Land Locked

The Urban Land Ceiling Act, enacted in 1976, has made land in cities the monopoly of a select few

THE Urban Land (Ceiling and Regulation) Act, 1976, ULCRA, was enacted during the Emergency declared by then Prime Minister Indira Gandhi.

Under the Constitution, land is a state subject. The objectives of the ULCRA were: (i) to prevent the monopoly on urban land by a select few; (‘land mafia’); (ii) to prevent speculation market and profiteering in land and (iii) to facilitate equitable distribution of urban land so that the poorest of the poor also benefited.

The main proposals of the ULCRA were ‘‘imposition of a ceiling on vacant land available in an urban area; acquisition of land in excess of the ceiling limit by the government or its agency like the development authorities so that residential and commercial space were made available in an equitable manner and the government and/or its authorised agency regulated construction of buildings’’.

However, the government could grant exemptions on the ceiling limit in public interest for say housing for the weaker sections of society, hospitals and other institutions. If a piece of land becomes vacant due to demolition or destruction due to a calamity, the landowner has to inform the government which “may allow” the landowner to retain the vacant land in excess of ceiling limits and impose conditions.

The law imposed restrictions even on transactions within ceiling limits. If a landowner wanted to sell his land within the ceiling, he had to inform the government of his intent and the government could acquire that land by paying compensation under the Land Acquisition Act 1894, an earlier law.

What actually took place

THE fallout of the ULCRA has not been disclosed to the public for nearly 20 years. One of the fallouts appears to be that developers have accumulated lands of individuals and got ‘‘exemption’’ for the development of such accumulated land since it’s difficult for individuals to get exemptions. Private builders now have a monopoly on housing and commercial complexes. There have been many complaints in the recent past over the monopoly of builders and developers. In Delhi, the court recently intervened and ordered demolition and sealing of complexes.

When the ULCRA was enacted

in 1976, it was said that there was a ceiling surplus of 2.2 lakh hectares.

In the next 20 years, the total area

Story continues below this ad

said to be procured by all state governments is a meagre 15,000 hectares, proof of how miserably the law

has been.

State subject

Successive failures forced the central government to repeal the ULCRA in 1999. It then left the subject of land solely to the respective state governments. Punjab, Uttar Pradesh, Madhya Pradesh, Rajasthan, Gujarat, Karnataka, Orissa, Pondicherry, Delhi and Haryana have repealed the law. States like Andhra Pradesh, Assam, Bihar, Maharashtra, Kerala and West Bengal are yet to take the plunge.

But almost all states are actively considering doing away with the law— West Bengal has already formed a committee to work on it. Now, Maharashtra too wants to repeal it and enact a law of its own.

Road ahead

If the ULCRA is repealed, it will mean that more land will be released in the market, which in turn, will bring down land prices.

Story continues below this ad

The price of land is estimated to account for about 50 per cent of the price of the real estate in India, unlike developed countries where land price is much less in the real estate business.

A majority of land in India does not have clear titles. As the ownership is unclear, the land in question is off the market, creating a land crunch. This is due to poor record-keeping and complicated outdated processes. Special Fast Track Courts, like the ones for speeding up criminal trials in the country, must be set up to clear this land mess so that more land is made available to buyers. The result will be lower land prices and opening up of more avenues of financing and investment for development. The costs of various projects too will scale down.