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Mamata move hits land ceiling
Realty platform highlights hurdles

A conclave aimed at promoting Brand Bengal and attracting investors in urban infrastructure found an outsider’s shoulder to fire the land-ceiling gun at Mamata Banerjee.

On Thursday afternoon, at the inauguration of the three-day conclave — Bengal Builds — at the Milan Mela, a developer from Pune requested the chief minister to consider repealing the Urban Land Ceiling Act, a demand that the realty lobby has been highlighting for several years.

“The Urban Land Ceiling Act needs to be repealed here, like elsewhere in India…. Removal of the ceiling would make more land stock available for development, creating supply, bringing down costs and therefore prices for affordable housing,” said Lalit Kumar Jain while addressing the dignitaries on the dais.

Though Jain, chairman and managing director of Kumar Builders and national president of the Confederation of Real Estate Developers’ Association of India (Credai), said that land ceiling did not exist anywhere in India, sources said “it probably does not exist anywhere in the world”.

As soon as Jain broached the subject of urban land ceiling, the 200-odd invitees in the hall looked up at the chief minister to gauge her reaction. Several other problem areas affecting the growth of the realty trade were rolled out during the inaugural programme (see chart).

Sources in the government said that some of the prominent members of the realty trade have been trying to meet Mamata since she assumed office, but with little luck. The chief minister has been busy touring districts or attending various cultural programmes.

“In the face of criticism that she was not giving time to people from the world of business, she got this meet organised by directing one of her cabinet colleagues to advise the realty lobby to hold the programme,” said a source.

With the chief minister finally giving them time, the heads of some of the prominent city-based realty groups — who control a minuscule portion of the total trade as several national and international players have entered the market — tried to play it safe. That, in today’s Bengal, means not asking difficult questions of the powers that be.

So it was left to outsiders like Jain to raise the problems facing the industry in the state. “Developers from Bengal are doing a fantastic job in other states. You need to allow local developers to grow here,” he said.

Throughout his speech, Jain fixed his gaze upon a fidgety Mamata and addressed her while pointing out other areas that demand her intervention.

“I think you are concerned about the aam aadmi, the common people, and their housing. If the Act is repealed, it will help bring down costs for large-scale development for the masses,” said Jain.

Urban land ceiling has always remained a hurdle in getting land for real estate projects. According to the Urban Land Ceiling Act, introduced in 1976, the ceiling limit on vacant land in urban area is 7.5 cottahs (one-eighth of an acre).

Though Mamata skirted the issue of the urban land ceiling, saying that her government was “looking into everything”, it remained the hottest topic of discussion after the inaugural session of the three-day meet.

Explaining how doing away with the ceiling has benefited Andhra Pradesh, C. Shekhar Reddy, chairman and managing director of Andhra Pradesh-based CSR Estates, said there has been a 20-time increase in infrastructure development activity.

“My state did away with it in 2005-’06 and the results are showing. Activity has increased 20 times and developers from around the world have been thronging the urban centres of the state ever since,” he told Metro.

Urban land ceiling, however, was not the sole sore point as the Credai national president pointed out administrative hurdles, besides “high” stamp duty and registration fees, as areas that need the chief minister’s intervention.

“If clearances can be given in three weeks, for instance, instead of three years, then developers could be in a position to offer a discount of 15 to 30 per cent to buyers,” said Jain.

Highlighting the 8.2 per cent stamp duty and registration fees, Jain said the state should immediately consider rationalising the tax structure to invite large-scale developers for affordable housing projects. In many other states where the rate is around 5 per cent, the revenue collection is much more because of better compliance.

Mamata said urban Bengal was not in a position to offer what the likes of Mumbai, Delhi and Chennai could offer. “Your demands may be genuine, but we are paying as interest and loan repayment more than what we are earning,” she said, indicating that the high rates will prevail and the government will try to milk the sector.

As a token gesture, Mamata announced the formation of a “task force” to monitor issues with regard to urbanisation in the state. “This body will report to the cabinet committee on infrastructure and senior government officials within 15 days,” she said, to a round of applause from the audience.