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Urban Development Management

Strategies & Tools,

Demand Side
Management Land &
Real Estate
Research Paper

Vikas Paul Tayal


Urban Development Management (M.URP 608)

Strategies and tools of Urban Development Management

Rapid urbanization across the world and particularly in developing countries like India
has multifarious ramifications on the settlement systems. Pressures on land, water,
material needs, and environmental resources would undoubtedly increase and call
for integrated and sustainable solutions that cut across disciplinary domains of
science, technology and social sciences.

The Challenge of Urbanization

India faces a truly formidable challenge in managing the rapid process of urbanization
and the growth of its cities. It is the second-most-populous country in the world, with
a population of 1.028 billion and, of this, 285 million (27.8 percent) live in its 5,161
cities and towns. Economic reform has given considerable impetus to the process of
urbanization, and it is expected that by 2050 half of its population will be living in its
cities and towns. This will mean that the existing cities will continue to grow larger
and many new cities and towns will be added.
Pressures of rapid growth and years of neglect have severely stressed the condition
of Indias cities and towns. This is evident in the innumerable challenges facing
themlarge areas not serviced by roads, water supply, sewerage and storm water
networks, inadequate health and education amenities, traffic congestion, ineffective
and inadequate public transportation systems, unregulated and chaotic growth,
slums, poor building stock, destruction of heritage resources, etc. All of these make
Indias cities and towns polluted, unliveable, inefficient, and vulnerable to disasters.
Cities and towns are crucial to the economic well being of India. For this, it is
imperative that its cities and towns are transformed and pressures of new growth are
dealt with so that they are more liveable, efficient, and environmentally sustainable.
Only then will the rapid pace of economic growth that India is undergoing be
sustained and the targets of environmental sustainability of the world achieved.

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The Need to Effectively Manage New Growth

To manage the transformation of Indias cities and towns and effectively manage new
growth requires effective urban planning protocols, processes, and institutions
underpinned by effective legislation. Taking a viewpoint that distinctive responses
are required to transform the cities and towns from their present stressed conditions
and managing new growth in a manner that does not result in repeating the present
problems in the cities and towns, this paper focuses on the lattermanaging new
To effectively manage the new growth implies that the agricultural land at the
periphery of the cities and towns or smaller settlements that are not yet urban is
transformed to be made suitable for urban or non agricultural uses.
This essentially means that the irregular landholdings and plots1 will have to be given
regular shapes; they must be ordered; each plot must be given access; infrastructure
services such as water supply and drainage must be provided; land must be
appropriated for providing roads, parks, social amenities, and low income housing,
development controls must be prescribed to result in a good quality-built form and
levy development or betterment charges to offset the cost of developing the physical
and social infrastructure. But most importantly, all of this must happen in a timely
manner and such that it is acceptable to the landowners to avoid conflict in the
growth management process.

Approaches to Managing New Growth: The Gujarat Model

There have been, by and large, two approaches to managing new urban growth in
India. In the first approach the public planning authorities and development agencies
acquire large portions of land and then replan them in a desirable or appropriate
manner. This is referred to as the land acquisition method. In the second approach,
the public planning agencies and development authorities, instead of acquiring land,
bring together or pool together a group of owners and then replan the area by
readjusting or reshaping every land parcel in a manner such that it is given a regular
shape and access and in the process a portion of land parcel is appropriated to
provide for roads, infrastructure, and public amenities. This is referred to as the land
readjustment and pooling method. Both the approaches, with their merits and
demerits, are briefly explained and illustrated through sketches.

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Urban Development Management (M.URP 608)

Land Acquisition Method

In this method, the public planning authorities/development agencies acquire large
areas of land from agricultural landholders (farmers) under the Land Acquisition Act
of 1894. Compensation paid to farmers is based on prevailing agricultural land prices.
To minimize opposition to acquisition farmers are paid prices marginally higher than
agricultural land prices. Then a master plan of the area is prepared, laying out the
roads, plots for social amenities, and plots for sale. Roads and infrastructure are then
built, using government funds or loans.
Serviced plots are then sold for urban uses at market rates, which are most often
much higher than the rate at which land is acquired. There are merits as well as
demerits to this method.
The merits are listed as follows:
Adequate amounts of land for urban uses can be rapidly generated, provided that
there is little opposition to bulk acquisition from farmers.
To expedite acquisition, some states allow private developers to assemble land. In
many cases, developers use extralegal means to secure farmers consent.
There are very few constraints in preparing the master plan.
The benefit of appreciation of land value on its being converted to urban use
accrues to the development authority.
The demerits of this method are as follows:
Original owners or farmers dont share this benefit in any manner. This goes against
the grain of fairness.
In this method, farmers are essentially thrown off their land.
Unable to wisely invest the money received as compensation for their land and
deprived of a means of livelihood, they have to join the pool of urban labour. This
process adds to familiar urban problemsgrowth of slums, increase in crime rates,
and increased informal-sector economic activity.

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The development process is slow. Any person who needs land for urban use has to
approach the urban development authority. The development authority ends up
becoming a bottleneck for development.
Development agencies using the method of bulk land acquisition end up being
powerful large-scale land developers, controlling vast urban resources.
This is likely to breed corruption and is antithetical to the emerging paradigm,
where government plays a facilitators role.

