BS READS: Land revolution in Kashmir, but who is selling or buying?

Rates in Srinagar have been hiked by much more than even Jammu city, which has largely seen traditional yearly increments in officially notified land values.
The authorities in Kashmir have done something quite unusual. In January 2020, the Divisional Commissioner of Kashmir passed orders significantly increasing the market value of residential, commercial and agricultural land in all 10 districts of the territory for 2020-21.

The move was significant for two reasons.

One, Kashmir, which had been designated a Union Territory (UT) directly under control of India’s central government since August 2019, had never seen an official increase in land values of this magnitude.

And two, a couple of weeks before the order, separatist leader Syed Ali Shah Geelani had issued a statement through the All India Hurriyat Parties Conference, exhorting local residents and businesses in Kashmir not to “sell land, houses and shops to any outsider or non-resident".

Official minutes of meetings suggest that the hike in land rates was anywhere between five per cent in certain districts and 20 per cent in Srinagar district. But an examination of new land rates shows that land prices were raised much more than that.

In North and South Srinagar, the official land rates were increased by 50 per cent in most localities. For instance, in North Srinagar the average land rates for 2020-21 were almost doubled when compared with 2019-20 for all localities. Some even saw an almost three-fold increase.

A similar trend was visible in other localities in South Srinagar and certain other parts of the district. From 2013-14 to 2019-20, for which records are publicly available, the official land rates were roughly raised by five per cent in Srinagar annually. The notional increase in land value, which is usually done to improve the government’s tax revenue (stamp duty) collections, was probably lower for other districts of Kashmir division than Srinagar. But many witnessed steeper hikes in the past. Rates in Srinagar have been hiked by much more than even Jammu city, which has largely seen traditional yearly increments in officially notified land values.

The government’s objectives were primarily three.

First, incentivise the locals to think of selling their property by massively enhancing their official land values by getting into the base effect play. This had been missing when Kashmir was a state with special status. With locals incentivised and Jammu and Kashmir designated a Union territory (UT), many from outside the state would have lapped up property in a market that was earlier closed to them.

Second, anticipating a rise in property transactions by opening up its purchase to outsiders, the government would have significantly enhanced its revenues from stamp duty collections, which at present comprise two per cent of the UT’s Rs 12,000-crore tax revenues. Stamp duty on property transactions was introduced in the erstwhile state as late as 2011.

Third, the Modi government’s plan is to establish townships for certain disenfranchised communities such as the Kashmiri Pandits and newly-domiciled groups like the Gorkhas and families of bureaucrats who have worked for over 15 years in the valley, apart from designating land for armed forces and attracting businesses. This move was expected to give a soft touch by making it hugely lucrative for locals to sell land amid political pressure not to do so.

Acting as a force multiplier to this move is a massive cleaning up and digitisation of land records going on over the past year. This is primarily to ensure that those wanting to buy land in Kashmir can do so without fear of fraud. In many ways, this would also reduce black-market transactions in property which have been rampant in Kashmir for years.

Since 1887, when the first land transactions were recorded in Kashmir, they have largely been written in Urdu with Persian numerals. The administration’s digitisation drive will make them available in English, Hindi and Urdu.

Land records have been languishing for decades, without being updated, even though ownership has changed multiple times. All land transactions which were being done through the judiciary in the past have been done through the executive since August 5, 2019. In addition to shaving off crores of rupees in costs involved in printing stamp paper, the ‘land record revolution’ in Kashmir is expected to usher in a kind of transparency that instils confidence in the minds of buyers and sellers.

“We are preparing an extensive database of all land records after updating and checking them thoroughly. All transactions from now on will be clean. Access to records will improve. People will know what they are buying from the database to ensure the plot they want to buy hasn’t been sold multiple times. When the confidence of people in records improves, transactions will increase and so will government revenue. In fact, we will launch another survey after the digitisation drive to reinforce the error-free nature of records that can be accessed with the click of a button,” said Pawan Kotwal, principal secretary of the revenue department and the bureaucrat spearheading the project in Kashmir. Kotwal said the records were expected to go live before August 5 this year.

With new domicile rules coming into force, and with inducements of enhanced local value of land and property for Kashmiri locals, the looming demographic and economic shift had created ripples across the border in Pakistan as well. One of Pakistan’s most prominent clerics, Muneeb Ur Rehman – the man who heads an organisation officially responsible for sighting the new moon in the country – issued an explicit fatwa warning against “selling, renting and gifting of properties to non-local Hindus and other non-Muslims” in violation of the Islamic Sharia law. Geelani had been careful not to give religious colours to his call to Kashmiris to desist from selling property.

But a year after the flood gates to social engineering were opened in the Kashmir valley through measures like enhancement of land value, removing the ‘historic’ exemptions given to women paying stamp duty and various other administrative steps, the allurement seems to have largely failed.

“It was obvious that the government was primarily aiming to massively increase revenue from large-scale transactions that were expected last year. But the property market has mostly collapsed under lockdown. My business is as good as dead over the past year. The few deals I have seen are by those who have some problems living in a joint family and have decided to sell their gold to buy another house. There are no new projects at all. The new land rates will significantly increase the expectations of those who want to sell. Earlier a property whose official market value was Rs 30 lakh would sell for Rs 50 lakh in Srinagar. Now the government has increased the value to Rs 60 lakh. So locals will obviously demand much more,” said Umer Khan, a real estate agent in Srinagar.

