Maharashtra Chief Minister Devendra Fadnavis recently approved a new Transferable Development Rights (TDR) policy, aiming to control property prices while encouraging land acquisition for public amenities. The new policy allows builders to obtain twice the amount of TDR for land that is surrendered to construct public amenities. It would mean that giving up a 5,000 sq. ft. area of land for, say, building a hospital, would enable the builder to get TDR for a 10,000 sq. ft. area of land.
“We have seen that it is becoming increasingly difficult for municipal corporations to get land for public amenities and this leads to Development Plan being incomplete. So, we are bringing this new policy as an incentive for people to give us land,” said CM Fadnavis, as reported in this Economic Times article.
However, to prevent builders and developers from abusing the new policy, TDR will now be linked to Ready Reckoner (RR) rates of the land surrendered as well as the land to be developed. A recent Mint article suggests that since the rates are highest in south Mumbai, “TDRs generated in high-value areas will also be absorbed in cheaper areas, and will arrest further strain on civic infrastructure in high-density pockets."
Former Municipal Commissioner Sitaram Kunte explained:
"Indexing will help to reduce distortion in the TDR market. The TDR generated in low-value eastern suburbs, was used in high-value western suburbs. This trend now will be controlled. And vice versa, if TDR generated in high-priced land is utilized in low-value land, it will have less deduction, which will encourage the land owners in high-value land areas to come forward for handing over of the reservations to the Municipal Corporation of Greater Mumbai (MCGM) in lieu of TDR."