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Urban Development Management (M.URP 608)

Land Pooling and Readjustment Method

In this method, the public planning agency or development authority temporarily
brings together a group of landowners for the purpose of planning, under the aegis of
the state-level town or urban planning act. As there is no acquisition or transfer of
ownership involved, there is no case for paying compensation.
A master plan of the area is prepared, laying out the roads and plots for social
amenities. The remaining land is reconstituted into final plots for the original owners.
The size of the final plot is in proportion to the size of the original plot, and its
location is as close as possible to the original plot. A betterment charge based on the
cost of the infrastructure proposed to be laid is levied on the landowners.
Infrastructure is then provided utilizing these funds.
There are merits as well as demerits to this method.
The merits are as follows:
All the land, except whatever is needed for infrastructure development and social
amenities, remains with the original owner. The development agency plays a limited
role in ensuring planned urban growth.
The increment in land value resulting from the development accrues to the original
owner whenever the land is sold and developed for urban use. Thus the benefit of
development goes to the original owner instead of the development agency.
The original owner is not displaced in the process of land development and
continues to enjoy access to the land resource. Thus the negative impact of the
process of urbanization on farmers (original owners) is minimized.
The demerits are as follows:
This method is time consuming, since the procedure prescribed for preparation and
implementation of such land pooling or readjustment schemes is unduly complicated
and cumbersome.
Betterment charges are assessed at the beginning of the land pooling or
readjustment scheme preparation. Due to the inordinate delays in finalizing schemes,

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the betterment charges levied on finalization of the scheme do not meet the cost of
the infrastructure provided.
This method is used, for example, in Gujarat and Maharashtra:

It is quite evident that the land pooling and readjustment method is far more
equitable and democratic when compared to the method of bulk land acquisition.
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Scope of the Paper

The state of Gujarat has been practicing the land pooling and readjustment method
since early 20th century to manage the process of new growth that addresses the
undesired consequences of growth in a fairly successful manner. This is called the
Town Planning Scheme (TPS). It has worked extremely successfully and has many
crucial lessons to offer to not only other parts of India but other countries too so as
to address some of the planning problems. Among the many reasons it works are the
The process has a long historyit was introduced in 1915 by legislation and since
then the legislation has been continuously improved to make the process more
responsive to the changing context of development.
The process is democraticparticipatory with a built-in mechanism for dispute
resolutionthe landowners are involved in the process of planning and have ample
opportunity to present their views on the proposals and place on record their
The process is fairall owners loose the same proportion of land.
The process facilitates equitable and inclusive developmenta portion of land is
appropriated for accommodating urban poor.
The process respects property rights and non disruptivethe landowners are not
thrown off their lands and are given a better shaped land parcel, usually very close to
the original land parcel.
It is non coercive and non authoritarianthe proposals are reviewed at several
stages that are formally prescribed in the Act.
Overall, the process has been a win-win proposition for both the landowners and
the planning agenciesboth gain from the appreciation in the land values.
The process is transparentvery clearly described in legislation, planners have
mastered it, and people understand and accept it.
The process has been tested in law courtsit has been challenged in law courts and
has withstood these challenges successfully.

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The cost of infrastructure is in a sense paid for by the owners directly, and the
planning agency or development authority is not required to make huge investments
Overall, this manner of urban planning sees government and government agencies as
being facilitators rather than providers of infrastructure. Although conceptually very
well envisaged at this point, it also must be mentioned, however, that it is not
perfect. There are several areas that can be improved to strengthen the process and
extend it to achieve a lot more in terms of managing land appropriations in a manner
whereby large parcels of land are available for key public social and physical
infrastructure, achieving a better built form by incorporating urban design concerns,
This paper attempts to elaborate on some of the above in the TPS process as
practiced in Gujarat in the following manner:
A brief introduction to the planning process in Gujarat is given so as to place the
TPS in legislative and institutional perspective.
A brief legislative and implementation history of the TPS in the city of Ahmadabad
is given to demonstrate that the entire city has been developed in this fashion and
that there have been continuous improvements in the legislation. Because of this,
there is acceptability among people and a realization of much-better detailed
planning. At the same time, there do continue to exist some of the obvious lacunae
and limitations in the present legislation.
A simple step-by-step explanation of this process with a case study of a TPS,
prepared and implemented by EPCDPM with drawings, is presented next as
prescribed in the legislation
Some of the lacunae and limitations, scope for improvement, and the potential of
the TPS mechanism are presented.

