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MVA government reduces development charges, PMC faces revenue cut
The Maha Vikas Aghadi (MVA) government’s decision to reduce development charges and premium charges by 50 per cent throughout the year is directly hampering the
The Maha Vikas Aghadi (MVA) government’s decision to reduce development charges and premium charges by 50 per cent throughout the year is directly hampering the revenue collection of all civic bodies including the Pune Municipal Corporation (PMC).
The civic body is set to lose Rs 350 crore revenue in 2021.
The PMC is already facing a financial crunch due to the Covid-19 pandemic, and now the civic body faces heat after the MVA decision.
In an attempt to boost the real estate sector, the state government took a decision to reduce development and premium charges.
On average, the PMC gives more than 2,500 building permissions a year. Usually, PMC gets around Rs 700 to 750 crore from development and premium charges every year.
In 2020-21 annual budgets, the PMC set a target of Rs 800 crore. Until date, the corporation has collected Rs 250 crore.
According to officials of the building development and construction department, the PMC will get another Rs 4 to Rs 5 crore up to 31st March 2021.
Prashant Waghmare, PMC city engineer said, “We cannot predict the impact on the civic body’s revenue on the background of the state government’s decision to reduce development and premium charges.”
One of the senior officials of the PMC said, “The PMC is already facing a financial crunch and now the state government has reduced a 50 per cent development charge. It will impact the annual budget of 2021-22.”
Hemant Rasane, chairman of the standing committee said, “I don’t think it will affect the corporation revenue collection. The PMC is exploring different avenues to generate income.”
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Development charges
Development charges are packing of a Property or Mortgage, including the negotiation and approval of plans and any assistance in obtaining zoning and necessary variances and financing for a specific Property, either initially or at a later date.
Under Section 124A of the Act shall be deposited with the Planning Authority before issuing of development permission/ commencement certificate.
What is a premium?
Premium typically refers to the multiple charges that are levied by the state with respect to approvals for initiating, progressing, and completing the area or additional area in a project.
These could include the fungible premium, premium paid for FSI (floor space index), open space deficiency premium, premium paid for more ground covered for construction, lobbies, lift wells, and staircase premium among others.
These premiums, cess, or levies (for staircases, lift well, lobbies) are paid to the municipal corporation.
