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Bengal urban land policy seeks 30% reservation for low-cost housing

Developers dejected as govt rules out repeal of Urban Land Ceiling Act

Namrata Acharya  |  Kolkata 

The promise of Ma, Mati, Manush governance by Mamata Banerjee may fall short of the second M-word, meaning land — at least for real estate developers in the state’s capital city.

For, the West Bengal government has now decided to bring in an amendment to the Urban Land (Ceiling and Regulation) Act (ULCA), 1976, an eyesore of developers for quite some time. The proposed alteration will stipulate the developers to reserve 30 per cent apartments in big housing projects for the low-income group (LIG). Industrialists have been seeking a total repeal of the Act, introduced in 1976 to prevent hoarding or excessive holding of land in urban centres.

West Bengal is one of the few states in the country to have a legislation like the ULCA. The move is in sync with the apprehensions of the chief minister. After all, Banerjee had once wondered, “What will happen if someone wants to buy the city?”

According to the Act, the ceiling limit on vacant land in a category ‘A’ city like Kolkata is 7.5 cottah or about 500 square meters.

The demand for repealing the ULCA was raised for the first time by Godrej Properties chairman Adi Godrej, at an industry meet within the first month of Banerjee taking over the chief minister’s office.

Much to the disappointment of the developers, urban development minister Firhad Hakim has now totally ruled out the possibility of repealing the Act. “We are not going to abolish the Land Ceiling Act,” he said. “Instead, we will give permission to developers for purchase of land beyond ceiling, provided they reserve 30 per cent housing for low-income housing segment.”

The amendment will be a part of a bigger urban development policy that the government is expected to announce next month.

For West Bengal, which has not seen the launch of any major real estate projects since the Trinamool Congress government came to power 11 months ago, the move is seen as a dampener for already sluggish real estate market.

Prominent city-based developer Santosh Rungta says it is not feasible to reserve 30 per cent of the project size for the LIG segment. “The responsibility of the state is being thrust upon the private developers,” according to Rungta, who is a former president of the Confederation of Real Estate Developers Association of India.

The body is now set to hold a meeting with government, insisting that not more than 15 per cent of the reservation was possible for LIG segment.

As for the Trinamool dispensation, it has also decided to do away with the concept of public-private partnership (PPP) — an idea pioneered by the earlier Left Front government under Buddhadeb Bhattacharjee. Instead, “the government will allocate land to the highest bidder and for the rest of the big projects the state will build on its own,” according to Hakim.

Notably, in spite of the Land Ceiling Act, the earlier government had windfall gains by allotting land in prime areas of city.

For example, three prominent government agencies involved in land deals in and around Kolkata — the Kolkata Metropolitan Development Authority (KMDA), Kolkata Municipal Corporation and West Bengal Housing Board— signed deals worth more thanRs 18,000 crore, for over 5,250 acres of land during the period in little over two years. In fact, KMDA was credited with signing deals, worth more thanRs 800 crore with real estate developers on a single day.

“The process of land allotment slowed substantially over the last two years. First, it was due to elections,” said a city-based real estate developer. “second, it was due to lack of vision and policy of the new government.”

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First Published: Thu, April 19 2012. 00:53 IST