Saturday, May 10, 2008

India's Space Program May Help Fix Land Market:

Andy Mukherjee

A rocket head being carried on the backseat of a bicycle.

That's how French photojournalist Henri Cartier-Bresson's camera captured the initial years of India's space program, which began in the early 1960s.

Many of the program's critics noted at the time that Prime Minister Jawaharlal Nehru was squandering the country's severely limited budgetary resources on an elitist reverie far removed from the realities of the newly decolonized, poor nation.

Author and former United Nations diplomat Shashi Tharoor described the tension in his 2003 biography of Nehru. ``There was no limit to his scientific aspirations for India,'' Tharoor wrote in ``Nehru: The Invention of India.'' ``And yet the country was moored in the bicycle age at least partly because of his unwillingness to open up its economy to the world.''

Four decades after Nehru's death, his economic legacy, especially a dangerous flirtation with Soviet-style state planning, stands largely discredited.

Yet his scientific aspirations are coming to fruition in an India that is twice as open to the world as it was just a decade ago, judging by the flow of trade and overseas investments in relation to the size of the economy.

Last week, India put 10 satellites into orbit in a single mission, creating a new world record.

Among the payloads was Cartosat-2A. It's an indigenously developed remote-sensing satellite that has already begun beaming high-resolution pictures of the Indian hinterland, setting the stage for what may be a revolution in the nation's finance.

Satellite Communication

India has already made extensive use of domestically developed communication satellites.

In the mid-1980s, satellites made it possible for India to export computer software written in Bangalore to the U.S. In the 1990s, the same technology enabled India to set up a modern, nationwide, electronic stock market circumventing the lack of a robust, terrestrial communication network.

In the southern Indian state of Andhra Pradesh, students in remote villages get access to an English teacher in the city via a satellite link. Later during the day, the same link may be used to set up a video conference between an urban doctor and his rural patients.

Indian scientists have also effectively used images from outer space to map the missing nutrients in barren land so it can be reclaimed for agriculture. The next step is to combine satellite pictures of landholdings with field surveys and create a unified register of property titles.

Land Titles

That's going to be a key use of the images obtained from Cartosat-2A. These will have a resolution that's 36 times sharper than that of the images clicked by India's first remote-sensing satellite in 1988.

``Land is probably the single most valuable physical asset in the country today,'' a government-appointed committee on financial-sector development noted last month. ``Unfortunately, the murky state of property rights to land makes it less effective as collateral than it could be,'' said the panel headed by University of Chicago economist Raghuram Rajan.

Improving the collateral value of land will mean more bank credit to more entrepreneurs at cheaper rates.

The first stumbling block to achieving this goal in India is the absence of reliable visual representations of what a landholder actually owns; surveys in India have traditionally covered farmland because the British rulers had a strong revenue interest in it.

Rural and urban dwellings have largely been left out. Not just that. A survey in Andhra Pradesh found that 9 percent of village maps were either torn or faded; an additional 29 percent were missing from official records.

Gains Forgone

``Unless alternative options -- for example, use of satellite imagery -- can be explored, reconstituting village maps in the 30-40 percent of cases where these are either missing or not usable will require huge amounts of fieldwork,'' noted a 2007 World Bank study. ``Given the cost involved, it isn't surprising that this has rarely been done in practice.''

More than five years ago, McKinsey & Co. warned that India was losing as much as 1.3 percentage points of economic growth because of distortions in the land market, including titles that weren't legally foolproof.

One of the indirect costs shows up in very small farmers not leasing out their land to those who actually have the stomach for taking the risks associated with agriculture.

`No Assurance'

If the owners of small strips of land were assured that by handing possession of their holdings to someone else they weren't diluting their ownership rights, they would gladly do so and come to cities to supplement their rental incomes. Urbanization will accelerate; manufacturing industries will gain a competitive advantage from cheaper labor. None of this is happening now because of dodgy property rights.

``Land title in India is uncertain and there is no assurance of clean title,'' Ascendas India Trust, a Singapore-based owner of office property in India, told potential investors last year. ``Title records provide for only presumptive title rather than a guaranteed title to the land.''

All that may change. The Indian government is planning a mammoth resurvey of all land -- partly using satellite imagery -- with the ultimate objective of creating a digital repository of all land records.

The spirit of private enterprise that was stymied during Nehru's rule -- and crushed under his daughter Indira Gandhi's reign -- is already witnessing a surge. And it's getting a boost from Nehru's insistence on inculcating a scientific temper among his countrymen. Even when the last of the state-owned companies in India is sold off, this aspect of Nehru's legacy will endure.

(Andy Mukherjee is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: Andy Mukherjee in Singapore at:

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