economic times

Great rural land rush: 3 to 100-fold rise in property prices may not bode well

By M Rajshekhar, ET Bureau | 12 Nov, 2013, 09.32AM IST

Prices of agricultural land have risen by anywhere between three-fold and 100-fold. This is the beginning of a new phase in India’s agricultural land markets

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For the longest time, the price of farmland in Vadicherla stayed below Rs 20,000 an acre. Ten years ago, that began to change. "In 2003, an acre cost Rs 25,000. By 2006-07, it had climbed to Rs 2 lakh," says Byru Veeraiah, sarpanch of this village in Andhra Pradesh's Mehbubnagar district."By 2010, an acre cost Rs 3 lakh. And Rs 12 lakh by 2012."

It was a puzzling spike. This village, with 700-odd families, is nowhere near large cities. Warangal, the nearest large town, is 100 km away. The Vijayawada-Hyderabad highway is a good 15 km away. No farmland in the village or its vicinity was being bought by the government or companies.

Vadicherla is not alone. In 10 years, the price of an acre in Ramavarapadu, a village next to Vijayawada, has leapt from Rs 7 lakh to Rs 7 crore. Or take Mardi, 15 km off Solapur, Maharashtra. The price of an acre in this village, says Prakash Arjun Kate, a local, has "climbed from Rs 20,000-25,000 ten years ago to Rs 10 lakh now." Ramavarapadu, Vadicherla and Mardi are not isolated instances. Microstudies and anecdotal information on 68 villages in seven states gathered by ET suggest a lot of rural India is seeing a similar climb in farmland prices (See graphic), primarily because of highways, investors and urbanisation.                             naresh kumar 
                             pgdm 1st