BSP supremo Mayawati appeared unimpressed with only the 12.5 acre mill land being earmarked for the memorial and wanted more land to be allotted while Maharashtra Chief Minister Prithviraj Chavan called as "historic" the decision.
The announcement which met a long pending demand of several political parties in Maharashtra came on the eve of Ambedkar's 55th death anniversary.
"The Government of India has taken a view to make available this land for use to the Government of Maharashtra for the construction of a befitting memorial," Textiles Minister Anand Sharma said in identical statements in the Lok Sabha and the Rajya Sabha.
"The government has initiated the process to give effect to this decision and I will be shortly moving the necessary legislative proposal for Parliamentary approval. I seek the support and endorsement of the House," Sharma said.
The ashes of Babasaheb Ambedkar are interred at Chaitya Bhoomi, situated in the vicinity of the 12.5 acre land of India United Mill, popularly known as Indu Mill, under the National Textile Corporation at Prabhadevi in central Mumbai.
Dalit outfits had set December 6 as the deadline for the state to decide on the issue, failing which they threatened to forcibly occupy the mill premises.
Sharma said the decision was taken respecting public sentiments and in response to the request of the Maharashtra government and taking note of the unanimous resolution passed by both Houses of Maharashtra Legislature.
"If the government allocates 12-13 acres of land for it, it would not be sufficient for the memorial. For such a grand memorial for Ambedkar, at least 30-40 acres of land would be required. In 12-13 acres, no grand memorial can be built," she told reporters outside Parliament House.
A delegation of MPs from Maharashtra, led by Chief Minister Prithviraj Chavan, had met Prime Minister Manmohan Singh yesterday to press for transfer of the land.
The state government will bear the entire cost of the memorial project, Chavan told reporters in Mumbai.
"A separate authority will be set up for the purpose...," he said.
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