Wasting Public Wealth—The Antecedents and Practice of Public Land Management in Pakistan
Introduction
A paradoxical blend of immense asset wealth and systemic administrative failure characterizes the practice of public land management in Pakistan. While land is arguably the most valuable public asset held by the state, its management has historically been marred by inefficiency, lack of transparency, and entrenched rent-seeking behaviors. This summary analyzes the PIDE Working Paper No. 2022:10, authored by Shahid Mehmood, which provides a critical examination of how federal and provincial governments in Pakistan hold vast quantities of land yet fail to capitalize on its economic potential. The document argues that unless the current practice of public land management in Pakistan undergoes drastic structural reform, the status quo of wasted opportunities and fiscal loss will persist.
The Scale of Public Land and Data OpacityOne of the primary challenges identified in the analysis of the practice of public land management in Pakistan is the sheer lack of accurate data. Unlike many developed economies that maintain centralized balance sheets for non-financial assets, Pakistan lacks a concise estimate of the total size, value, or utilization of its public land. The International Monetary Fund (IMF) has noted that in many countries, non-financial assets constitute a significant portion of GDP, with land representing one-fifth of this total. In Pakistan, however, this asset class is persistently wasted through corrupt practices and poor record-keeping.
The complexity of the land record system exacerbates this issue. Estimates from 2004 suggested there were 190 million land records for 50 million landowners, managed by 14,000 patwaris (revenue officials) across the country. Each official maintains multiple registers, creating a fragmented and opaque system. There is no central repository for public land data. For instance, while the Capital Development Authority (CDA) publishes some data for Islamabad, it does not provide comprehensive estimates of public land utilization. Similarly, the Evacuee Trust Property Board (ETPB) holds approximately 100,000 acres of land, but detailed information regarding its value and status remains largely inaccessible to the public.
This opacity is a defining feature of the practice of public land management in Pakistan. Without transparent data, it is impossible to accurately assess the market size, which some estimates place between $300 billion and $400 billion. Consequently, policymakers operate in an information vacuum, unable to leverage these assets for sustainable urban development or revenue generation.
Historical Antecedents of Land Distribution
To understand the current practice of public land management in Pakistan, one must examine its historical roots. The modern framework for land acquisition dates back to the British colonial era, specifically the Bengal Regulation of 1824 and later the Land Acquisition Act of 1894. The British administration shifted from the Mughal model of temporary land grants to a system of private ownership entitlements, primarily to generate revenue through commercialized agriculture and secure political loyalty.
This history is evident in the establishment of "Canal Colonies" in Punjab, where millions of acres were distributed at highly subsidized rates. Table 3 in the document highlights that between 1886 and 1940, vast swathes of land in districts like Multan, Sahiwal, and Faisalabad were distributed to settlers. By 1951, this process had resulted in 80 percent of agricultural land being privately owned, while significant urban land remained under government control as "Crown Land."
Post-independence, the practice of public land management in Pakistan continued this trend of distribution rather than professional management. The influx of migrants after 1947 led to unauthorized settlements, which were later regularized in the 1960s. The state assumed the role of a primary housing supplier, establishing development authorities like the Karachi Development Authority (KDA) and Lahore Development Authority (LDA). However, this role often devolved into a mechanism for providing subsidized plots to influential groups, including bureaucrats, military officers, and judiciary members, rather than addressing broader housing needs.
Legal Framework and the "Public Purpose" Loophole
The constitutional and legal underpinnings of the practice of public land management in Pakistan are complex and often contradictory. Articles 172 and 173 of the Constitution of 1973 designate unowned property as government property and grant the state the right to dispose of it. However, Article 24(3)(e)(ii) allows for compulsory acquisition of private land for "public purpose," which includes providing housing and facilities to specific classes of citizens.
This definition of "public purpose" has been exploited to justify the allocation of public land to elite groups. The document notes that while the Supreme Court has ruled that public interest should benefit a large segment of the population, the practice of public land management in Pakistan frequently sees land acquired from private individuals at market rates for projects like dams, only to be redistributed to government servants at throwaway prices. For example, until 2007, Grade-22 bureaucrats were entitled to one plot; this was expanded to include an additional "gift" plot upon retirement, a policy later declared illegal by the Islamabad High Court in 2021.
