Maharashtra could sell prime lease plots at 10th of market rate

Even as the proposal has stirred a debate, it turns out that the cabinet favours allowing such transfers at highly discounted rates. (Image used for representational purpose)

Thousands of acres of prime public land in Maharashtra, currently on lease, could be disposed of at just a tenth of their market value.

On September 13, The Indian Express reported that the Devendra Fadnavis government had proposed to permit transfer of plots, previously allotted to residential societies and agriculturists on lease or occupancy rights basis, into freeholds. On Tuesday, the cabinet also discussed a proposal in this regard. A final decision was deferred with the cabinet asking the state’s Revenue Department to make certain changes to the proposal.

Even as the proposal has stirred a debate, it turns out that the cabinet favours allowing such transfers at highly discounted rates. Based on recommendations by a government panel, the department had proposed premiums of 60 per cent and 75 per cent of the ready reckoner (RR) values to allow such conversion for housing societies and agricultural lands respectively. But a senior official confirmed that the cabinet had instructed the department to reduce the proposed premiums further. In fact, sources said, some senior BJP ministers wanted the premiums for residential societies to be as low as 10 per cent of the RR values. RR rates are market values of plots as determined by the government. In most cases, these are lower than actual market values of the properties. Ironically, the state government collects 50 per cent of RR value as premium for permitting a change of use for leased land.

Statistics show there are at least 1,14,000 public land plots that have been granted on lease or occupancy basis. Most of them have been allotted for residential or agricultural use. In Mumbai alone there are 1,298 leased plots, including allotments to housing societies of elected representatives, judges, civil servants, celebrities, and state government officials. Besides, as many as 3,000 housing societies in Mumbai exist on such plots. The state’s bureaucracy seems divided on the issue.

Senior bureaucrat RA Rajeev, who was on the panel as the then Principal Secretary with the Finance Department, had formally submitted a dissent note, stating that even the 60 per cent premium that the department has proposed for housing societies is low. Several senior bureaucrats concur with this viewpoint. “The plots are a constant revenue stream to the government. Ideally, they should not be disposed of. If the government wants to go ahead with the move, they must at least charge 100 per cent or more of the RR value,” an official said.

Activist Shailesh Gandhi, who has in the past filed a PIL against disposal of public lease plots at concessional rates, said, “The government must not dispose of these plots since they provide a revenue stream that is a hedge against inflation.” Gandhi added, “If the government disposes of the plots at highly discounted rates, it would be an indicator that it is not bothered about safeguarding the revenues for the poor. The panel’s report should have been put in the public domain before the cabinet decided on it.”

But Salil Rameshchandra, President, Federation of Grantees of Government Land, countered this view. “Most housing societies allotted on such plots in the suburbs of Mumbai in the 1940s and 1950s had paid market rates at that time. The conversion should either be permitted free-of-cost or for low premiums to make it viable. Most of these societies have now grown old and are facing redevelopment hurdles as the land is not freehold,” he said. Rameshchandra backed the suggestion that the conversion be permitted at one-tenth of the RR values.

The government has contended that the decontrol exercise will see an estimated revenue of Rs 20,000 crore through premiums. In 2012, the then Congress-Nationalist Congress Party government had faced flak for permitting conversion of lease plots to occupancy rights at concessional rates.