"A committee of all district collectors decided this year's value. Though I am not involved in deciding the rates, I am optimistic that our collections for 2020-21 would increase significantly. We earn around Rs 200 crore at present. We expect collections to be up to over Rs 300 crore this year. There are many challenges in ensuring compliance with correct valuation of land and the stamp duty people pay on property transactions. We ensure the same through regular inspections," said P K Bhat, Commissioner of State Taxes.

While not many would acknowledge it publically, the huge rise in official property rates would be a boon to many Kashmiri Pandits who still own properties in the Kashmir valley. There are almost 44,000 families from Kashmir registered as migrants staying in various camps in Jammu and 90 per cent of them are Hindus--mostly Kashmiri Pandits. Official records show that close to 800 properties in Srinagar alone are registered as migrant properties.

Many of these were sold to locals from 1989 onwards when the exodus of Kashmiri Pandits began from the valley. In 1997, a law making it difficult to execute these ‘distress sales’ was enacted. As a result, hundreds of properties on valuable land still sit in ruins in parts of Srinagar. Many of these have either been rented out by their original owners, given in protective custody or quite simply been encroached upon. With the Modi government’s plan to establish townships for migrants as ‘safe havens’, the sale of these properties could fund further acquisitions in newer townships for those migrants who wish to return to the Kashmir valley.

In May 2020, the government opened registration for bonafide migrants who had never registered as one after their exodus from the valley. Those who submit one of the prescribed identity documents would be given domicile status and be eligible for reservation in jobs. Till July 25, over 100 people had registered for obtaining domicile.

“The rate of increase of land prices is baffling to me as well. There are a lot of Pandits who would have liked to dispose their property but could not do so since 1997. The government rates have always been much lower than the actual market value. The fact is that land is scarce in places like Srinagar. If you have to develop the city like Delhi and Mumbai, then every inch lying unused is precious. Redevelopment of land requires rationalisation of land rates and transparency in sale and purchase. Benami transactions and evading stamp duty is very common and easy here. I think the government is playing for the long run and not just a year or two to get more people to sell their land at attractive prices and businesses to come and establish themselves,” said a former official of the state’s revenue department.    

While there are incentives galore for sellers of land in Kashmir, there are hardly any buyers.

“I have had no customer for the past one year. Even ordinary locals are not buying or selling land or property. Businessmen and merchants who were interested in properties have disappeared,” said Farooq Ahmed, a real estate agent.

One of the main reasons for this is that the business uncertainty that was created initially by lockdowns enforced after a change in Jammu & Kashmir’s status and subsequently by the Covid outbreak, has indefinitely delayed if not derailed the changes that were to be ushered in. A senior official in the Industries department stated that the administration conducted various roadshows for attracting businesses to set up shop in Srinagar. Players like Flipkart had shown great interest in starting business in Srinagar. Proposals were drawn and many corporates evinced interest in investing in industrial parks and estates. The official said that Rs 200 crore worth of investment proposals were in the pipeline but many of those stand derailed because “people do not have the money to invest anymore".

What has further depressed land buyers' interest and capability is that local businesses have been wrecked by past circumstances with little hope of what the future holds. While outside businesses and buyers hold their horses in an uncertain economic environment, the usual movers and sellers in Kashmir’s property market like traders, merchants, small and large businesspersons are stuck in a rut they can find no way out of.

The Kashmir Chamber of Commerce and Industry (KCCI) estimates that after the lockdown imposed on August 5, 2019 Kashmir division’s businesses have suffered a loss of almost Rs 120 crore a day with general trade, industry, horticulture and construction among the worst-hit sectors, accounting for a bulk of the damage. As Kashmir’s designation as a UT completes a year, local businesses have suffered a hit of over Rs 44,000 crore. KCCI estimates that close to 500,000 jobs were lost within the first four months of the lockdown in 2019. Closing business and out of work Kashmiris would mean that many locals who had considered buying property would be further deterred by the new land rates.

Some industrialists were surprised to learn about the official rise in land prices from Business Standard, and stated that the “intentions behind the move were obvious”.

There was a general consensus that the very survival of local businesses was at stake with the financial and investment capacity of many being completely destroyed. A business delegation had met Home Minister Amit Shah and Finance Minister Nirmala Sitharaman this March to put forth these issues, but another lockdown to contain the spread of coronavirus was imposed a week after that meeting, leaving many in the lurch. There are difficulties in getting the benefits of the Rs 20 trillion package announced by PM Modi to alleviate the economic blow-back of the Covid crisis because of “bureaucratic technicalities” revolving around the imposition of a lockdown in Kashmir much before the rest of the country on March 22.

Sheikh Ashiq Ahmed, president of KCCI said, “I started a car rental company in Kashmir along with a friend in Delhi. Over the past year, I have closed down my business while the person who started the business in Delhi has hundreds of cars now in his fleet. Most businesses started over the last decade have struggled to even break even. It’s impossible to succeed in business in Kashmir.”

 


Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel