COMMENTARY
INTERVIEW
SPECIALS
CHAT
ARCHIVES

Urban Land Ceiling Act to go

The Union government has decided to repeal the Urban Land Ceiling and Regulation Act, 1976, preparing the ground for the entry of vast vacant urban land into the market and a consequent sharp fall in land prices. It will also see the a growth in construction activities in the 64 cities to which the act applies.

Ironically, the act was introduced by Prime Minister Inder Kumar Gujral over 20 years ago when he was then the housing minister in the Indira Gandhi government. Last month, Gujral had rejected a suggestion for amending certain sections of the act and sought its repeal. He was backed by Finance Minister Palaniappan Chidambaram, Industry Minister Murasoli Maran, and Information and Broadcasting Minister Jaipal Reddy.

The state governments have been empowered to formulate their land acts to replaced the repealed ULCRA. The move, in keeping with the recommendations of industrial and trade bodies, is expected to prevent monopolistic acquisition of land and thereby augment land supply. The enhanced housing activity is expected to spur the crucial housing, transport, and construction sectors.

Since land is a state subject, as per Article 252(2) of the Constitution, the act can only be repealed after two state legislatures have passed a resolution for the same. The Haryana legislature has already passed a resolution asking the Centre to either repeal, or amend, the act, and one more state's approval is needed. Several states are keen to have the act repealed and it is expected that sooner or later, one of the states will pass a resolution asking for the act's repeal.

The present act was criticised for failing to provide a mechanism to force the entry of vacant urban land into the market. This had resulted extremely low supply of urban land for housing and developmental needs being choked, sending land prices skyrocketing, particularly in metropolitan cities. Bombay city is reputed to have the highest land prices anywhere in the world, even more than Tokyo or New York!

The present act also vested too many discretionary powers in the state governments for granting exemptions, which inevitably led to corruption in the exercise of these powers. Further, the government had the power to acquire the entire ceiling-surplus vacant land at a nominal price, which often led to lengthy litigation disputes.

The new act is slated to take effect prospectively. Therefore, pending litigation will be settled under the Urban Land Ceiling Act of 1976. The new act is expected to aid the acquisition, development and disposal of urban land. A fallout of this would be that sick industrial units -- like the National Textiles Corporation -- could be rehabilitated faster. NTC's revival plan had been stalled after the Maharashtra state government refused to permit it to sell its surplus land.