Builders may pay for roads, metro, mono………Santosh Andhale and Alka Shukla
‘War Room meeting in Mantralaya decides builders developing land along major infrastructural projects will have to pay a surcharge. Government hopes to raise Rs 1,000 crore a year
‘War Room meeting in Mantralaya decides builders developing land along major infrastructural projects will have to pay a surcharge. Government hopes to raise Rs 1,000 crore a year
Has the government bitten off more than it can chew in developing infrastructure in Mumbai?
It appears so, given the fact that it is already thinking of levying a betterment charge on builders developing properties along some of the citys most talked about infrastructure projects such as the Metro, the Monorail, the Mumbai Trans-Harbour link and the Bandra-Worli Sea Link extension among others.
The logic is simple – prices of properties around these projects have appreciated and builders must share some of the profit with the state. But its also a fact that the government is struggling to raise money to fund all its infrastructure projects.
The decision was taken at a high-level meeting at the War Room in Mantralaya on Wednesday.
The meeting was attended by CM Ashok Chavan, his secretary Ajit Kumar Jain and senior Mumbai Metropolitan Region Development Authority (MMRDA) officials.
It has been observed that whenever a mega project comes up property prices in areas around it shoot up. In that sense, the buyers end up paying higher prices anyway.
But instead of builders pocketing all the money, now the idea is to get them to share part of the profits with the government, said a senior bureaucrat who was present in the meeting.
The government hopes to levy 4-5 per cent surcharge on every new property development. Along with various taxes, charges and premiums (development charges, storm water drain charges, road development charges, fire brigade charge, environment tax, etc) builders pay while getting a plan sanctioned, this surcharge will have to be paid. It is just a one-time payment, said an Urban Development Department official requesting anonymity.
The builders, obviously, feel the government move is wrong. Mukesh Patel, managing committee member, Maharashtra Chamber of Housing Industry and managing director of Neelkanth group, said, This is illogical.
There is a plethora of taxes and charges we are anyway expected to pay to the government for getting projects sanctioned. Heres one more, which will obviously be passed on to the consumer.
Patel said the government is just looking for a shortcut to meet its funding requirements. If there is a big project, say the First Metro Line, it is not only people living in Versova, Andheri and Ghatkopar who will benefit.
Thousands of commuters stand to gain as well in terms of saving time. Not all of them are even home buyers. Projects are welcome but only wanting developers to pay is a very narrow approach.
While the radius around an infrastructure project where this surcharge will be applicable is still being worked out, this may be guided by the governments ballpark figure of raising around Rs 1,000 crore every year.
A big chunk of the money raised will go to MMRDAs kitty.
MMRDA had recently estimated that it requires Rs 1.13 lakh crore for all its infrastructure projects in the next four years in the Mumbai Metropolitan Region spread over 4,355 sq km.
While admitting to the War Room meeting on the future of the development projects in the city, curiously, the chief minister insisted funding was not on the agenda. We met to take stock of all important projects and find out the progress of each one of them as also the potential dates of how soon they can be completed, he told Mumbai Mirror.