Maharashtra repeals Urban Land Ceiling Act

By Nidhi Jamwal
Published: Monday 31 December 2007

the Maharashtra government repealed the Urban Land (Ceiling and Regulation) Act, 1976 on November 29 saying "the basic purpose of the act was not fulfilled". The state government was under severe pressure from the centre to repeal the act to avail funds under the Jawaharlal Nehru National Urban Renewal Mission.

The move is expected to release over 36,000 hectares (ha)--including 5,200 ha in Mumbai alone--and bring down soaring property prices. The 5,200 ha may not be freed up immediately because around 2,300 ha are locked in legal disputes between the state government and landowners.

Views over the move are divided. The builders' lobby welcomed it; activists say it is an opportunity lost for housing the urban poor. Maharashtra Chief Minister Vilasrao Deshmukh, however, maintained that his government will meet the goal of the 1976 act of housing the urban poor through its housing policy, which is still in the draft stage. The policy gives incentives to private builders for taking up housing for low- and middle-income groups (see 'Shelter skelter', Down To Earth, December 31, 2006). Primary gainers of this repeal will be trusts, builders and industrialists who own large chunks of land in Mumbai. Niranjan Hiranandani, a builder, described the government's move as a "red-letter day for housing in Maharashtra".

Media reports speculate Godrej and Bombay Dyeing will be the biggest beneficiaries. The Godrej group owns around 1,416 ha in central suburbs of Mumbai, the market value of which is estimated to be Rs 53,000 crore. But the question that is worrying activists is whether industrial houses will share their land for housing the poor. There is also much speculation over whether property prices will actually come down. According to Hiranandani, it will take at least two years for property prices to stabilize in Mumbai and that prices could fall in cities such as Pune and Nagpur. "Projects will develop at a faster pace; prime land in prominent areas will be released and developers will pass on the benefits of speedier approvals to consumers... portions of land will be released in central areas," he says.

However, these will be out of reach for middle-income buyers. The land which was locked under the act, and is now being reverted to its owners has appreciated in tandem with market dynamics since the passing of the act," says Anuj Puri, chairperson and country head, Jones Lang LaSalle Meghraj, India's leading real estate firm.

The act had come into force on February 17, 1976 to prevent hoarding of land and facilitate the government in executing social and common welfare schemes.

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