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Workshop on Alternative Sources of Financing Urban Development
Organised by
- Ministry of Urban Development, Government of India
- National Institute of Urban Affairs
Date: 26 March 2009
Venue: Conference Room, NIUA, New Delhi
The
Government of India has taken several initiatives to improve financing of
urban infrastructure. The requirements of funds for the sector are so huge
that there is need to integrate these initiatives with other alternate
methods of financing. Several land based financing methods like higher
Floor Space Index (FSI), Transferable Development Rights (TDR), Impact
Fee, Area Linked Development Charge, External Development Charge,
Betterment Levy and Private Sector Participation have been used as tools
for financing urban development. In this context, the Ministry of Urban
Development in association with NIUA organized a Workshop on,
"Alternate Sources of Financing Urban Development" at NIUA on
March 26, 2009.
Dr. M. Ramchandran, Secretary, Ministry of Urban Development, MoUD inaugurated the workshop and guided the deliberations. He complimented NIUA to organize the workshop and said that it will be very useful to share experiences on initiatives using land as a resource for financing urban infrastructure.
Mr. V. K. Phatak, Former Chief Town and Country Planner, Mumbai Metropolitan Region Development Authority (MMRDA) and presently Director, National Housing Bank made a presentation on the subject. He brought out need for exploring more alternative sources of finances. Difficulties of fund incremental infrastructure to service additional growth, led to Impact Fees in US and Development Charge in Canada. Maharashtra Town Planning Act allows for such a charge. Punjab charges External Development Charges while granting permission for conversion for land. This usually suffers from lack of buoyancy. Instead of attempting to tax the land value increment on account of infrastructure, directly taxing the value of property at its inception would be a more effective way of obtaining capital receipts for financing urban infrastructure. This could be termed as an Infrastructure Benefit Tax (IBT). It could be introduced through suitable amendment to the Town Planning Acts. The tax base would be value of the property at the time of construction. This would ensure buoyancy that is absent in area linked development charges. Extensive discussions took place among the participants. Mr. A.K. Mehta, Joint Secretary (Urban Development), MoUD summarized the discussions and stated that the workshop gave inputs to alternative sources to financing urban development as a whole.
