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Journalism of Courage
Real estate prices in Indian metros rival those in the most expensive cities of the world. Of course, the prices of real estate depend on various factors, including stamp duties, foreclosure laws, building regulations, and tenancy laws. But urban land shortage is a major determinant. The point is that such shortage is artificial rather than real and, instead of easing shortages, as the Urban Land Ceiling and Regulation Act (ULCRA), 1976, was meant to do, it only compounded the problem.
Between the mid-1960s and mid-1970s, the hallmark of Indian economic legislation was unnecessary state intervention, spliced with discretion. This was true of ULCRA too. Discretionary acquisition and exemption provisions funded corruption (and several state-level elections) contributing to harassment. This altered the popular usage of the ULCRA acronym to ULCER.
The much-needed repeal of this law has been pending since 1999 and, at an all-India level, should free 2,10,000 hectares of vacant land for commercial, housing and infrastructure development, contributing to a drop in property prices by 10 per cent as well as real estate growth, with consequent employment generation. However, since land is a state subject, the Centre had no direct right to insist on the repeal of ULCRA or control over any state legislation. State governments may have passed a replacement for ULCRA. A law technically repealed in 1999 thus continued to be in force.
Some states like Delhi, Karnataka, Haryana, Punjab, UP, Gujarat, Chandigarh and Pondicherry went ahead with the repeal, but Maharashtra hung on. This meant ULCRA’s sway continued in major cities like Mumbai, Thane, Pune, Nasik, Nagpur, Sangli, Solapur and Kolhapur. That Maharashtra has now finally decided to repeal the law is largely because of Central incentives through the Jawaharlal Nehru National Urban Renewal Mission, since the flow of Central funds (an estimated Rs 11,000 crore to Maharashtra) is contingent on the repeal of this act. However, caveats are necessary about the figure of 500 hectares of extra land that are floating around on additional land that will now become available in Maharashtra. For instance, half of the private land in Mumbai is held by private trusts and family-held companies and their exemptions will probably continue. The impact is likely to be more in Kalyan, Pune, Nasik, Sangli and Kolhapur, or in Mumbai’s suburbs like Vikhroli, Mulund and Kanjurmarg. But the fact that there has finally been some reform in urban land markets in a state that scores well in many indicators of development, needs commendation.
