Econ-ity » June 26, 2016

Daily Archives: June 26, 2016

Violation of the Property Rights by the Budget

Property rights as defined by James D. Gwartney – Florida State University, Richard L. Stroup – Montana State University, Dwight Lee – University of Georgia in the article ‘Importance of Private Property’ involves ensuring three important criteria: 1. the right to exclusive use, 2. legal protection against invaders those who would seek to use or abuse the property without the owner’s permission, and 3. the right to transfer to (that is, exchange with) another. If the owner is barred from exercising any one all of these aspects, it is the violation of the property rights.

The state has the primary responsibility of warranting all these criteria to the citizens and thus, protecting their property rights. However, what if the one that is supposed to protect the right of the citizen is itself involved in the violation. Here, the context directly relates to provision in the recently formulated budget of Nepal. In the section related to Land Reform, the budget specifies that all the lands will be classified on the basis of their use and the land classified for the specified purpose shall not be used for other purposes. Additionally, the budget has also provisioned that no agricultural land should be left barren. In case it is left barren, there is the provision of imposing penalty of 25 percent of the potential average production of such barren land.

This budget is unswervingly trying to infringe on the property rights of the citizens. After the implementation of the budget, no citizens will have liberty to use their piece of land as according to their preferences. The use of land will be directed by the state itself. This directly bars the citizens from enjoying the very first criterion, the right to exclusive use of the property (land in this case). Furthermore, as the provision limits the use of land, market value of the land will get reduced. For example, if a piece of land can be used for multiple purposes like making residential house, commercial building, cultivation etc., its market price will be high because of high demand from multiple sector. But, if its use is only restricted to, say agriculture, there will be reduction in the demand, which reduces it market price, thus adversely affecting the land owners and their property rights.

Ashesh Shrestha

About Ashesh Shrestha

Ashesh Shrestha is an independent researcher. He has an Economics background and is interested in Monetary economics and Public finance.

Published by: