Niti Aayog’s urban plan: Higher FSI, lower stamp duty

Lower stamp duty and a higher floor space index could help ease land prices and aid vertical expansion of cities, the Niti Aayog said as part of reforms it recommended to smooth India’s growing urbanisation.

A three-year action agenda unveiled by the government’s top think tank envisaged more skyscrapers, flexible land-conversion rules and increased availability of affordable housing.

As per Census 2011, 377 million people or 31.1% of the total population in India lived in urban areas. A 2010 McKinsey report had projected that Indian cities are expected to house approximately 590 million people by 2030.

“Unfortunately, the permitted floor space index (FSI) in Indian cities is extremely low, ranging from 1 to 1.5… Available urban space can be expanded by relaxing the permitted FSI,” the threeyear document, to be implemented by 2019-2020, states in its chapter on urban development.

The FSI measures the floor space in a building as a proportion of the area of the plot on which it stands. The lower FSI has resulted in Mumbai having on average just 4.5 square metres of space per person. As against this, in 2010, Shanghai had 34 square metres owing to a more liberal FSI.

Lower land prices by way of reduced stamp duty, according to the think tank, would not only check the flow of black money into real estate but also make housing more affordable for lowincome families. “Only a handful of states have lowered stamp duty so far. The results will show when low stamp duty is implemented across states,” said a housing and urban affairs ministry official.

Making the country’s stringent land-conversion rules more flexible to allow easy availability of urban land is another suggestion that, if implemented, would help build city infrastructure. “…making conversion transparent and flexible would go a long way towards creating a vibrant land market in Indian cities,” the report said.

However, urban sector experts are of the view that such sweeping recommendations might not be the answer to India’s growing urbanisation .

“These recommendations might or might not be in the right direction. Essentially, a broad overarching national recommendation is not a useful approach. What applies in one city might not hold good in another,” said Professor Partho Mukhopadhyay, senior fellow, Centre for Policy Research.