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Niti Aayog’s plan for urbanisation: Lower stamp duty, higher floor space index

A three-year action agenda unveiled by the government’s top think tank envisaged more skyscrapers, flexible land-conversion rules and increased availability of affordable housing.

india Updated: Aug 25, 2017 22:26 IST
Moushumi Das Gupta
Moushumi Das Gupta
New Delhi, Hindustan Times
Niti Aayog,Urbanisation,Urban cities
Making the country’s stringent land-conversion rules more flexible to allow easy availability of urban land is another suggestion that, if implemented, would help build city infrastructure.(File)

ower stamp duty and a higher floor space index could help ease land prices and aid vertical expansion of cities, the Niti Aayog said on Thursday as part of a slew of reforms it recommended to smooth India’s growing urbanisation.

A three-year action agenda unveiled by the government’s top think tank envisaged more skyscrapers, flexible land-conversion rules and increased availability of affordable housing.

As per Census 2011, 377 million people or 31.1% of the total population in India lived in urban areas. A 2010 McKinsey report had projected that Indian cities are expected to house approximately 590 million people by 2030.

“Unfortunately, the permitted floor space index (FSI) in Indian cities is extremely low, ranging from 1 to 1.5… Available urban space can be expanded manifold by relaxing the permitted FSI,” the three-year document, to be implemented by 2019-2020, states in its chapter on urban development.

The FSI measures the floor space in a building as a proportion of the area of the plot on which it stands. The lower FSI has resulted in Mumbai having on average just 4.5 square metres of space per person. As against this, in 2010, Shanghai had 34 square metres owing to a more liberal FSI.

Lower land prices by way of reduced stamp duty, according to the think tank, would not only check the flow of black money into real estate but also make housing more affordable for low-income families. “Only a handful of states have lowered stamp duty so far. The results will show when low stamp duty is implemented across states,” said a housing and urban affairs ministry official.

Making the country’s stringent land-conversion rules more flexible to allow easy availability of urban land is another suggestion that, if implemented, would help build city infrastructure. “…making conversion transparent and flexible would go a long way towards creating a vibrant land market in Indian cities,” the report said.

However, urban sector experts are of the view that such sweeping recommendations might not be the answer to India’s growing urbanisation and a more focused approach is required instead.

“These recommendations might or might not be in the right direction. Essentially, a broad overarching national recommendation is not a useful approach. Cities are contextual, what applies in one city might not hold good in another. Each city needs to decide what kind of growth they can facilitate and need to build local capacities accordingly,” said Professor Partho Mukhopadhyay, senior fellow, Centre for Policy Research.

The Niti Aayog has also recommended releasing substantial chunks of urban land belonging to central and state governments that have remained unused or have been encroached upon. “These vacant lands can be monetised to provide affordable housing,” said a ministry official.

Prof Debolina Kundu of the National Institute of Urban Affairs said it was not the first time such reforms had been suggested. “Unless a proper road map is framed that spells out specifics on doables, the various pros and cons, these recommendations will end up being just a wishlist. For instance, a higher FSI will allow sky scrapers where day-to-day management of building requires a high cost. It will house the rich. It is not going to address the shortage in the affordable housing category.”

The report admitted that it won’t be easy to implement the changes. “Removal of many of the constraints discussed above will admittedly take more than three years… Nevertheless, a beginning in this direction must be urgently made. States must be sensitized to the benefits of policies that would help bring land prices down. Where the central government needs to take action, it must do so within the next three years,” the report said.

First Published: Aug 25, 2017 22:07 IST