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Rise in premium FSI puts developers in a tight spot

In South Mumbai, developers can avail an FSI of 1.33, while it is 1 in the suburbs; the rest, developers can buy in open market, or from the government by way of premium FSI or TDR (transfer of development rights).

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The state government's decision of increasing the premium floor space index (FSI) from 30% to 60%, and connecting with the new ready reckoner (RR) rates are making redevelopment projects unviable.

Earlier, the state government used to charge 30% premium for additional FSI, with the RR rate of 2008. "Now, the cost of the project will be manifold. We are calculating as per the new formula, which shows that it won't be easy to undertake the redevelopment project," said Sunil Mantri, president of National Real Estate Development Council (NAREDCO), developers' umbrella body.

Mantri said that the state government may earn the revenue, but developers will be reluctant to do the project. "The government should clear its stand about whether they want to only earn revenue, or want development as well. Because of this, housing prices will also go up, so no one will able to purchase them. Also, people who are staying in old and dilapidated buildings will continue to live in them," said Amin Patel, Congress legislator from Kalbadevi.

Patel said that in his locality, many old buildings were demolished for 'redevelopment'. "But the state government continuously changes its policies, and now, rise in premium FSI is making developers delay projects. How long will people live in rented houses? Some developers have even stopped paying rent as well, and inform residents that they are unable to undertake projects," Patel said, adding that through this, people may be left in the lurch lurch due to the government's 'wrong and anti-development' policies.

In South Mumbai, developers can avail an FSI of 1.33, while it is 1 in the suburbs; the rest, developers can buy in open market, or from the government by way of premium FSI or TDR (transfer of development rights).

Earlier, developers used to buy 0.33 TDR from the government, and the rest from private sellers. Now, the government wants to sell 0.60, as against the earlier 0.30 FSI, with the current RR rates. In most places, the RR rate nearly as much as the market rate.

A prominent SoBo builder, on condition of anonymity said: "We are already paying fungible FSI for the lobby, balcony, lift and flower beds. Earlier, these items were free of cost. The government must think twice before bringing such anti-development policies because it will have ramifications on Mumbai's development."

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