First-of-its-kind in-country, Agri Land Price Index launched by IIMA-SFarmsIndia.
On Thursday, the country’s first land price index was launched to record and monitor agricultural land prices in India.
The Indian Institute of Management-Ahmedabad (IIM-A) has announced the launch of the IIMA-SFarmsIndia Agri Land Price Index in collaboration with the agri-land marketplace SFarmsIndia (ISALPI). The first-of-its-kind land price index will collect and present ‘quality controlled’ data on agricultural land prices throughout the country.
The index will aid in benchmarking land prices in rural and semi-urban areas, as well as serving as a reliable source for signaling the potential conversion of agricultural land into real estate.
Prashant Das, project lead and associate professor of Real Estate Finance at IIMA, explained the index’s utility by saying, ‘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.’ This data could be used by fund managers and producers to broadly benchmark their own performance.
The researchers could use this data to investigate how economic events and factors influence price movements in a specific asset class. Das added that policymakers (such as the Central Bank) could use it to modulate their policies.
Unlike other financial assets, creating an index of land parcels is a difficult task. There are visible price differences between listings due to factors such as market supply and demand. According to the developers, the method used to prepare ISALPI addresses these disparities and ensures accuracy.
ISALPI is currently based on data from six states: Andhra Pradesh, Karnataka, Maharashtra, Tamil Nadu, Telangana, and Uttar Pradesh. With the addition of more data from other countries, the index is expected to provide a more accurate representation of the national context as well as a more granular index at the regional level.
Pricing and significance
ISALPI was created using regression-based hedonic pricing methods. This index will be hosted on the official website of IIMA’s Misra Centre for Financial Markets and Economy.
In terms of the index’s current relevance, Errol D’Souza, Director IIMA, stated, ‘With over 200 million hectares, India houses only 2% of the world’s cropped land, but feeds over 15% of the world’s population. We have recently seen a surge in entrepreneurial interest in agriculture and related professions ranging from agricultural engineering to precision farming, food technology to supply chain management, and green energy. We believe that now is the appropriate time to launch such an index for India.’
‘We hope to build better data sources with ISALPI so that all stakeholders can make informed decisions at the national and regional levels and support agribusiness activities,’ he said.
‘SFarmsIndia has a strong focus on data warehousing and mining aimed at bringing cutting-edge agri-realty domain-specific AI capabilities to the market,’ said Kamesh Mupparaju, CEO of SFarmsIndia.