May the ceiling fall

The current year has brought more good news for India's top cities than in any of the preceding decades. The latest is the Maharashtra government's decision to table a resolution in the state Assembly to repeal the Urban Land Ceiling Act which, according to reports, has the potential to unlock as much as 25,000 acres of land for development in Mumbai, the country's commercial capital. This comes close on the heels of the Union government's decision to notify the 2021 Master Plan for Delhi which effectively ends the monopoly of the Delhi Development Authority and can unlock 50,000 acres for development in the national capital.

The good news is, however, not yet confirmed. The Maharashtra Assembly will have to debate and pass the resolution in its next session as the motion was introduced at the end of the last session. Those opposing the move will be the traditional forces that have thrived under the licence raj in urban land.

Reports indicate that the number of politicians agreeing to end the old reg-ime has been growing lately, particularly among those in power now. The sweetener that seems to have worked is the prospect of accessing over Rs 20,000 crore from the Jawaharlal Nehru National Urban Renewal Mission funds which the Centre will not pass on unless a state brings about a set of reforms.

Key among them is getting rid of the land ceiling laws which have for decades created an artificial shortage of urban land and kept property prices absurdly high. Another section which will try to delay the move, if not defeat it, from behind the scenes is the builders who have large inventories of land acquired in recent years at considerable cost. They will want to liquidate those investments first before fresh supply brings prices down. But many builders, particularly the large ones with corporate structures and access to foreign private equity, are clear that an end to urban land ceiling can only do their trade good in the long run.

Now that the end to the ceiling is in sight it is necessary for the government to move according to a well-sequenced action plan with the ultimate goal of having a transparent and well-regulated market for urban land in the not too distant future. In this regard it is important not to create speed breakers so that land does not come into the market in dribs and drabs. This is what builders will want.

On the other hand, the larger the tracks made available for development, the greater the common facilities like sewerage systems and roads whose costs can be amortised in the price that buyers of space ultimately pay. This is not all. Ending the ceiling is but one of the three legs on which comprehensive urban reform rests. The other two are abolition of rent control and making registration charges (stamp duty) reasonable so that there is no compulsive duty evasion.

To these can perhaps be added a fourth "" putting land records on the computer. The political rulers of Karnataka, which has achieved global distinction by putting all its rural land records on the computer, have not yet allowed the same to be done for the state's urban land records, for obvious reasons. With a land records system which ensures clear and unambiguous title to land, builders with land banks will be able to secure attractive ratings which, in turn, will allow them to access equity, private or public. All this would make up the route to a better life for India's burgeoning middle class which wants, above all, affordable and livable housing.