Taller Mumbai May Help BMC Earn Rs 5,000 Cr In Revenue

The Maharashtra government attracted national opprobrium when it recently decided to allow further vertical growth in Mumbai, a city that does not have infrastructure to handle its existing population. Do note that we are talking about the world’s second most populous city in the world. Housing experts might be busy diving deeper in the nitty gritty of Mumbai’s new development plan of 2032 and find faults with it, but the city’s civic body has other plans, positive ones to be specific. It plans to increase its revenue by cashing in on the changes.

Under a plan that was unveiled by the Maharashtra chief minister on April 25, Mumbai will have more land to expand on; the city will grow vertical, too, with increased floor space index (FSI). It is on Mumbai’s freedom to go taller upon which the Brihanmumbai Municipal Corporation (BMC) is betting big. The BMC, which is already the richest civic body in India, hopes to earn Rs 5,000 crore in future on relaxed FSI norms.

Do note that the FSI in Mumbai has been increased from 1.33 to 3 for residential projects and 5 for commercial ones. Mumbai suburbs will see the FSI rise from 2 to 2.5 for residential properties and from 2.5 to 5 for commercial properties. Floor area ratio (FAR) also known as FSI is the ratio of the plot size on which the construction is happening and the total permissible coverage area.

Also read: FSI In 10 Cities Of India

The widespread criticism of the DP 2032 has not been able to prick real estate developers’ bubble who have been desperately waiting for a move that would bring realty back on track.

“The new DP gives an impetus to affordable housing without compromising on the environmental aspect. It will boost construction activity in the city, owing to FSI revisions. This will lead to better supply of homes in Mumbai,” says Surendra Hiranandani of House of Hiranandani.

With realty getting a boost, the BMC might be able to earn Rs 5,000 crore through development charges, a one-time levy developers have to pay for constructions, alterations and redevelopments. Those developers who went ahead with the construction which were taller than what was allowed earlier in the hopes that the new DP would provide them more freedom would also be able to regularise those buildings by paying a penalty on top of the development charge. Resultantly, the BMC will see its finances improve which would be later used to fund infrastructure projects in the city.

“There has been a slowdown in real estate, and many projects were waiting for the release of the new DP. As per our rough estimates, we are expecting a collection of anything between ₹5,000 and ₹5,500 crore from development charges,” BMC chief Ajoy Mehta was quoted by Hindustan Times as saying.

Also read: With DP Change, Mumbai To Go Taller