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Corporates land a neat New Year bonanza

Saturday, 5 January 2013 - 8:30am IST Updated: Saturday, 5 January 2013 - 7:14pm IST | Place: Mumbai | Agency: dna

If 40% of SEZ land is used for residential purpose, it will generate Rs3.08 lakh crore.

The state’s industrial policy, announced on January 2, can lead to a windfall gain for a few corporate houses and developers.

The policy frees 35,000 acres of special economic zones (SEZ) land for residential development. It basically allows firms to develop 40% of the total available SEZ land for residential use with the remaining 60% to be utilised for commercial purposes.

This has the potential of generating revenue of almost Rs3.08 lakh crore for the corporate and real estate firms involved.

Back calculation

Going by the prevailing land prices of 124 SEZs spread across various parts of the state, DNA arrived at the average market price as Rs2,000 per sqft
Government Industrial
policy will free up 35,000 acres of land for residential and commercial purposes
Considering the
prevailing FSI of 1, construction can be carried out an acre of land or 44,000 sqft
A construction
in 1 acre can fetch Rs8.8 crore for developers (Rs 2000 x 44,000 sqft)
Therefore, development
in 35,000 acres of land can generate a revenue of Rs 3.08 lakh crore
And this
is a conservative estimate

Bhushan Gagrani, CEO, Maharashtra Industrial Development Corporation (MIDC), said: “The large chunk of land, acquired under the SEZ policy, had been lying idle for the past five years. The government’s step will boost industrial growth and create thousands of jobs.”

The state government’s decision to free SEZ land for industrial and residential use has put Bharat Forge — with 11,500 acres in Pune — above India’s largest real estate player, DLF, which has a land bank of 7,900 acres. Also, because of this new policy, industrialist Mukesh Ambani, his close aide Anand Jain and Reliance Industries now own about 7,500 acres in Maharashtra.

Gagrani defended the decision that has been widely criticised by activists, with some smelling a scam. “In the past only 50% of SEZ land was given to industry. Now we have made it to 60%. Corporate houses can build houses and sell them in the open market,” said Gagrani.

But social activist and noted layer YP Singh is not convinced. He says any decision related to land should be taken by the housing minister and not Narayan Rane, who is the industries minister. “Rane has several big groups among his friends; and he always tries to help them in some form or the other... The new industrial policy shows it once again. When he was the revenue minister, he helped corporate groups acquire land at cheap rates... this seems like a big land scam in the offing.”

Gagrani insisted that there was no scope for misuse because the government would not allow the residential sections to be developed until the companies concerned first fully developed industries on the other 60% of land. “They have to follow certain procedures before using the land for the construction of houses,” he said.

The government first started acquiring land under SEZ about a decade ago. Some changes in the policy was introduced in 2005-06.

Ulka Mahajan, an activist based in Raigad who has always maintained that the SEZ policy is a ‘land grab’ policy, says the acquisitions were done by the government. “They acquired land from farmers and parcelled it off to private companies.”

Niranjan Hiranandani, the MD of the Hiranandani Group, was all praise for the policy. “It is a good decision because everyone needs a house,” he said. “But I am doubtful about its implementation.”

Other developers suggested that the Congress-led Democratic Front government in Maharashtra changed the policy keeping in view the requirements of the 2014 state and general elections.

The NCP tried to keep itself clear of any controversy. MLA Nawab Malik instead said the government should explain how the new policy will fuel growth. “They should prove it with facts and figures. Otherwise this will soon turn into red tape. We have several good policies, but they are rarely implemented.”

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