Growth Boundaries of Bengaluru

Madalasa Venkataraman's article "Analysing Urban Growth Boundary Effects on the City of Bengaluru" (EPW, 29 November 2014) discusses the impacts of urban growth boundary (UGB) and its effect on land prices, taking the case of Bengaluru. It puts together an interesting data set of sparse land transactions in the city and estimates a hedonic model. The results are intriguing and with respect to the UGB, they are as expected. However, there are several fallacies in the paper which dilute its value.

While the UGB effect might be large enough to affect land prices, the author makes a big deal of the green belt and its impact on land prices, which are a much bigger phenomenon than what are implied by green belts. Other and more important land-use regulations, such as building height restrictions (which Brueckner and Sridhar (2012) analysed in "Measuring Welfare Gains from Relaxation of Land-Use Restrictions: The Case of India's Building- Height Limits", Regional Science and Urban Economics, in the context of Indian cities) and rent control, have had a much more signifi cant impact on land prices, whether within or outside of the UGB. None of the hedonic models estimated by the author takes such substantive land-use regulations into account which are relevant in the context of a highly planned economy such as India. No wonder the UGB shows as insignifi - cant when land outside of the UGB is taken into account.