Farmers Seek Fair Share Amid India's Housing Boom

Aug 4, 2011
Originally published on September 5, 2011 4:27 pm

A land crisis is gripping India. The country's growing prosperity has created a rapidly expanding middle class that is demanding modern housing and has the money to pay for it.

But building millions of new houses and apartments isn't easy, especially in a country where land is hard to come by.

A land battle on the outskirts of New Delhi illustrates the point.

The property, in an area known as Greater Noida, is undergoing the transition from cropland to towering apartment blocks. Right now, though, it's a visual and legal mess.

Bulldozers rumble along muddy roads amid the spiky concrete pillars of unfinished apartment houses.

Authorities say this area alone has about 100,000 apartment units in the process of development, but many of those deals are now in legal limbo.

Farmers Fighting Back

The farmers who originally owned the land have now decided that they were shortchanged when they were forced to sell it to the local government.

"The government took our land under false pretenses," says Ajay Kumar Nagar, a farmer and the chief of a farming village.

He says the land was sold under a law that allows farmland to be taken for "urgent industrial development." But after acquiring the land, the government then turned around and sold it to residential developers for more than 10 times the original price.

Nagar and other farmers say they went to court to get a larger share of that money.

To the surprise of nearly everyone, the farmers won.

A state high court ruled that development had to stop in the area covered by the lawsuit, and the land had to be returned to the farmers.

That meant tens of thousands of would-be apartment buyers were suddenly faced with the potential loss of the biggest investment of their lives.

"I am losing because I have given 40 percent payment to the builder, which is my savings," says Nishant Singh Virk.

The 34-year-old software engineer says that amounted to about $34,000 for an apartment that hasn't been built yet. He had to take out a mortgage for the rest, a mortgage that he will have to pay regardless of whether he gets his apartment.

Although the current lawsuit only affects a few thousand buyers, the legal principle could apply to as many as 100,000.

Balancing Competing Demands

What's at stake is more than just money: In India, a modern apartment is the ultimate sign that a person has arrived in the middle class.

India's rapidly growing economy means that millions of people now make enough money to afford an apartment. But right now, most of those apartments only exist in their dreams.

Getamber Anand is the head of a builders' association called CREDAI.

"The documented shortage today is 24 million units — in the urban areas," he says. "If you look at rural India, add another 70 million. That is the kind of shortage we're talking of in housing. Now here's an issue which needs to be addressed."

Anand is also the managing director of a development company called ATS that has projects in the disputed area.

He says the government should continue to be the middleman in acquiring land from farmers and selling it to developers, to assure fairness for both sides.

But he agrees that farmers deserve a bigger chunk of the pie.

For its part, the Noida development authority defends its profit on the land deals, saying it needs much of that money to build infrastructure for the new developments, including roads, water and sewage treatment.

Last week, the government and farmers reached an agreement in which farmers promised not to block construction for the next three months, and the government agreed to return some of the developed land to the farmers.

The part that still hasn't been resolved, though, is how much more money the farmers will receive for their land, and, if increased payments are made retroactive, how far back they will go.

As the same kind of development goes on in cities throughout India, a lot of people have a lot of money riding on that decision.

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STEVE INSKEEP, host:

And let's travel next to a nation with a rising economy and some growing pains. India's middle class is expanding quickly. The supply of middle class housing is not. Many people can now afford a modern home if they could only find one. Creating millions of units of new housing is not easy, and in densely populated cities the effort prompts battles over real estate. NPR's Corey Flintoff reports on a land battle on the outskirts of Delhi.

(Soundbite of machinery)

COREY FLINTOFF: This is a rutted mud road in the middle of an area known as greater Noida. It's being developed for middle-class housing on the outskirts of Delhi, but right now, it's a visual and legal mess. What used to be farmland has been torn up by bulldozers, and the concrete pillars of unfinished apartment blocks are spiking up amid eroding heaps of dirt.

(Soundbite of hammering)

FLINTOFF: This area alone has around 100,000 apartment units in the process of development, but a lot of those deals are now in legal limbo. The farmers who originally owned this land have decided that they were short-changed when they were forced to sell it to the local government. Ajay Kumar Nagar is one of the farmers whose land was taken.

Mr. AJAY KUMAR NAGAR (Farmer): (Foreign language spoken)

FLINTOFF: He says the government took the land under false pretenses, claiming it was needed for urgent industrial development, then turned around and sold it to residential real estate developers for more than 10 times the price. Nagar and other farmers say they went to court to get a fairer share of the profits. To the surprise of nearly everyone, the farmers won. A state high court ruled that development had to stop in the area covered by the lawsuit, and the land had to be returned to the farmers.

That meant tens of thousands of would-be apartment buyers were suddenly faced with the potential loss of the biggest investment of their lives.

Mr. NISHANT SINGH VIRK: I am losing because I have given the 40 percent payment to the builder, which is my savings. This is a loss for me. And the same kind of losses for everybody.

FLINTOFF: That's Nishant Singh Virk, who says he gave about $34,000 in cash -his entire savings - as a downpayment on an apartment that hadn't been built yet. He took out a mortgage for the rest, a mortgage that he'll have to keep paying whether he gets his apartment or not. Although the current lawsuit only affects a few thousand buyers, the legal principle could apply to as many as 100,000.

What's at stake here is more than just money. In India, a modern apartment is the ultimate assurance that a person has arrived in the middle class. India's prosperity means that millions of people now make enough money to afford an apartment, but right now most of those apartments only exist in their dreams. Getamber Anand is the head of a builders' association called CREDAI.

Mr. GETAMBER ANAND (CREDAI): The documented shortage today is 25 million units in the urban areas. And if you look at rural India, add another 70 million units. That is the kind of shortage we're talking of in housing. Now, here is an issue which needs to be addressed.

FLINTOFF: Anand is also the managing director of a development company called ATS that has projects in the disputed area. He says the government should continue to be the middleman in acquiring land from farmers and selling it to developers, to assure fairness for both sides. But he agrees that farmers deserve a bigger chunk of the pie. For its part, the NOIDA development authority defends its profit on the land deals, saying it needs much of that money to build infrastructure for the new developments, including roads, water, and sewage treatment.

The government and farmers reached an agreement in which farmers promised not to block construction for the next three months, and the government agreed to return some of the developed land to the farmers. The part that still hasn't been resolved, though, is how much more money the farmers will receive for their land, and if increased payments are made retroactive, how far back they'll go.

As the same kind of development goes on in cities throughout India, a lot of people have a lot of money riding on that decision.

Corey Flintoff, NPR News, New Delhi. Transcript provided by NPR, Copyright NPR.