30% of Mumbaikars's flat cost goes into bribes

The consumer is the sacrificial goat and the builder the cash cow. From politicians to RTI activists and gangsters to the babus: everyone extracts his pound of flesh before a real-estate project sees the light of day.

“The underworld’s demands have steadily gone down over the years but officials have developed a voracious appetite for bribes,” a Chembur-based developer said (see box for details). Now, BMC officials seek at least Rs1,500 per sqft,” he said. “It can be Rs2,000 per sqft depending on concessions [violations].”

The other major heads that involve unofficial payments are local corporators, shakha pramukhs of political parties and gangsters, he said. These account for at least 15% of the cost. “One-third of the cost goes into bribing various people. And the percentage goes up in projects that blatantly violate rules.”

And what about the consumer? “If we do not have to pay bribes, the flat prices would come down by 30%,” the developer said. Not to mention the builder’s own profit. It fluctuates from 30% to 100%, depending on the cost of land acquisition. And this has to be coughed up by the hapless buyer.  

The bulk of the bribe money goes to officials in the BMC’s building & proposals department and officials who are in charge of TDR (transfer of development right) at the Maharashtra Housing and Area Development Authority (MHADA).

“You may know top officials at the Mantralaya and the BMC, but the fate of your project remains in the hands of junior officials at the BMC,” a developer from Khar said. “The worst part is they do not move the files even after all their demands have been fulfilled.”
The developer has a full-fledged team of seven people just to liaise with BMC and MHADA officials. There is no option but to give in to their demands, he said. The civic laws are such that even a small inconsistency can be used [by the officials] as a tool to stall a project, the developer said.

“The entire process of securing permissions breeds a culture of corruption. Permissions are given in stages; and at every stage, you have to pay a bribe.”

Since redevelopment projects form the bulk of the ongoing projects in the city and a major chunk of the FSI (floor space index) in such projects is used to accommodate existing tenants, negotiating and securing TDR is important, the developer said. 
The exercise of paying bribes at various stages is not limited to Mumbai. It covers the entire Mumbai Metropolitan region, including Navi Mumbai, Thane and Kalyan-Dombivli.

“Be it the Thane Municipal Corporation (TMC) or the City and Industrial Development Corporation of Maharashtra Ltd (Cidco) or the Navi Mumbai Municipal Corporation (NMMC), nothing will move without paying money,” a member of the Builders Association of Navi Mumbai said. “Once you acquire plots from Cidco at a high price, it becomes imperative for the developer to cut corners if he has to make a profit and officials make sure they get their share of the booty.”

The percentage of bribe money is higher for projects involving plots that belong to the satellite city’s Project Affected People, the member said.

When contacted, Paras Gundecha, president of Maharashtra Chamber for Housing Industry, would neither confirm nor deny the bribe culture prevalent in real estate business. “I do not want to comment on this matter. Please leave me out.”

Municipal commissioner Subodh Kumar evaded the issue of civic babus demanding bribes. He instead said, “Why are builders paying bribes? Are they not equally at fault if they are doing so?” He, however, said any builder could meet him if their files were not moving. “Let them report the matter to me. I will investigate the case,” he said.