Maharashtra’s new housing policy could open the flood gates for corruption

By Vipin Agnihotri

Maharashtra’s new housing policy proposes that every project, whether private or public, a minimum of 20 percent of the space should be set aside for Lower Income Group (LIG) and Middle Income Group (MIG) and MIG housing, in return for additional FSI and tax benefits for the builder or developer. The pivotal factor here is that it applies to any construction, one building or many.

If experts are to be believed, the policy defines LIG units as flats spread over a maximum of 30 sq metres and MIG as those with 50 sq metre area. In my opinion, this is addressing the housing shortage from the wrong end. What is actually required is an environment that creates additional supply across the board and not reservations.

“Such kind of reservations becomes difficult to implement especially in up market locations. It is high time the government realized that any controls would lead to corruption,” pointed out Sheeba Mehrotra, MD, Pushpa Development Limited.

In my opinion, trying to impose this on a free market would lead to devaluing the property and would be especially tough in small projects. While in-principle housing for the poor, sounds good, eventually the market would determine their use. They may end up in different uses, which they were originally not meant for.

It is worthwhile pointing that if there is demand and the incentives are provided, then supply will become available. But to make it compulsory on builders to provide low cost housing is not very logical. It has come into the notice that lower income groups who have been reserved flats in small complexes in a high-end localities, will invariably sell and move away.

“The main objective of the housing policy is to create surplus supply and thereby provide affordable housing. Hence the government should quickly implement enabling acts and laws, so that this happens,” pointed out Rahul Khetan of Rahul Realty.

The welcome features in the policy say builders, are the additional FSI granted, which would lead to more meaningful development, developers developing infrastructure as part of housing projects and the boost to satellite townships. The other laudable features of the policy are the sale of flats on carpet area basis. Point to be noted here is that all around the world flats are sold on carpet area basis, which allows for more transparency in transactions and increase in confidence of the people.