IIM-A launches India's first agri land price index

The Indian Institute of Management-Ahmedabad (IIM-A) and agri-land marketplace SFarmsIndia have announced the launch of IIMA-SFarmsIndia Agri Land Price Index (ISALPI), a first-of-its-kind land price index that will record and present ‘quality controlled’ data of prices of agricultural land across the country. The Misra Centre for Financial Markets and Economy at IIM-A will host the index on its official website.

This index can benchmark land prices in rural and semi-urban areas and hence serve as a reliable source that will signal the potential conversion of agricultural land into real estate, the creators of the new index claim.

“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 agricultural land and allied professions like agricultural engineering, precision farming, food technology, supply chain management, green energy, etc. With ISALPI, we hope to build better data sources for all stakeholders to be able to make informed decisions at national as well as regional levels and support the agribusiness activities,” says Errol D’Souza, director, IIM-A.

ISALPI has land listing data from Andhra Pradesh, Karnataka, Maharashtra, Tamil Nadu, Telangana, and Uttar Pradesh at the moment. It intends to add data from other states of India to the index. IIM-A and SFarmsIndia say with more data getting added, the index could offer a superior representation of the national context and a more granular index at regional levels. They also expect the index to benefit stakeholders across the spectrum, including policymakers, local governments, environmentalists, investors, real estate developers and financiers as it can be used for multiple purposes like compensating the people who lose land for highway expansion.

“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 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,” says Prashant Das, project lead and associate professor of Real Estate Finance at IIM-A.