Maharashtra cabinet meet today on ULCA repeal

The Maharashtra cabinet will deliberate on a proposal for scrapping the Urban Land Ceiling Act (ULCA) and on a new Act to introduce ULCA provisions for Mumbai, Thane and Pune today.

A third Act for dealing with the transitional phase after the ULCA is repealed and for pending judicial cases will also be discussed today.

A senior government official said, "The state government's plan will fall out of the memorandum of understanding (MoU) it signed with the Union government five months back. As per the MoU, the state sought Rs 70 crore for the development of Mumbai city. Of that, Rs 35 crore was released by the Centre immediately. The balance will be given once the state implements five reform milestones, including the repeal of the ULCA in entirety."

According to the official, the state government's proposal for imposing a limited ULCA for Mumbai, Pune and Thane is most likely be nixed by the Union government. Bihar is the only other state that is yet to repeal the ULCA.

The official added, "Even if the state seeks to first repeal the ULCA and then bring out a limited ULCA for the three cities, it would need the Union government clearance, which is unlikely to happen. Therefore, it is apparent that the repeal of the ULCA in entirety is logical. Moreover, the non-fulfillment of the five reform milestones by the state will result in it failing to get the balance Rs 35 crore from the City Development Fund of the Centre." The MoU specifies that the ULCA has to be repealed in addition to rationalisation of stamp duty and property taxes in the state.

In addition to these three reforms, the state is also committed to reform its accounting methods by introducing double-entry system accrual-based method. The accounting reforms are supposed to help the state in effectively utilising Budget-allocated funds for development activities.

"As of now, unutilised Budget funds provided for development activities tend to lapse at the end of the financial year. Just to avoid this lapse, projects are sanctioned hurriedly towards the end of the year end. Under the accrual-based accounting, the unutilised funds could be carried forward to the next fiscal and can be used for the budgeted allocation made in the previous fiscal," the official added.

The state has readied a proposal to rationalise stamp duty (for commercial realty transactions), which is a variable levy ranging from four to 10 per cent in different regions. Meanwhile, the state's efforts to rationalise the property tax is being met with strong opposition from the Opposition.