Friday, October 12, 2007

ULCRA - to repeal or not to repeal

In many of my earlier posts I've made reference to the fact that a delay by the Maharashtra State Government to repeal the Urban Land Ceiling and Regulation Act (ULCRA) will result in us losing out funds from the Central Government made available under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM).

But is the choice that simple? Repeal ULCRA = More money for Mumbai? That's the line being taken by many. But its never that simple. In Mumbai, nothing is.

The ULCRA is 30-year old piece of legislation followed more in its abuse. Formed with the purpose of curbing land-hoarding in the hands of a few, the Act empowered the State Government to acquire "excess" land and then release this land for public use. Sounds good, doesn't it? If Person X has loads and loads of land, then what's wrong if he surrenders a bit of it to the Government who then gives it back to the aam janta in the form of low-cost housing.

If only it was that simple. Ironically, even with all the discretionary power that the ULCRA gave to them, State Governments just couldn't work it right. They just couldn't - didn't - acquire surplus land. Besides, land owners, and Governments, conveniently circumvented the Act using the "exception" clauses that the Act contained.

Now, to put numbers to it, consider this nationwide data (source).
Land deemed as excess: 2,20,674 hectares
Land acquired by State Governments: 19,020 - or a mere 9%
Actual excess land exempted under the Act: 61,967 hectares.

(download data in MS Excel here)

Now, if that's not a case of failure, what is? Thankfully, but after a lot of debate, the Act - on a Central basis - was repealed in December 1998. Eventually a number of states that had implemented this Act followed suit. Delhi, for example, repealed the Act five years ago.

But Maharashtra - and hence Mumbai - has not repealed this Act. Our Chief Minister promised to repeal it last year, but the motion didn't make it through last years winter session and this year's monsoon session of the Legislature. Best chance now? This year's winter session.

For a minute, lets take a contrary view, i.e. is there a case for ULCRA to remain in action? After all, if implemented properly, the Act can achieve its intent, i.e. cool property prices and provide low-cost housing in a city where "affordable housing" is a dream.

Take for example, this article in today's ET. 84 year old, veteran Janata Dal (Secular) Leader P.B. Samant wants Maharashtra's Chief Minister, Shri Vilasrao Desh to convince him that repealing the Act will be beneficial.
The octogenarian leader referred to a successful housing project undertaken by Nagari Nivara Parishad for 6,000 families in Goregaon under ULCRA. “This demonstrates that the Act can still be implemented for the larger good of the people in Mumbai if the government has the will,” he added. The state government has proposed to repeal the Act in the winter session of the state legislature in December. “If the Act is repealed, around 30,000 acres of land would be released to real estate market players, who would certainly not use it for the benefit of an average Mumbaikar,” he said.
Indeed, who can argue with that? Shouldn't the State Government first implement the Act in its spirit before repealing it? But, doesn't past experience tell us that this Act can't be implemented? So, can we trust our politicians to actually execute this Act? Even if they do start implementing it, what if land-owners go to courts and delay the process? Even if the Government acquires land, then who will monitor the process of the surplus land reaching its ultimate end-use, i.e. low-cost housing? Is there any regulatory system in place to ensure transparency in this land-release?

As always, too many questions, too few answers. If, and when, ULCRA is finally repealed, the process will take time and it won't be transparent. Look at Mumbai's Mill Lands. The Supreme Court verdict (allowing for re-development of the mills) was in March-2006, and even today a year-and-a-half down the line, mill owners, the BMC and MHADA are all fighting over who gets how much land and when. So, even if the ULCRA is repealed, I doubt it will be an easy process and I doubt if it will result in vast tracts of land coming into the market on one fine day.

This is Mumbai. Nothing is simple, nothing is easy. And when it has to do with land, land worth thousands of crores, it will take time. Lots of time. Time that this city never had.