10% development tax expected to shore up MMRDA’s cash reserves
The MMRDA is the state government’s milch cow, with cash reserves running into thousands of crores of rupees generated by selling land at the Bandra Kurla Complex (BKC).mumbai Updated: Jun 14, 2012 01:39 IST
The MMRDA is the state government’s milch cow, with cash reserves running into thousands of crores of rupees generated by selling land at the Bandra Kurla Complex (BKC). However, these reserves are rapidly depleting as the Mumbai Metropolitan Redgional Development Authority (MMRDA) has taken on cash-intensive projects like an underground metro and the Mumbai Trans Harbour Link.
MMRDA estimates that it will have to spend Rs 70,000-Rs 80,000 crore on Mumbai’s infrastructure in the next decade. However, officials believe that even if it sells off its entire land holding in BKC and Wadala, it will not raise more than Rs 50,000-60,000 crore.
It has therefore proposed to levy a development tax on properties near major infrastructure projects (like the metro, monorail or the Mumbai Trans Harbour Link), based on the assumption that people residing in these areas will benefit from the projects and the value of their properties will also increase.
MMRDA has initially planned a one-time 10 per cent development tax which will have to be paid while registering the property. The agency currently has a corpus of Rs 9,000 cr, money which it uses to fund infrastructure in the city. However MMRDA officials now claim that the agency could run out of money and go into a deficit in the next four to five years.
The MMRDA, set up by the state government as a special planning body for the Mumbai metropolitan region, was given a 180-hectare marshland at what is now called the Bandra-Kurla Complex and asked to raise its own finances by selling the land. It managed to do this very successfully, turning BKC into one of the most preferred office locations in Mumbai. However, it is now left with only 40 hectares of unsold land--20 hectares in BKC and 20 hectares in Wadala.