The Maharashtra government is set to use a little-known rule in the General Clauses Act to stay the 2017-18 ready reckoner rates for land in the Mumbai Metropolitan Region. Highly placed sources admitted that this perhaps could be the first time when the government was stepping in to revise such rates after being published.
Ready reckoner (RR) rates are market values of a property, which are determined by the government for payment of stamp duty. These rates, which are published annually, also impact the construction cost of real estate projects, since several premiums and charges collected by the municipalities are linked to them. The Maharashtra Chamber of Housing Industry (MCHI-CREDAI), an apex body representing builders in the MMR, had earlier approached Chief Minister Devendra Fadnavis, demanding staying of the 2017-18 RR values.
The builders’ outfit had argued that there had been an abnormal hike in this year’s rates, and that it hadn’t factored in the slump in the construction sector. The office of the Inspector General of Registration (IGR), which finalises these rates, had however contested the builders’ arguments. It claimed that the rates had been finalised on the basis of the transactions that took place in 2016-17. “The hike this year was the lowest ever in seven years. The average hike in Mumbai was under 4 per cent. This shows that the general slowdown in the sector had been accounted for,” said an official, who did not wish to be named. The state government had earlier stepped in to defer release of the new RR rates till April 1.
It was also pointed out to the government that the IGR did not have powers to stay the RR rates once published. But the government then took up a proposal to use Section 21 under the General Clauses Act to consider the building industry’s demand. The proviso basically states that a person empowered to issue a notification or an order also has the power to vary or rescind such a notification or an order. In the relevant context, it means the IGR can invoke this section to modify its own order.
While the IGR’s office has continued to oppose the proposal, the sources said the government had plans to issue directives asking it to act in this regard. Incidentally, a proposal to delink construction premiums and charges with RR rates is gathering dust in Mantralaya. A top builder, however, justified staying of the land rates. “These days, land is hardly sold in Mumbai. The government mostly arrives at RR rates for land on the basis of flat sales, which is an inaccurate projection. In several pockets, the land rates fixed are higher than the true market values. This has further pushed up construction costs, and has hit redevelopment projects the most,” said the builder.