The Maharashtra government has decided to increase floor space index (FSI) to 3 from the current 2.5 for buildings which have come up between 1940 and 1960. The decision opens up the possibility for redeveloping 16,461 old buildings.

FSI is the ratio of total floor area of a building to the size of the plot. It indicates the maximum construction allowed on a plot in a particular area.

That is, if the FSI is one and the plot size is 1,000 sq ft, the maximum construction allowed on that plot will be 1,000 sq ft. The state's initial estimates state an additional FSI of 300 million sq ft will be available in phases. A senior government official, who did not want to be quoted, said the redevelopment would involve Rs 3 lakh crore (Rs 3 trillion) under private public partnership.

"If we calculate the average FSI rate at Rs 10,000 per sq ft, it comes to Rs 3 lakh crore," he added. Chief Minister Ashok Chavan said the government is keen to hasten the process.

Developers said the move would release more housing stocks in the market but prices are unlikely to reduce.

"It will be easier to convince the tenants. I expect more old buildings to come under redevelopment quickly. The true market potential of such buildings can be discovered now,'' said Pujit Agarwal, managing director of Orbit Corporation, a redevelopment projects player.