Thursday, August 5, 2010

Why land titling does not work? It doesn't teach you how to earn!

Land titling is an incomplete solution. It does give the inhabitants a house but not the assured stream of income to maintain the house. Government should extend the policy purview (Rajiv Awas Yojna for slum rehabilitation) to include establishment of vocational training institutes that will provide the dwellers with the skill set required for sustenance. This can be implemented through a government financed slum development authority or through involvement of private developers.
Land titling is successful in so far it eliminates the need for the presence of an adult member in the house at all times to protect eviction from property. Thus, property rights provided to an x number of households makes available a comparable number of adults and consequently an equivalent amount of productive labour. Since the households become registered and therefore legal, numerous other problems such as electricity theft are alleviated.
However, any significant increase in access to credit has not been recorded, as a study in Peru, the developing country with the largest land titling program revealed. Plausible reasons are the costs associated with small ticket credit approval process; determination of creditworthiness of a borrower which entails evaluation of individuals on accounts of land available for collateral besides employment and level of income, education level, counter-guarantee, purpose of loan (productive or consumption) etc.
A potential problem with the land titling policy: reversion of the targeted group to slum dwelling and renting out the newly possessed property.
Slum rehabilitation authority with an initial paid up capital allocated in the budget. This authority should plan, aid and oversee the construction of a complete township. The house area, if we assume to be of double carpet area of the initial slum houses, and three storied, will leave almost one-third area available for workshops and other commercial trade centers.
This authority should undertake the establishment of vocational training institutes. Depending on the supply side feasibility, each slum can create a niche in some craft. The onus of marketing and the brand building exercise should also be on the authority. This is analogous to the highly successful state emporia model, an initiative of the state governments to showcase and sell its state’s traditional handicrafts.
This would also bring a sizable number of taxable transactions or sometimes even the flourishing black economy under the government net.
The program can also be designed to involve private developers who can use the land available commercially, while also showcasing the crafts associated with the slum.
Slums are a large part of the informal economy.

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