A critical review of the fair value of land in Kerala, India

Abstract

PurposeProperty tax continues to be the most viable, steady, progressive and genuine source of income for an independent local government administration in India. Kerala has one of the most complex cadastral and property taxation systems in the country. In 2008, the Kerala government introduced “Fair value of land” for all landed property in Kerala, which is calculated per Are and notified by the Government of Kerala on the website. This paper presents the outcome of the spatial mapping of the fair value of land in Kerala and its comparison with actual land value collected through advertisements and surveys.Design/methodology/approachThe methodology used in this study analyzed the existing fair value system of land valuation in Kerala and identified its drawbacks. Fair value is integrated into cadastral data in geographical information system (GIS) and spatially analyzed to identify the discrepancies in fair value fixation. The actual land value for 837 locations is collected from online advertisements and verified through a field survey. A paired t-test analysis follows this to compare the fair value and actual land value of the study area.FindingsThe disparity between the original land value and the registration value in Kerala has resulted in the undervaluation of land resources by the government. The fair value fixed by the government is significantly lower than the actual land value based on the statistical comparison results. It is observed that the actual land value is multiple times higher than the government fixed land value. Also, the spatial distribution of the village level fair value shows the randomness in fixation and abnormalities existing at numerous locations.Practical implicationsThe results indicate that the traditional comparison method used for fair value calculation by the Kerala government is not suitable in Indian scenarios due to the unreliability of registration values. The study thus points to the importance of developing a scientific method for determining the land value that would consider various spatially influencing parameters.Originality/valueThe current study provided an in-depth analysis of the land valuation system of the Kerala government. The strengths and weaknesses of the existing system are analyzed through statistical methods.