The Maharashtra state assembly has repealed the Urban Land (Ceiling & Regulation) Act, or ULCRA, which sets limits on the size of urban land holdings. This action will free up large tracts of prime real estate in Mumbai, the country''''s financial and commercial capital.

The shares of property firms are expected to soar because of the flexibility they will gain. The prices of real estate may, however, drop with the availability of additional land coming into the market.

Developers'''' representatives are saying the ULCRA repeal could free up to 25,000 hectares of land in the state. In Mumbai some 3,000 to 5,000 acres of land may get freed. It could also attract foreign builders.

ULCRA, enacted in 1976, was intended to prevent rich individuals and firms from cornering land and getting into a position to dictate prices to the populace. But the law had turned out to be counter-productive, causing a shortage of real estate, which was exactly the opposite of what it was intended to do.

Given that, the state has been under pressure from the Union government to scrap ULCRA. Since land is a state subject, New Delhi could only try and persuade the state to see reason. Finally, what seems to have brought the state government to act is New Delhi''''s making the scrapping of ULCRA a condition for the disbursement of funds from the Rs11,000-crore Jawaharlal Nehru National Urban Renewal Mission. The deadline for this is March 2008.

Inability to access these funds would have had an adverse effect on some major projects, such as the Rs 3,500-crore Mumbai Trans-Harbour Link, the Rs 20,000-crore Mumbai Metro, the Rs 4,200-crore Bandra-Worli-Nariman Point Sea Link, and the Rs 3,600-crore Mumbai Urban Transport Project-II.

With the ruling Congress-NCP combine and the main opposition party, the BJP, favouring the repeal, the BJP''''s ally Shiv Sena''''s protestations are unlikely to be more than a nuisance. The repeal bill is likely to be cleared during the current session of the assembly.