How can land on one side of a road be ten times as expensive as land on the other? It's not easy to accomplish this, but with the right mix of land-use laws and poor policing, it can be done.
On one side of the Mehrauli- Badarpur (MB) Road, in south Delhi, is Saket, an upper-class colony of single homes, low-rise apartment blocks, and Delhi's first multiplex, PVR Saket. My real estate broker tells me that residential land in Saket is simply not available at prices below Rs.3 to 3.5 lakhs a square yard.
On the other side of MB Road is Sainik Farms, home to many of Delhi's rich and famous, where land - according to the same broker - costs between Rs. 30,000 and Rs. 50,000 a square yard. The thing is, "Sainik Farms is an entirely unauthorised colony, built in violation of building norms", to quote Minister of State for Urban Development, Saugata Roy.
Developed in 1960 as a cooperative for defence personnel, Sainik Farms has now become a symbol of the Delhi government's inability to enforce its own laws. Every few years, the administration will threaten demolition, send in the bulldozers, and knock down a few token walls. In the last such drive, in 2004, four homes were demolished. To put it in context, a resident I met on Saturday estimated that there are 3500 homes in the area.
Current building norms in Delhi do not allow any construction on farm-land measuring less than one hectare (2 1/2 acres). Plots in Sainik Farms have been divided, sub-divided, sold and re-sold so often that scarcely any plots are large enough to permit construction. In 2006, fearing that their homes might actually be destroyed, a group of original Sainik Farms allottees moved the courts for anticipatory relief, as they were in full possession of their holdings.
Their number? 16.
Sainik Farms being unauthorised, the sale of homes in the colony cannot be registered. Titles do not change hands, but suitcases of cash do. The trail of transactions is marked by Powers of Attorney, passing from one owner to the next. And the government does not collect the 4% to 6% stamp duty that it levies on real estate transactions.
One way to look at MB Road - to the south, Saket homes, bought by those who live in fear of the law, or (unlikely) respect it; to the north, those who treat the law with impunity, spend the same amount of money to buy ten times as much land in Sainik Farms, where they live in mansions behind huge walls. Oh, and virtually every wall in the area exceeds the maximum height permitted under Delhi building norms.
Sainik Farms, and two other areas designated as 'affluent colonies', have been excluded from a list of 1218 illegal colonies the Delhi government is in the process of regularising. This will not be the first time past sins have been washed clean - in 1961, 110 such colonies were made legit; in 1969, 101, and in 1977, 567. Political and administrative pressure to legalise the latest, and largest, tranche of developments has been building since 1993.
How did so much illegal development happen? Here's the KK Mathur Committee, set up to examine the issue: "When land is acquired (by the government) and its possession taken, it becomes very difficult to protect it from encroachments. The ineffective enforcement machinery of local bodies and the connivance of the field staff also makes it difficult to prevent encroachments. Many unauthorised colonies have come up on public lands due to the fact that the land, once acquired, could not be protected from encroachments effectively".
In other words, the government uses tax money to (under) pay farmers for land acquired for the 'public good'. Muscle-men move in and grant illegal occupancy rights - strictly for cash. KK Mathur does not mention the fact that the muscle men cannot survive without political patronage, which doubtless extracts its fees in both cash and vote-banks. And you and I pay for this!
Under the plans now being developed by the government, homes which are built on private land will be legalised on payment of a development fee. Where the homes have been built on public land, making the property legal will cost the price of land in equivalent legal colonies, plus a penalty of 50%.
To go back to Sainik Farms, the Delhi Government claims that it has either acquired, or taken steps to acquire, 528 acres of land in Sainik Farms. This would mean that over 70% of the land in Sainik Farms is public land. Applying the market rate in Saket, and adding the 50% penalty to it, would mean that those living on such land would owe the government of Delhi something of the order of Rs. 5 lakhs per square yard. The average Sainik Farms mansion, according to my broker friend, is built on 1000 square yards. A small matter of Rs. 50 crore each - not the kind of money anyone would be happy paying!
Conveniently, the KK Mathur committee decided it didn't have enough facts to decide which of the plots were public, and which private. In any case, this is the not kind of political hot potato that a committee of administrators and experts can handle.
Like so much other public filth, the issue of Sainik Farms has been kicked down the road. And the other 1218 regularised colonies? Their 'promoters' (aka musclemen) get legit.
Mohit Satyanand is an entrepreneur and portfolio investor.