New Delhi: IIM Ahmedabad has announced the launch of the IIMA-SFarmsIndia Agri Land Price Index (ISALPI) in partnership with the Indian agri-land marketplace SFarmsIndia. It is a first-of-its-kind land price index that will record and provide 'quality controlled' data of agricultural land prices across the nation.
Currently, ISALPI is based on land listing data from six states that include Andhra Pradesh, Karnataka, Maharashtra, Tamil Nadu, Telangana, and Uttar Pradesh. IIM Ahmedabad in a statement stated, “With the arrival of more data from other states of India, the index could be more valuable in two ways. First, it will offer a superior representation of the national context. Second, it will offer a more granular index at regional levels”.
Furthermore, this index can assist a wide range of stakeholders, including policymakers, local governments, environmentalists, investors, real estate developers, and financiers. Local governments, for instance, might use the index to compensate people who lose land due to highway expansion.
Dr Prashant Das, project lead and associate professor of Real Estate Finance at IIMA said, “Investors could use this information to assess the historical risk and return in the past and predict these metrics for the future to decide on their investment positions. Fund managers and producers could use this information to broadly benchmark their own performance. Financiers and insurers could use this information to assess the risk in the company related to the asset class reflected in the index. Researchers could use this information to study how economic events and factors are associated with price movements in a specific asset class. Policymakers (e.g. the Central bank) may use it to modulate their policies”.
According to IIM Ahmedabad, this indicator is especially relevant for measuring land values in rural and semi-urban areas. In such a circumstance, the index will serve as a credible indicator of the prospective conversion of agricultural land to real estate.
“With just over 200 million hectares, India houses just 2% of the world’s cropped land; but feeds over 15% of the world’s population. Recently, we have witnessed a surge in entrepreneurial interest in Agri land and allied professions: From agricultural engineering to precision farming, from food technology to supply chain management and green energy. We believe it is the right time to launch such an index for India”, Professor Errol D’Souza, Director IIMA said.
She further added, “With ISALPI, we hope to build better data sources for all stakeholders to be able to take informed decisions at national as well as regional levels and support the agribusiness activities”.
Developing an index for land parcels, unlike financial assets, is a difficult undertaking, according to IIMA, because evident price discrepancies in various listings are influenced by a variety of factors, including market-wide supply-demand dynamics.
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