Tag Archive for 'ULCRA'

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Today, Maharastra (India’s richest state) repealed an archaic land law, the Urban Land Ceiling Act (ULCRA), 1976. ULCRA was enacted to decrease the concentration of land holdings in cities. If you owned more than the “permissible” amount of urban land in Maharastra, it could be forcibly taken away from you and redistributed to the “needy.” Compensation for your land was a pittance.

The ostensible purpose of ULCRA was to provide low cost housing in cities. But as we all know, these socialist legislations can have very perverse effects. Instead of an urban socialist utopia where the government was going to build low cost housing with hospitals, roads and other urban amenities we have slums and virtual garbage dumps around our cities. Instead of decreasing land prices we have the third highest land prices in the world in Mumbai. The reasons are simple:

(1) As the government tried to forcibly overtake land in the city, thousands of landlords filed cases in the courts. We all know the speed of the Indian Judicial system. Land that could have been privately developed got locked up in court battles. One could argue that that the fault lies in the Indian Judicial system and if the cases were resolved faster this would not have happened. I have two counterpoints to that:

• Its a reality that the Indian Judicial System is slow and that will not change in a night. Any legislation needs to take ground level realities into account. UCLRA was a foolish act that expected people to just give up their land meekly. We all know that landowners were not going to give up without a good fight and do everything to stop the lands from being taken over.
• Acquisitions sometimes bring up real questions of law and this takes time to work its way through the system. The state has to justify why a certain landowner’s land is “surplus.” UCLRA raises important legal questions: How far can the Indian state forcibly acquire property from its citizens? Why should successful, law abiding citizen who own a lot of land be penalized for their success? Not all wealth is ill gotten or gotten by oppressing the poor. In this whole debate we need to realize that India is democracy with respect for property rights. It is not a communist state.

(2) A whole new bureaucracy sprang up that put its dirty hands in every land deal. Clearances of all kinds were required and “exemptions” an “No objection certificates” (NOC) needed. These bureaucrats essentially became, in the language of economics, rent-seekers.

(3) Land that was successfully acquired under the act was hardly developed because of the general lethargy of government departments. The quality of urban governance is so abysmal in India that one can not even be sure that deserving recipients would get housing in these acquired lands. Many of these lands fell in a legal limbo or were encroached upon by squatters or politicians.

Until a few years ago, almost all Indian states had UCLRA in place. One by one they have repealed it. Today Maharashtra, AP and West Bengal are the three major states where UCLRA is still operative. Andhra Pradesh is a very progressive state and I believe it will be ultimately repealed there too.

Bengal is the only major state where the politicians are ideologically committed to the objectives of the law. And its no surprise because these rent control and land ceiling laws are showcase legislations for the left parties in India. I hope West Bengal climbs down from its fundamentalist viewpoint and repeals these anti-development and corruption inducing legislations. Calcutta and Mumbai, our most majestic cities have become shantytowns partly because of these cancerous laws.

To the left parties who support these laws I would request them to see the real ground level effects of these laws. Lets recognize human nature and motivation and then frame laws. Communism failed because it was a fundamentally flawed ideology. Many people say that communism failed because it was not “implemented properly” or failed due to a western conspiracy. My view is that it failed because it could not be implemented properly. Any system that denied humans fundamental freedoms like the freedom to trade, to choose a profession, to choose how to live, to choose beliefs and concentrated control in an unelected, all powerful bureaucracy was doomed to failure.

“What does it matter if the cat is black or white as long as it kills rats?” is a very famous quote by Chinese leader Deng Xiaoping. Our leftist leaders must realize this and repeal all legislations that have failed in the past decades. Most often these leftist “leaders” have some vested interests (a union to run, a government department to lord over, bribes to collect) so they hold back these reform moves. Whatever the reasons for holding back reform, whether ideology or vested interest, Indian citizens should put pressure on our elected representatives to overturn these archaic legislations that are holding our country back.