The cost of property in areas surrounding major infrastructure projects such as the Metro and monorail in Mumbai is set to rise if a plan by the citys development authority is implemented.
The Mumbai Metropolitan Region Development Authority (MMRDA) has sent a proposal to the state government to charge development fee on all property transactions in areas surrounding major projects like the Chembur-Wadala-Jacob Circle monorail,the Metro corridors and the Sewri-Nhava Mumbai Trans Harbour Link.
The government is studying the formal proposal,but the details will need to be worked out. There could be opposition to it but the development fee will not affect those who already own property there. It will only apply to those who are making a profit out of the increase in property prices in these areas, metropolitan commissioner Rahul Asthana said.
The charge would be levied up to a radius,called the zone of influence,around the project and will not apply to rental transactions. The development charge would be one-time payment for the buyer,so it should not be a big burden. We havent decided the rate but it will be marginal, additional metropolitan commissioner SVR Srinivas said,adding that the charge will be shared with the respective urban local bodies.
The fee will ensure that the government bodies also stand to gain and provide a source of revenue for the MMRDA to fund more such projects.
The financial position of the MMRDA is good today,but over the next 10 years,we anticipate an outflow of Rs 70,000-80,000 crore towards more infrastructure projects. Even if we sell all the land we have at Bandra-Kurla Complex and Wadala,at the most we will get Rs 50,000-60,000 crore. We dont have another source of funds, Asthana said.
Earlier this year,the central urban development department had sent a note to all states suggesting innovative measures for financing expensive mass rapid transit projects. The suggestions included cashing in on the increased property prices by way of cess,additional property tax on existing buildings and vacant land charges.
Following this,the Bangalore Metro Rail Corporation Ltd (BMRCL) incorporated similar measures while sanctioning the second phase of the Metro. One of them was to levy a cess at 5 per cent of market value of land and buildings on future development. The move is expected to yield Rs 1,250 crore in five years.
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