The Mumbai Metropolitan Region Development Authority, frequently referred to as the government cash cow, is now facing a serious shortage in funds, which could impact development of the city’s infrastructure.
With lands in prime areas like the Bandra-Kurla Complex (BKC) and Wadala, the central agency has funded many infrastructure projects. However, it’s money sources seem to be drying up, with it’s 2008 scheme to sell additional FSI to builders at BKC not yielding the response the agency had hoped for.
As a result, The MMRDA recently decided to extend its FSI-selling scheme, for the third time. “We have decided to extend the scheme till March 2012. Interested parties, in view of the slowdown, requested us to do so,” said metropolitan commissioner Rahul Asthana.
The state’s Urban Development Ministry, in May 2008, had doubled the floor space index on G Block of BKC, from two to four. FSI determines the amount of construction allowed on the plot, and nearly 178 hectares of land were affected by this order. However, builders who had undertaken construction before the UDD’s notification did not get the benefit of the enhanced FSI.
The MMRDA then introduced its FSI-selling scheme, in October 2008, under which it would sell extra FSI to those who did not receive the benefit. The idea was that while the MMRDA would earn from the scheme, the incentive for builders was that they would buy the additional FSI at the ready reckoner rate for a residential property, which is one-and-a-half times less than that for a commercial property. The MMRDA had received 31 applications.
However, despite extending the scheme for three years and allowing builders to pay in installments, only six builders have made the full payment. Seven have not paid at all, while others have paid partially.
Adding to the agency’s woes is that over the past few years, many other plans by the MMRDA to raise money have failed. Officials say haphazard planning, and the tendency to involve themselves in too many projects, has meant that the once cash-rich agency is likely to run into deficit in the next five years.
The MMRDA presently has funds amounting to Rs9,000 crore, which it uses to fund infrastructure projects in the city. However, it has taken up projects worth Rs2 lakh crore, only to improve the city’s transport.
Even though these projects are based on the public-private-partnership model, the MMRDA will incur a cost of around
Rs40, 000 crore, as viability-gap funding, to ensure the projects are completed. The MMRDA does not have that kind of money. “We are under threat of going into a deficit in four to five years. We are seriously looking at raising money from other sources,” Asthana had told HT in May.