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Can Blockchain Solve India’s Land Records Challenges?

By April 5, 2021March 21st, 20225 minute read

Blockchain is today’s equivalent of the iPhone in 2007. As interest grows, it can easily become a normal part of day-to-day life, revolutionizing and disrupting it.

The blockchain is, of course, a digital, distributed, and decentralized network for storing information in a tamper-proof format and enforcing trust among participants in an automated manner. An open distributed ledger can keep track of transactions between parties in an effective, verifiable, and permanent manner. It gathers, manipulates, and creates consensus among network participants.

How does it work? Each data block is linked to the previous blocks with a unique signature (more accurately called the hash), ensuring that no changes to a record can be made without affecting the chain’s previous records, making the information tamper-proof.

In industries where corruption, human error, or human interference must be avoided, the blockchain offers a comprehensive solution.

The Convergence of Land & Blockchain

Land Registry is a great example of a use case that necessitates many intermediaries to maintain trust in the system. The new solutions are no longer fit for purpose. When you have thousands of land records to keep track of, it can be difficult to figure out who owns what.

Discrepancies in records, such as counterfeit names, forged certificates, and a complete loss of the record, are very common. Such circumstances result in costly court battles between opposing parties.

Because of the openness of blockchain, it could be possible to monitor the transfer of land. The immutability, auditability, and traceability of blockchain are enticing governments all over the world to use decentralized technology in land registration.

Where does India stand on land records?

An ambitious project to digitize land records across the world, known as the Digital India Land Records Modernization Programme or DILRMP, has been underway for more than a decade. The project aimed to get India’s land records up to the standard of those in the United Kingdom, where information about land, possession, and use is held in central repositories that are easy to access and updated in real-time.

Without a question, the issue is overwhelming. 

Land-related conflicts account for up to two-thirds of civil cases pending in Indian courts, with the majority of them centered on claiming possession. Since land and property encounter many modifications across ages that are not significantly recorded on public records, the current legal structure, which is built on the system of “presumptive ownership,” lends itself to litigation. Furthermore, data about a single parcel of land is held in separate government departments and in formats that differ significantly from one state to the next. Access to these documents is time and money-consuming, as it necessitates many visits and bribes to government officials.

Putting the blockchain to use on India’s Land

There have been proposals for a long time to use blockchain technology to boost land records’ abysmal condition. The rise in cryptocurrencies’ popularity has given rise to a new way of storing and sharing data among participants. The NITI Aayog recently declared that it would publish a discussion paper on using this technology to handle land records. 

Andhra Pradesh is currently collaborating with private companies to use blockchain to protect land records in its new capital, Amaravati.

So, what exactly is this technology, and how successful will it be in cleaning up land records around India?

A blockchain-secured record-keeping process can capture, store, and uniquely provide access to information compared to a traditional record-keeping process. 

  • Market participants use cryptography and consensus algorithms to create or change records after reaching an agreement about what constitutes a valid record. 
  • A decentralized blockchain allows all participants to build and change the blockchain, while a private blockchain, such as the one imagined for land records, allows only a few participants to do so.
  • New data is linked to the old entry, meaning that a history of changes to a record can be traced back to its inception. Since records are spread through a system of networked computer nodes, there is no need for a central authority to keep track of them. 
  • Without depending on someone else, both participants can see and use the most recent version of the record. In a nutshell, data stored on the blockchain is secure, open, accessible, and difficult to dispute.

But how do we get from where land records are now to a blockchain-secured state?

To transfer legacy records, we must first ensure that every component of these records is unquestionable. Although blockchain can ensure the legitimacy and indisputability of future changes, it will not be able to overcome current differences. What value will blockchain bring to a piece of land whose area is incorrectly registered, whose ownership is disputed, whose liens are incompletely recorded, and whose value is underreported? Is it possible to build a stable framework on a weak foundation?

Given the low quality of existing land records, implementing blockchain across the board for all land parcels is not the way to go. To preserve indisputability, it should be applied first on land with the fewest problems. Land owned by the government, whether at the federal or state level, as well as land owned by government entities such as railways, defense, and ports, may be ideal candidates for this move. To keep track of all of the country’s landholdings, the government established the Government Land Information System (GLIS). Although the immediate advantage of using blockchain to secure these records is small, it will pay off in the future as the government begins to monetize them.

Land that has been mortgaged may also be eligible for inclusion on the blockchain among privately owned land. Banks and housing finance companies carry out comprehensive due diligence to check details in land records and request correction if there are any inconsistencies for lands pledged to them. 

As a result, it’s not difficult to imagine lenders pursuing blockchain protection for land records, as it would drastically reduce the risks associated with lending against real estate. The first phase in pooling information on mortgages through lenders had already begun with the establishment of the Central Registry of Securitisation Asset Reconstruction and Security Interest of India.

What else is in store?

Using blockchain to overlay lands pledged against those mortgages might be a great place to start. Similarly, National e-governance Services Ltd (NeSL), a newly formed information utility, may be used to drive blockchain-based record-keeping for underlying collateral such as property. On the other hand, interest rate discounts may encourage borrowers to pursue this transition, at least initially. Land records secured by blockchain may command a premium over time (for example, a lower interest rate, simpler title insurance, or greater liquidity), enticing more landowners to pursue this protection.

That’s not all that the blockchain can do for land. In fact, we think the idea of real estate tokenization is the next Bitcoin.

Although imposing blockchain on all land records from the top might backfire, incentivizing selected participants to make the switch might be the best way to use this powerful technology.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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