Maharashtra govt mulls hiking rent for leased plots

Island city has 1,292 leased plots, of which leases of 517 have expired

Grappling with a cash crunch and fiscal challenges, including the seventh pay commission burden and a possible loan waiver, a section within the state government is hoping to make the most of its key resource — land.

The state government’s revenue target for 2017-18 from the renewal of lease rents is Rs3,200 crore. (HT File Photo)

From the outright sale of government land to eyeing a manifold hike in the rent of leasehold plots, for which a formula is being considered, the revenue department is looking at ways to bolster the state’s non tax revenue.

The state government’s revenue target for 2017-18 from the renewal of lease rents is Rs3,200 crore.

In 2016-17, this target was Rs1,600 crore. However, the state government still failed to achieve it, with the lease policy yet to be finalised.

“Land is our largest resource. If we have to meet demands such as the loan waiver, then our only option is to utilise the land,” said a senior minister, who did not wish to be identified.

“We can get around Rs1,000 crore just by selling a plot, for instance, one of the mill lands. Similarly, while renewing expired land leases, we can easily fetch up to Rs5,000 crore-plus by way of new rents, penalties and transfer from lease to ownership,’’ added the senior minister.

He added that the existing policy on leasehold plots dates back to 2012 and is clearly in favour of tenants as opposed to the government.

“The 2012 government resolution states that according to a high court order, the notional value of the government’s share will be 25% and that of the tenant will be 75% in state-owned leased plots. The rent we charge ranges from 2% to 25%, so we get nominal returns. We want to study high court order to see if it can be challenged. Why should an owner’s share be limited to just 25%?’’ he added.

The third-party rights created, he argued, ended once the lease period expired.

The island city has 1,292 leased properties, of which the leases of 517 have expired.In the suburbs, there are 295 such properties, of which the leases of 49 have expired.

However, sources in the government said that any hike in the rents of leasehold properties in Mumbai cannot be drastic, given the third-party rights and legal implications.

From 1999 onwards, the state governments has been unsuccessfully trying to gain revenues from old properties leased during colonial times.

Currently, the rents of these properties is nominal and starts at Rs1 per square metre.

Last year, the state government amended the Maharashtra Land Revenue Code to enable the transfer of leased land into freehold land after levying a certain penalty on the users.

However, a committee set up under revenue secretary Manu Kumar Srivastava is yet to finalise the formula for the penalty and nitty gritties of such a transfer, including what land can be given this option.Once the committee submits its report, a final decision on leasehold plots is likely.

But, even then, meeting the requisite revenue target for this year seems far fetched.

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