An Analysis of the Factors Affecting Agricultural Land Price for Determining the Fair Value of Land During Land Acquisition in India

Abstract

Valuation of agricultural land has been done for ages and it is market driven. But it evolves out of valuing the attributes of the assets individually and in combinations. Land, as any other asset is also valued by its attributes. However, the relative importance of these attributes change over time as the social and economic priorities also change. Current research focuses on identification of the attributes which are significant in making the land price to change and building a land valuation model. Research treatment is both quantitative and qualitative. Data used are both primary and secondary. To identify factors which determine land prices in India literature review was carried out to identify variables which were to be considered to build models for land valuation. Such modelling studies have so far been mostly carried out in the western world. The variables chosen have been specific to their context. These cannot be replicated directly in the Indian context. Hence, focus group survey was carried out among the subject matter experts to identify variables that could be considered as significant in the Indian context to affect agricultural land price. Both the list of variables emerging from these two sources was reviewed to choose a final list of 31 variables to suit the Indian condition. There was a need to identify the principal components among those variables which could account for most of the variations in land price between the acquired land and the comparable lands sold. The survey aimed at identifying the latent variables from among the 31 variables using factor analysis. newline