Expired leases costing city hundreds of crores
A yet-to-be-tabled Comptroller and Auditor General (CAG) report has found that the state government has mismanaged leasehold plots in Mumbai — some of them in premium locations such as Mahalaxmi and Worli. Ketaki Ghoge reports.mumbai Updated: Apr 08, 2012 01:30 IST
A yet-to-be-tabled Comptroller and Auditor General (CAG) report has found that the state government has mismanaged leasehold plots in Mumbai — some of them in premium locations such as Mahalaxmi and Worli.
These prime Mumbai plots, leased out between 20 years and 99 years ago, are still being used by private entities who pay nominal rents, costing the state government hundreds of crores in revenue each year.
In one example, the CAG report pointed to a 1-acre leasehold plot in Mahalaxmi, which was allotted to Simplex Mills in 1884 for a period of 99 years. The annual lease rent fixed then was Rs48.13 — less than a paisa for per sq metre.
This lease expired in 1983. The audit report notes that, for the next 20 years, the state did nothing to reclaim its land or renew the lease at more competitive rates. A conservative estimate puts this plot’s market value at more than Rs100 crore.
Meanwhile, in 2004, the lease owner obtained BMC approval to build residential towers on this plot. The lessee did not get approval from the city collector till 2006, or from the state government till 2009.
Now, a plush residential complex of six towers stands on this plot. The state revenue department has now allowed this redevelopment, levying a temporary valuation charge, saying it is still to work out policy for granting development rights to leasehold plots.
In another glaring case, the CAG noted that the state allotted 1,256 sq metres of land to an industrial house in Worli in 2005, for a period of 30 years. The provisional lease rent was fixed at Rs57.21 lakh. Over the past five years, however, the department has played the role of generous landlord, neither fixing a final lease rent nor collecting the provisional rent from this industrial house.
In all, there are more than 400 such cases of expired leases, where lessees continue to pay government agencies nominal rents, according to information obtained under the RTI Act by Shailesh Gandhi, now the country’s central information commissioner, in 2005.
In the island city, leases for 298.5 acres of land — four times the area of Nariman Point — fetches the government only Rs2.53 crore in rent annually. At a very conservative estimate, using the relatively low rate of Rs 3,500 per sq metre, the state should be earning an additional Rs424 crore every year in rent — just from these plots.
“According to my estimates, the state could earn an additional Rs 8,000 crore per annum if it renewed lease rents at more competitive rates,” says Gandhi.