The Bombay high court’s order restraining the civic body from approving any new construction from March 1 owing its failure to adhere to solid waste management rules is expected to have a big impact in Mumbai.
Although the high court has exempted redevelopment projects from the ambit, they are also expected to be adversely affected. The reason: The ban on new projects will extend to the sale component of redevelopment projects, which is how developers are compensated for building free houses for existing residents.
A division bench of justice Abhay Oka and justice CV Bhadang put a ban on all new constructions, except hospitals and educational institutes. While the court exempted redevelopment projects that consume existing FSI, it, however, restrained giving any incentives to these.
Shadaab Patel, chairman and managing director, Platinum Constructions, said residents of dilapidated structures will be most affected. “How can we construct and hand over free houses to existing residents when we are not making any profits,” said Patel. “Moreover, with the prices of raw materials and taxes increasing by the day, no builder will be able to implement any project in such an unsure environment,” he added.
In the redevelopment scheme, the builder rehabilitates the existing residents free of cost. In return, he is given an incentive Floor Space Index (FSI), which allows him to construct additional houses that he can sell in the open market. This is how the builder makes profit on his investment. The high court order allows the BMC to give approvals for rehabilitation of buildings, but not for selling some of the flats built under these projects.
According to Anand Gupta, spokesperson, Builders Association of India (BAI), builders are penalised because of the authorities’ fault. “It was the responsibility of the officials and elected representatives to prepare a plan and implement it. However, we are now put in the dock,” said Gupta.
Both the Congress and the NCP have blamed the ruling Shiv Sena-BJP for the mess. “This will only fuel the negative sentiments in the already depressed market,” said NCP Mumbai chief Sachin Ahir. Mumbai Congress president Sanjay Nirupam said, “It only shows the incompetency of the ruling alliance and the real estate sector is paying the price.”