Minister for housing development Raj Purohit told The Financial Express: "This will be a major boost for the economy as it will increase the volume of building stock into the market. As a result people from all strata of society would benefit from the increased supply. A decent system of housing will come about which will replace slums in big cities like Mumbai."

The government's decision to repeal the act was hailed by the building industry. Maharashtra Chamber of housing industry president GL Raheja said, "We welcome the decision as this will be an important step that the government istaking to pull the economy out of the recession that is creeping in. Another important effect will be the infusion of foreign capital investment for building projects. Earlier, foreign companies were restricted from acquiring land in India. With the act being repealed this restriction will also be lifted."

But there were sceptics too. The Flat Owners Association secretary advocate Mahabeleshwar Morje says: "A complete erosion of the act would create more harm than any long-term benefit to the middle, lower-middle class and lower sections of the society. This is because removal of any ceiling on the land to be accumulated would certainly mean that land will be accumulated by a few rich people and construction activity will cater to only to a select section of the society." Morje believes that the government should have opted for repealing the act gradually rather than doing it in one go.

Most, however, see the removal of Ulcra as a vital step. According to experts, if bottlenecks like Ulcra remained, therewould have been little that RBI or commercial banks could have done on expanding housing loans. In a country where there are about 20,000 -25,000 new housing units added every year as against a demand for 1.5-2 lakh units per annum, the Ulcra so far was enabling an increase in prices by depressing supply.

The construction industry is one which has huge spin offs for a number of other industries like steel, cement, glass and so on. It even gives employment to a large labour force and few industries can match the sector in its role in rejuvenating an economy. At a time when the government is interested in kickstarting the economy and is at a loss for funds providing a boost to the housing sector by removing such legislative bottlenecks could be the right way to head.