AWAITING REVIVAL
MUMBAI: The slump in the real estate sector has hit the Brihanmumbai Municipal Corporation’s (BMC) revenue, with the civic body earning ₹1,579.45 crore from development charges in 2019-20 (until December), 62% down from ₹4,222.83 crore in 2015-16.
Real estate development is a major source of income for the BMC, which earns premiums on floor space index (FSI), fungible FSI, transferred development rights (TDR) components and development charges, among others. A dip in development charges implies new construction projects are not being taken up.
The collection of ₹1,579.45 crore from development charges in 2019-20 is only 57.34% of the estimate of ₹2,754.36 crore – the lowest in the past five years. Even though there are four more months to go, civic officials say it will be difficult to meet the target.
In 2015-16, the BMC earned ₹4,222.83 crore in 2015-16, against the estimate of ₹4,525 crore; ₹3,929.28 crore against the estimate of ₹5,207.82 crore in 2016-17; ₹2,545.69 crore against the estimate of ₹2,680 crore in 2017-18; and ₹1,850.50 crore against the target of ₹2,129.70 crore in 2018-19. Over the past few years, the BMC has been reducing its estimate, too, as the realty market is facing a slowdown. The estimate was increased in 2019-20, as the civic body hoped the real estate sector would get a boost as the Development Control and Promotion Regulation (DCPR) 2034 was finalised in 2018.
The civic body, however, feels transition from Development Promotion Regulation (DPR) 1991 to Development DCPR 2034 is among the factors responsible for the low collection over two years. In August 2019, the state government reduced premiums and development charges. According to a letter sent by the BMC to the state government, the move cost the civic exchequer ₹800 crore.
A senior civic official said, “The revenue generated from development charges is down by approximately 50%, despite the BMC reducing its estimate. In the past two years, fewer proposals for new construction have come to the BMC for approval.”
Vilas Nagalkar, city-based senior architect, said the real estate industry faced a cash crunch owing to demonetisation, goods and services tax and policy paralysis.
He said, “There is a communication gap between people in real estate and the government. There is a need to study what sort of rules would be attractive in the real estate industry. Also, the high premiums, before they were brought down in August last year, proved to be a debilitating factor for the industry.”