Monday, February 28, 2005

India starts to reverse its ridiculous land policies

India has permitted FDI in the real estate sector. I have commented below that India's ridiculous rules and regulations when it comes to land are at the heart of the lack of adequate housing that keeps half of Bombay's population in fetid slums. Nobody wants to develop land if they are not sure that somebody won't come up to them a few years later and say "this is not yours."

The liberalization is a step in the right direction, but obviously there is a lot to be done. Investors are not exactly free to do whatever they want with the land, and they cannot sell without having developed the land first, which means buying implies a great deal of risk.

Most importantly, India needs to work on its protection of property rights, and that is much more complicated than just passing a law that liberalizes investment.

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