Furthermore, the proliferation of laws such as the Cantonment Land Administration Rules (1937) and various Cooperative Societies Acts has created a fragmented regulatory environment. In Karachi alone, seventeen different agencies deal with land titling, complicating oversight and enabling misuse. This legal fragmentation is a critical weakness in the practice of public land management in Pakistan, allowing various departments to operate with minimal accountability.
Mechanisms of Misuse and Fiscal Loss
The document outlines several avenues through which the practice of public land management in Pakistan results in significant fiscal loss. These methods include the use of outdated valuation metrics, long-term leases at nominal rates, and the formation of employee housing societies.
Undervaluation and DC Rates
A common tool for misuse is the reliance on "DC rates" (Deputy Commissioner rates) or book values, which are significantly lower than market rates. This undervaluation leads to massive losses in revenue. For instance, in Punjab, the expected income from public land was Rs 1.25 billion in 2019-20, but actual earnings were only Rs 44 crore. Similarly, in Islamabad, the difference between DC rates and market rates has resulted in an estimated loss of Rs 30 billion in potential taxes.
99-Year Leases
Another prevalent method in the practice of public land management in Pakistan is the 99-year lease. The Karachi Port Trust (KPT) serves as a stark example. In 2007, KPT leased 881 acres of prime land to the Defense Housing Authority (DHA) for 99 years at a premium of Rs 2.5 per square meter and an annual rent of 18 paisa per square meter. The market value of this land was estimated at Rs 60 billion, yet the financial return to the state was negligible. Such leases effectively transfer public wealth to private or semi-private entities without fair compensation.
Housing Cooperatives and Societies
Government departments frequently form housing cooperatives to acquire land at subsidized rates. The document notes that by 2008-09, housing cooperatives had built over 2 million units, often serving as conduits for personal gain rather than public welfare. The DHA, originally formed as a cooperative for defense officers, is a prime example of this evolution.
In Islamabad, the CDA allotted 77 percent of its subsidized plots to its own officials and board members, leaving displaced villagers with inadequate compensation. This elitist capture of resources is a defining flaw in the practice of public land management in Pakistan.
Illegal Occupation and Encroachment
Illegal occupation is another major issue. In Khyber Pakhtunkhwa, 71 percent of Auqaf department land was under illegal occupation as of 2020. In Punjab, the government recovered 180,411 acres of illegally occupied land between 2018 and 2021, valued at Rs 462 billion. These figures indicate that a significant portion of public land is either unused or generating no revenue due to encroachment, further highlighting the inefficiencies in the practice of public land management in Pakistan.
Recommendations for Reform
The paper concludes that improving the practice of public land management in Pakistan does not require complex new legislation but rather the enforcement of existing principles and structural adjustments. Key recommendations include:
- Ban on Departmental Housing Societies: A complete ban should be placed on government departments forming housing societies under Cooperative Acts. This would curb the institutionalized rent-seeking that benefits elites at the expense of the public treasury.
- Abolition of Subsidized Mechanisms: The use of DC rates, 99-year leases, and other methods that facilitate subsidized land extraction should be discontinued. Land should be valued at prevailing market rates to ensure fair revenue generation.
- Centralized Data Repository: Establishing a central repository for all public land data is crucial. This database should include details on ownership, utilization, earnings, and relevant laws. Transparency is the first step toward accountability in the practice of public land management in Pakistan.
- City Holding Companies: Each major city should establish a holding company with management powers over public land. These entities would operate with professional autonomy, free from federal and provincial bureaucratic interference, and focus on maximizing financial returns through regeneration plans.
- Facilitating Market Transactions: The government’s role should shift from direct provider to facilitator. By improving legislative and administrative procedures, the state can enable a more efficient land market, reduce transaction costs and encouraging private investment.
Conclusion
The practice of public land management in Pakistan represents a significant missed opportunity for economic growth and fiscal stability. As detailed in Shahid Mehmood’s working paper, the current system is plagued by historical legacies of subsidized distribution, legal ambiguities, and a lack of transparency. The result is a vast amount of public wealth that remains underutilized, illegally occupied, or transferred to elite interests at below-market rates.
However, the path to reform is clear. By adopting professional management practices, establishing centralized data systems, and eliminating subsidized allotments, Pakistan can transform its public land from a liability into a robust source of revenue.
Implementing these changes requires political will and a departure from entrenched interests, but the potential rewards—ranging from improved urban infrastructure to reduced predatory taxation—are substantial. Ultimately, reforming the practice of public land management in Pakistan is not just an administrative necessity but a critical step toward sustainable national development.
Also read: Greening the Financial System of Pakistan