Calcutta, April 15: The government should bring about changes in its land policy if it wants more investment, says the UK?s department for international development (DFID).

In its study of urban investment climate in the state ? submitted to the government this month ? the aid agency has sounded a note of caution saying the government must repeal the Urban Land Ceiling and Regulation Act, 1976.

The law, which bans any transaction exceeding the ceiling, has drastically reduced availability of land. As a result, large tracts of urban land remain locked in litigation, which affects acquisition for setting up industry. While the Centre has already repealed the act, the state is yet to pass a corresponding legislation. This is mandatory as land is a state subject.

Urban development minister Ashok Bhattacharya said the Centre has been pressuring Bengal to repeal the act. ?Many states, including Maharashtra, have repealed it. However, a Left government cannot take such a major decision so easily. It will have to be a political decision if it happens,? Bhattacharya said.

According to the minister, the government is yet to decide whether to repeal the existing act or replace it with a new one.

In assessing a state?s industrial climate, its land policy, especially the ease with which plots can be acquired and the cost of a transaction have an important bearing, the study notes.

It also recommends that the government increase the land ceiling for industrial activities in non-urban areas to promote industry. At present, 14 per cent of Bengal?s 88,752 sq km is vested with the government.

Reforms in Bengal may have enabled redistribution of land to landless labourers for agriculture, but it has not been effective in bringing non-agricultural land to the market.

?Out of a total urban land area of 3,307 sq km, 166 sq km was found to be in the possession of 500 sick/weak and closed units in 2004. Due to paucity of funds as well as the absence of concepts like ?land banks?, the government has been unable to free the blocked land from defunct units,? the study says.

The DFID has identified difficulty in land acquisition by the state and private sector, time consuming legislation, high transaction costs and problems in change of designated land use as barriers to the development of a land market.

?The government has been reluctant to permit (the) conversion of land from industrial to commercial use as it fears it may be grabbed by land sharks.?