I have come to understand the main set of these assumptions to be. I then briefly examine the case of the Bangalore International Airport that was built in 2008 under a land-incentivized joint venture. As I am constrained by my lack of in-depth information on many aspects of the case, I use the case merely as a tool to illustrate how a number of the implicit assumptions might be compromised in actual implementation. It is hoped that identifying possible sources of complication can begin to help policy makers and future researchers think about accompanying reform that can facilitate the future use of land-incentivized joint ventures in the broader Indian context. In particular it appears that addressing some existing distortions and structural inefficiencies, particularly in land markets, might lead to better land-based finance outcomes.