Maharashtra Government has announced yesterday that it will be constructing around 15,000 apartments of 300 square feet each for the economically weaker section of the society.
It plans to construct these apartments and sell them at 30,00,000 (Thirty Lacs each) making for a cost of 10,000 per square feet.
Out of this Maharashtra Government will give a subsidy of 2,50,000 from its own kitty and 2,50,000 from the National PMAY (Prime Minister Awas Yojana). Thus the apartment will cost the buyer 25,00,000. This works out to a cost of 8333.00 per square feet. Which is not cheap, only cheaper by comparison.
The going rate for an apartment in Goregaon is around 20,000 to 30,000 square feet. Therefore Maharashtra Government and its Minister Jitendra Awhad called this scheme a golden opportunity for the EWS to have a cheap apartment.
So far so good.
The plot size is not mentioned in the details that are available. But working in the reverse, if 15000 apartments of 300 square feet are to be considered at an FSI of 2.5 then the plot size will be (15000 apartments x 300 Square Feet each) Divided by FSI of 2.5, which works out to be 18,00,000 square feet. Divide this by 44,000 and you get 40.9 or 41 Acres as the plot size for EWS. Now this is 50% of the total plot size, thus 100% would work out to 82 Acres of Green Zone Land.
The project will be done in PPP mode and the builder / developer will be given 50% of the plot for free sale.
Now let us get into the mathematics of this scheme.
The plot is in green zone, thus it cannot be developed without impacting the environment. Thus in the name of the poor, the plot’s zoning is being changed.
What this does is that suddenly a plot that was worth nothing becomes worth a lot of money.
41 Acres of plot would translate to a development potential of 45,10,000 Square feet. As this is being done in the name of the poor, an FSI (Floor to Space Index) of 2.5 has been allowed.
Just by giving up 50% of the land the builder will get to develop and sell 45,10,000 Square feet of space. At the going rate of 20,000 to 30,000 per square feet, this will translate into a deal of 11,275 Crores! (taking average price at 25,000)
The apartments constructed for EWS will be sold for 25,00,000 each getting the government a revenue of 25,00,000 x 15,000 = 3750 Crores and then Stamp Duties and Registration Charges too!
Now assuming that the cost of construction of a tower is about 2000 Rupees per square foot, the cost of the apartment to the government will come to around 6,00,000 per apartment. Add to this development cost of another 2000 rupees per square foot, the cost will increase by another 6,00,000. An apartment constructed at a cost of 12,00,000 is being sold for 25,00,000 while giving a subsidy of 5,00,000. Even when selling the EWS apartment for 25,00,000 the government will still make a profit of 1950 Crores!
Similarly for the free sale component, the cost will come to the same. That is the cost of apartment and development will come to 4000 Rupees per square feet and it will be sold at an average of 25,000 Rupees per square feet.
The Free Sale component will get the builder a profit bonanza of 21,000 x 45,10,000 (25,000 – 4000 Construction and Development Cost) = 9471 Crores.
All in the name of poor.