According to a report in English daily Indian Express the Maharashtra government will be using the not so well know rule to stay the 2017-18 ready reckoner rates for land in Mumbai Metropolitan Region. Ready Reckoner (RR) rates are market values of a property, which are determined by the government for payment of stamp duty, which directly impact the construction cost of real estate projects, since several premiums and charges collected by the municipalities are linked to them.
The builders had earlier argued that the hike in the rates has been abnormal, which led to a slump in the construction sector. “The hike this year was the lowest ever in seven years. The average hike in Mumbai was under 4 per cent. This shows that the general slowdown in the sector had been accounted for,” said an official to the Indian Express, who did not wish to be named.
According to the Indian Express, it was pointed out to the government that the IGR did not have powers to stay the RR rates once published. But the government then took up a proposal to use Section 21 under the General Clauses Act to consider the building industry’s demand. The provision basically states that a person empowered to issue a notification or an order also has the power to vary or rescind such a notification or an order. In the relevant context, it means the IGR can invoke this section to modify its own order.
A top builder, however, justified staying of the land rates. “These days, land is hardly sold in Mumbai. The government mostly arrives at RR rates for land on the basis of flat sales, which is an inaccurate projection. In several pockets, the land rates fixed are higher than the true market values. This has further pushed up construction costs, and has hit redevelopment projects the most,” said the builder to the Indian Express.