'Can lead to ruin…': Sridhar Vembu raises red flag over Nandan Nilekani’s land tokenisation proposal

As Nandan Nilekani pushes for the tokenisation of land to unlock dormant wealth, Zoho’s Sridhar Vembu has issued a stark warning. Making every asset liquid might look like progress, he says—but it’s a slippery slope. 

“Companies would arise to offer ‘instant cash out’ of tokens on farm land, homes and so on. I am afraid where this path would lead,” Vembu posted on X. Finance, he warns, is seductive—and unchecked, it can destroy.

Nilekani had suggested that around 50% of Indians’ assets are held in land—land that is often locked, unsellable, and unusable for credit. “This land is an asset, but you cannot do anything with it,” Nilekani said. “You can’t sell it, you can’t take a loan against it. It’s like an asset that’s there, but it’s just sitting there, unable to be utilized.”

His solution? Tokenisation—turning land titles into digital tokens tradable on ledgers. “We believe that tokenisation of land assets, using a proper ledger, can unlock these things,” Nilekani said. He envisions a future where people can use these tokens to either sell land or raise capital via loans, potentially spurring a wave of rural entrepreneurship.

However, Vembu isn’t convinced. In a post on X, he cautioned against what he called the “Fundamental Axiom of Financialization”—the belief that making every asset liquid is inherently good. “It is very seductive—after all, what is wrong with every asset being liquid and tradeable, being more money like?” he wrote.

But this “moneyness,” he warned, could lead to unintended consequences, like increased financial fragility and wealth concentration. “As an example, a person with a gambling or drinking problem could now easily monetize a part of their home to fund their habit,” Vembu pointed out.

“Ancient wisdom born of experience tells us that finance should be carefully controlled. Left unchecked, finance can lead to ruin.”

While Nilekani acknowledged that implementation would depend on individual state governments and their property laws, he remained optimistic that tokenisation could bring long-overdue liquidity and opportunity to rural India. Vembu’s response, however, signals that the road to reform may be more contested than it first appears.