The hike in the premium amount on the additional floor space index (FSI) granted to builders in Maharashtra budget, instead of relief, at a time when the real estate industry is facing a slowdown, will only push up the already-exorbitant housing prices even further, claim experts.
FSI is the ratio of the total buildable area on a plot. For the past few years, builders have been paying meagre premiums. Recently, the state proposed to link them to the market value, which will make their projects costlier. Under the plan, any additional FSI given to builders will be charged a premium, which will be divided equally between the state government and the civic body. Now, the state has decided to hike this premium amount, so that the exchequer earns at least Rs 4,000-5,000 crore.
Defending the hike, chief minister Devendra Fadnavis said the government has the legitimate right to get its share of revenue. “The builders were making windfall profits using the additional FSI. The benefits were never passed on to the buyers. The hike will not affect the realty prices,” he said, adding the civic bodies have been instructed to devise ways to ensure higher returns by way of premiums.
According to builders, high premiums will only derail the state government’s oft-repeated agenda of providing affordable houses. “We ultimately recover the entire cost, including premiums and other taxes, from consumers. These taxes will, in fact, hurt the consumers more. It will act as a hurdle in providing affordable houses,” said Sunil Mantri, president, National Real Estate Development Council (NAREDCO). The council plans to approach the state government asking for relief.