Printhviraj Chavan Meets High-Powered MCHI Delegation

Assures Real Estate Sector of Developing an Enabling Regulatory Environment

Mumbai, 4th Feb, 2011: Maharashtra Chief Minister Prithviraj Chavan on Friday assured a high-powered delegation of the Maharashtra Chamber of Housing Industry (MCHI), the apex trade association of the real estate segment, that his government will seriously pursue reforms in the housing sector.
Whether it is FSI or TDR, said the Chief Minister, this is virtual land that is being created and this is the only wealth that this city has. Revenues from equitable development of this asset, with the state’s coffers getting their legitimate share in these revenues, these are the primary concerns of the government.”

Mr. Chavan was responding to the points made by the delegation’s head, Mr. Sunil Mantri, the President of MCHI. Mr Mantri informed the chief minister that the association’s members account for 90 per cent of the houses developed in Mumbai and the Mumbai Metropolitan Region (MMR). It had 1,500 members and the association was growing rapidly.

The Chief Minister assured the MCHI delegates that he would try to resolve the various pending issues that were hurting the prospects of the sector. He invited MCHI to nominate a 10-member delegation, to meet with a committee of the State government for a dialogue, to work out transparent policies that would help speed up decisions and clearances. He expressed his concern that procedural hurdles often resulted in developers having to resort to short cuts to expedite approvals, “Whatever decisions are taken, said the Chief Minister, “hereon, the game has changed, the rules have changed, and I will try to bring this issue to a head.” He wanted constant interaction with the industry to resolve issues .

Mr. Chavan noted that he would not like to address any developer on an individual basis, but would like to deal with the MCHI, which represents the industry in MMR. The state will be a facilitator, declared the Chief Minister, because it is the private sector that is creating jobs, wealth and opportunities for development and advancement.

According to MCHI, the housing industry in the MMR is expected to multiply by five times to Rs.2,50,000 crore in just about three years. The government’s earnings from stamp duty is expected to rise from Rs.7,500 crore at present to Rs.25,000 crore in three years from the sale of homes and other units in the MMR. Other taxes on the industry is expected to fetch the state government another Rs.25,000 crore (as against Rs.5,000 crore at present). The industry is expected to triple the housing stock in the MMR to 1,50,000 units in three years, and the employment generated (direct and indirect) will more than double to 50 lakh (from 21 lakh at present).

Private developers contribute to more than 90 per cent of the housing stock created in the MMR (including slum rehabilitation projects). A recent report by international consultancy McKinsey estimated that eight lakh low-income houses can be built to rehabilitate existing slum-dwellers by redesigning the Slum Rehabilitation Authority (SRA) process. Another three lakh additional low-income housing units can be created by setting up special housing zones through targetted incentives, the McKinsey report notes. And land availability in the metropolis can be increased by 50 to 70 per cent by increasing the FSI (floor space index) to an average of three to four in as many zones as possible; cities abroad have an FSI of over 10.

The MCHI delegation also focussed on several problems confronting the industry in the MMR. The delegates called for speedy sanctions and approval of plans by the Mumbai Municipal Corporation; at present, it takes anywhere betwen six and 18 months to get the 30 to 60 NOCs required.

The members also raised the important issue of the shortage of sand in Maharashtra, and called for pragmatic steps to tackle this problem. Besides the government losing revenue, inadequate sand supplies is also leading to unemployment. The MCHI delegates urged the CM to facilitate import of sand from neighbouring states and even countries. They also highlighted the delays in obtaining environmental clearances, which can take nine to 12 months.

An important issue raised by the MCHI delegation related to the Urban Land Ceiling Act (ULCA); though the state had abolished it in 2007, officials in the urban development department continue to demand NOCs, when none are required.
The delegates expressed their appreciation over the fact that Mr. Chavan considered their suggestions and promised to introduce reforms in the housing sector in the state.

Mr. Niranajan Hiranandani made a strong plea for infrastructure development. He congratulates the Chief Minister, highlighting the fact that the first major decision we had taken was the clearance of the Navi Mumbai Airport Project, which had been languishing for years .

He said Mumbai’s MMR had a seeing example of a PPP Project, wherein 3years back builders had built and handed over 50,000 housing units Free to the government for PAP.

This was a unique project, the lines of which has not been done in India. And the Real Estate Sector is capable for replicating such success stories, given the right framework of policy . Mr. Hiranandani also refereed to the 0.33 FSI Premium ‘a policy, which he said, is initiated, approach by the Govt. yet lochs implementation, holding up several hundred projects which can he unblocked and brought on to the market to the housing shortage.