Cleaning an urban market
The new rules reduce the discretionary powers of the municipal commissioner to allow developers to alter building plans
The new rules reduce the discretionary powers of the municipal commissioner to allow developers to alter building plans
The Mumbai real estate market has been a feeding trough for state politicians of all hues, even as the city itself groans under immense problems. Chief minister Prithviraj Chavan has put his limited political capital at stake to reform the way building permissions are given in the city.
New development rules proposed this week could cut the ground under a lot of dodgy practices of builders. Homebuyers are charged for public spaces such as building lobbies that should be free. Buyers are encouraged to enclose balconies and flower beds to ease some of their pain. Building plans are changed at the discretion of bureaucrats. The right to build extra space is sold at rates far lower than market prices.
Chavan and Mumbai civic chief Subodh Kumar have been fighting a tough battle to clean up the Mumbai real estate game. The new rules reduce the discretionary powers of the municipal commissioner (i.e. Kumar himself at the current juncture) to allow developers to alter building plans. The rights to build extra space will have to be bought at closer to market rates, a move that could earn the civic body around Rs. 1,000 crore a year. The money will likely be used to fund infrastructure. The Maharashtra cabinet has also given its nod for a real estate regulator.
All these moves should help make the Mumbai real estate market more efficient. Prices will also come down, especially if new housing stock is also created through projects such as the redevelopment of the Dharavi slum.
Chavan has been able to act despite immense pressure from the builder lobby because he has no skin in this game, having spent most of his time as a politician in New Delhi. He is an atypical politician. But his battle against those who control Mumbai real estate shows that it is possible to push ahead with reform even in a complicated political system, an art that has been forgotten in New Delhi.
Another key takeaway is that it is now the state leaders who are showing more dynamism than the Union government. Besides Chavan, there is Narendra Modi in Gujarat, Sheila Dixit in New Delhi, Naveen Patnaik in Orissa, Raman Singh in Chhattisgarh and J. Jayalalithaa in Tamil Nadu (though Mamata Banerjee in West Bengal is one obvious exception). The new development rules in Mumbai are still at a proposal stage, so the builder lobby could yet strike back. But Chavan has shown the sort of political courage that is sorely lacking in New Delhi, where the government has, for many years now, backed off at the first signs of protests, both from within the ruling coalition and without.
Are clean real estate markets a fantasy in India? Tell us at views@livemint.com