take­five

vcf: never too late to start

Hindustan Times (Chandigarh) - Estates - - FRONT PAGE -

What is value cap­ture fi­nanc­ing? It is one of the tools gov­ern­ments use to fund in­fra­struc­ture projects. This model is based on the premise that since in­vest­ments in pub­lic in­fra­struc­ture usu­ally lead to eco­nomic de­vel­op­ment and higher land prices, the pub­lic or the own­ers of real es­tate lo­cated close to the de­vel­op­ment should be made to pay for it

Mech­a­nisms used to raise funds: Those buy­ing real es­tate along the in­fra­struc­ture de­vel­op­ment gen­er­ally pay ad­di­tional tax, area and value based de­vel­op­ment charges, trans­fer de­vel­op­ment rights, im­pact fees, fees for chang­ing land use, land value in­cre­ment tax, value based de­vel­op­ment charges, in­cen­tive FSI and town plan­ning schemes such as TOD

Tar­get agen­cies: The value cap­ture pol­icy frame­work is de­signed for the state gov­ern­ments and Cen­tral gov­ern­ment min­istries such as min­istry of rail­ways for high speed rail projects and ex­pan­sion of rail­way net­work through SPVs, de­part­ment of in­dus­trial pol­icy and promotion to set up spe­cial eco­nomic zones and in­dus­trial cor­ri­dors such as the Delhi Mum­bai In­dus­trial Cor­ri­dor and smart cities mis­sion

Work cut out for agen­cies: Un­der the scheme, all in­fra­struc­ture min­istries will first have to iden­tify the area of in­flu­ence which would in­clude both the ac­tual project area and the projects that are likely to get im­pacted. Min­istries will also have to pre­pare a value im­pact as­sess­ment re­port to see how much fi­nan­cial value the project would gen­er­ate over the years. These will be part of the de­tailed project re­port

The mech­a­nism: Af­ter the in­fra­struc­ture min­istry has iden­ti­fied a VCF tool and held talks with state gov­ern­ments, a mem­o­ran­dum of un­der­stand­ing will be signed be­tween the Cen­tre and the state gov­ern­ments and the lo­cal bod­ies

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