The prospects for the reform of the real estate sector will be considerably brighter with the proposed repeal of the Urban Land Ceiling and Regulation Act (Ulcra). Together with the Rent Control Acts and the paucity of formal finance for housing, the Ulcra had ensured that the real estate sector in the country remained mired in a cesspool of regulation, litigation and corruption. The economic price which the country paid for such misguided socialist legislation was that the price of land as well as housing reached sky-high levels in the metros, effectively having the opposite effect from the one envisaged by the framers of the original legislation. Companies were unable to sell their surplus land, and as a result many sick companies were unable to turn around. The social price paid has been even higher. The scarcity of land in the cities, coupled with the powers vested in the authorities made the stakes very high, and the underworld has lost no time in taking advantage of the opportunity. The nexus between many builders, contractors, and criminals is well known.It is to be hoped that, once the states are empowered to draw up their own rules on real estate, they will seize the opportunity to enact more liberal legislation. The principle behind such legislation needs to be the same as that regarding any other market--allow a market in urban land to develop, while ensuring that undesirable practices are eliminated. In the real estate market, for example, a tax on vacant land lying undeveloped could take care of pre-emptive buying of land in order to bid up prices.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.