Chavan approves extra .33 FSI in suburbs

Announcing the decision on the sidelines of an investors’ summit in Mumbai,Chavan said: “The legal framework for the decision was ready. There was a fear that increasing the FSI could put unnecessary burden on infrastructure in the suburbs. However,after lengthy discussions with officials,including the Municipal Commissioner,we have concluded that FSI up to two is already consumed through use of Transferable Development Rights (TDR).”

The CM added that the decision would lead to the state government and the Brihanmumbai Municipal Corporation (BMC) earning significant revenues from the premium paid by the developers.

The Vilasrao Deshmukh government increased the base FSI in the suburbs from 1 to 1.33 in March 2008. The move was aimed at reducing developers’ dependence on TDR or floating FSI,a commodity that is controlled by a handful of developers,such as DB Realty,HDIL and Ackruti.

Within months,the policy was challenged in the Bombay High Court and the state government has been swaying back and forth on this issue since then. Urban Development Department (UDD) officials have been in favour of scrapping the extra FSI policy even as the BMC pushed for its implementation. The UDD held that while the TDR stock is limited to a few lakh sq metres,granting the 0.33 FSI,on the other hand,will unleash a 30 million sq m of built-up space in the 300-sq km of the suburbs.

The Maharashtra Chamber of Housing Industry (MCHI),the main developers’ body,has been constantly petitioning the state government to get the extra FSI policy sanctioned. Builder Sunil Mantri,former president of the MCHI,said the policy will now put an end to the cartelisation of TDR. “Also the money earned from the FSI premium will benefit the city at large. Considering that within three months in 2008,the revenue earned through the policy was Rs 500 crore,we estimate that the BMC and state government will earn an annual revenue of Rs 5,000-10,000 crore in lieu of granting the additional FSI,” he said.

Over the past three years,TDR prices have fluctuated over speculation of extra FSI being scrapped or implemented. At present,TDR rates are as high as Rs 2,500-3000 sq ft,while the extra 0.33 FSI will cost the developers only half as much.