Spotlight was back on Mumbai’s realty sector after the Bombay High Court, in its recent order, struck down a notification by the Maharashtra government on increasing the floor space index (FSI) in the Mumbai suburbs from 1 to 1.33. However, the government is undeterred by this order and plans a slew of initiatives to bring stability to Mumbai’s realty market. It plans to re-develop 56 colonies of state-run Mhada by throwing open 10 million sq ft area for construction. In an exclusive interview with Sanjay Jog, Maharashtra minister of state for housing, Sachin Ahir, spells out the government’s strategy. Edited excerpts:
Mumbai’s realty sector is facing a peculiar situation — a rising mismatch between demand and supply of the housing stock. Prices are not out of reach for many. What is your view on the current scenario?
I must admit that due to the upturn in the economy, Mumbai’s realty sector is flourishing. However, the prices are also rising. The stability is still not achieved. In Mumbai, both consumption and demand are more but the availability is low.
Is the government proactive to address this issue so that stability in the market is achieved?
As I said, the government is quite keen to take necessary decisions to bring in stability in the Mumbai realty market. It has decided to provide 4 FSI for the re-development of over 16,000 old and dilapidated buildings in the city through a cluster development. This will certainly increase the availability of housing stock. So far, four cases have been approved and 10 are under active consideration. In fast-growing Mumbai suburbs, an additional FSI is allowed to create more housing stock.
Further, the government has increased FSI in the Mumbai suburbs to 2.5 from 2 for schemes to be implemented by the state-run Maharashtra Housing and Area Development Authority (Mhada). The FSI for Mhada schemes in Mumbai city has been raised to 4 from 3.19. Recently, Mhada had received over a million applications for 3,000 houses.
Mumbai being the financial capital of the country is going to witness a surge in housing demand and the demand-supply mismatch is bound to increase in future. The government plans to re-develop 56 colonies of Mhada situated in city and suburbs. Mhada will develop these colonies on its own rather than giving them to builders and developers. This will enable Mhada to use 2.5 FSI. This entire exercise will help generate 10 million sq ft area to create additional housing stock at affordable prices. Additionally, the government would soon decide on re-developing the Bombay District Development chawls spread over 56 acres in the Mumbai city through a joint venture between Mhada and private builders and developers. This will further generate another two to three million sq ft for re-development.
The recent high court order is seen as a major setback as it may further increase realty prices in the suburbs. What is the government’s reaction? Is it amending the town planning Act to enable higher FSI?
The government had taken a bold decision to increase the FSI to 1.33 from 1 against a premium in the suburbs. FSI in the suburbs was a pragmatic economic policy in favour of citizens. The premium charged will generate funds for development of infrastructure in the city. The high court order has really hurt us. There is a need to review the high court order as there is every possibility that realty prices will go up further. Further, the state government will amend the Maharashtra Regional Town Planning Act of 1966 to insert the term “premium” in the relevant sections. This will allow higher FSI for a higher price.
However, the government has done little to curb cartelisation of the Transferable Development Right, or TDR?
I disagree with this. In fact, the government’s intention to increase FSI at premium to 1.33 from 1 in suburbs was with a sole objective to control cartelisation. The government, as I said earlier, is open for a legal review of the high court order.
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Slum rehabilitation schemes have been under attack from various sections. What is the government doing to streamline its implementation?
In slums, the government has already increased the FSI to 3 from 2.5. In the slum rehabilitation schemes, an approval from 70 per cent of the residents is a must for redevelopment of those areas. What has been witnessed is that if the builder is finalised after such approval, about 40 per cent residents make a case for change in the builder, which affects such schemes. The government is contemplating to prohibit any change in builder or developer once they are selected after the necessary 70 per cent approval from the residents.
Only in exceptional cases, where builders and developers default, the slum residents would be allowed to change them. Such defaulters would be blacklisted and their names would be put online. These builders and developers will not get any government job in future.
What is the government doing to set up a regulatory authority for the realty sector?
The government is expected to introduce a Bill in the ensuing monsoon session of the state legislature. The regulatory authority will be a quasi-judicial body. The state government will incorporate necessary guidelines issued by the central government on setting up a regulatory authority. The body will be empowered to take up issues relating to default by builders and developers in implementing the government’s decisions like sale of flats based on the carpet area and not on the super-built-up one. Besides, the authority will look into issues related to cheating of consumers by builders and developers. Maharashtra will be the first state to have such an authority.