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Urban Development Management (M.URP 608)

Demand Side Management of Land and Real Estate Development (Topic 2)

Increasing housing land supply has been the Government's top policy priority. In the
light of the irrationally exuberant property market caused by the tight demandsupply balance, extremely low interest rates and abundant liquidity, the Government
has introduced several rounds of demand-side management measures to reduce the
risk of a property bubble and prevent property prices from deviating further from the
economic fundamentals.
By doing so, we are seeking to help the community to avoid greater pain should there
be any adjustment caused by a change in the interest rates or other external factors,
and the same time achieve the policy to accord priority to address the home
ownership needs in the midst of the tight supply situation. Compared with the
trough at the end of 2008, overall property prices increased by 134% in July 2013. As
property prices have gone beyond the affordability of the general public, the
mortgage payment to income ratio stood at as high as 56% in the second quarter of
2013, far exceeding the long-term average of 48% during the period between 1993
and 2012.
In fact, the demand-side management measures have yielded notable results.
Both speculative activities and purchases of residential properties by non-local
individuals and non-local companies have diminished and stayed subdued since the
respective introduction of the Special Stamp Duty (SSD) and the Buyer's Stamp Duty
(BSD). The property market has also cooled off since the announcement of the latest
round of demand-side management measures.
Overall flat prices increased by on average 0.4% per month during March to July
2013, a notable deceleration from the monthly average increase of 2.7% in the first
two months of 2013. The above shows that the relevant demand-side management
measures have been effective in addressing the irrational property market
exuberance. We have also changed the irrational expectation that property prices
could only go up further.
Reduction in property transactions from their record highs would inevitably affect
the practitioners in the real estate sector. We hope the trade can understand that
these are extraordinary measures in response to the exceptional market
situation. By reducing the risk of a property bubble, the Government is acting in the

Urban Development Management (M.URP 608)

overall interests to maintain the stability of our financial system and macro economy.

India Real Estate Sentiment Index

Current real estate sentiment score stands at 33 implying that stakeholders
feel the current real estate market is somewhat worse compared to six
months back.
Future sentiment score at 50 reflects a neutral view indicating a status quo in
the coming six months.

The stakeholders perceive that the present residential and office markets are
comparatively weaker than what they were six months back.
Majority of the respondents are optimistic about the economic
scenario and expect improvement in the next six months.

Urban Development Management (M.URP 608)

There is an evident optimism for the residential sector be it launches,
sales volume or price appreciation in the coming six months.
Office sector on the other hand is expected to be pessimistic in the
coming two quarters.
Credit lending/ funding situation appears worse now compared to six
months back and is not expected to improve in the near future.

Residential Price Index


Urban Development Management (M.URP 608)

Mumbai and Pune are forerunners in price appreciation during 2009-2013.
Pune shows the maximum appreciation amongst the IT/ITeS driven markets
of Bangalore, Hyderabad and Chennai.
The NCR market prices trended downwards till the end of 2010, post which
they have raised more than any other major residential market in India.
Hyderabad has substantially underperformed compared to other markets.


Urban Development Management (M.URP 608)

DSM & Demand Response
There are many definitions of DSM and Demand Response, Demand Response is a
new name possibly the most charming for the Demand Side Management - DSM. The
proponents of the Demand Response argue that the two terms are not necessarily
equal. May be Demand Response can be only one new piece of DSM, but the two
methods provides for smarter energy use and more efficient operation.
But the Demand Response is not energy efficiency as its main target, although
Demand Response programs can serve as a complement to the efforts of energy
efficiency. Demand Response is different from energy efficiency, but Demand
Response does not primarily aim to save energy, you only respond, if you want, when
provoked while DSM can be mandatory or voluntary membership.
DSM programs have energy efficiency as its primary goal, but programs such as
Demand Response have two main goals:
1. Economic benefits -- for the consumer and the utility.
2. Customer satisfaction and improve the reliability of the entire power system.
Improve the service provided to customers is a primary goal of Demand Response
programs, consumers have the opportunity to save money by shifting their energy
consumption over time for the energy use of lower price of the day.
The success of this program is the fact that it was designed from the ground up with
customer focus as the only priority. Response to Demand for residential work, the
utility must provide a tariff structure that encourages customers to change their
consumption habits, and the program must be understandable and easy to use.
The flaws in the supply side of the electric power industry may be relieved
temporarily, with the randomness of supply and demand becomes necessary to
maintain the Demand Response programs in place as an aid to security and system
Demand Response can be part of the solution to the problems associated with
deficits in energy generation, and can help alleviate the lack of capacity of
Transmission and Distribution. Demand Response is not just a fad, it's here to stay.


Urban Development Management (M.URP 608)

The negotiation of Demand is based on customer demand, the ability of consumers
to respond to price changes in the short term - as the next day or hours in advance -or from one region to the energy supply capacity by reducing demand at times
The negotiations on Demand Response projects with customer, promises a
substantial increase in efficiency, stability and reliability of the energy sector.
The negotiations that recognize the value of time in energy use can be used to help
optimize the balance between Supply and Demand, encouraging clients to actively
Demand Response programs become important to manage price and risk, as are a
link between the wholesale energy markets and also at retail.
The Load profile of the residential consumer and the ability to restrict energy use can
vary greatly, but the aggregation of its reductions provides a highly reliable resource
for planners in the energy market.
The definition of trade in energy demand is based on conventional demand response
approaches such as voluntary programs, demand bidding, the cutting options and
pricing in real time.
Trading Demand provides a wide avenue for the provision of resources to view, such
a response in the regional energy markets through a variety of marketing tools.