The World Bank will send a team of experts to Mumbai soon to draft a $2 billion business plan on housing, social infrastructure and governance.
The plan would be prepared jointly by the WB team along with city-based experts and state officials in 100 days, after the Bank experts' arrival. The WB team is expected to reach Mumbai in the next two weeks.
While the modalities for funding the project are yet to be worked out, informal discussions had signaled that the WB is willing to offer a loan of $1 billion (Rs 4,500 crore) and provide guarantee to the Maharashtra government's market borrowing plan.
For Maharashtra, a WB guarantee for its market borrowings plan would result in a sharp upgrade of its creditworthiness (current rating at AAA+). The state government would, however, have to comply with its written commitment made to the Union government on three reform initiatives. The state, through a signed undertaking, had committed to repeal the urban land ceiling and regulation Act, 1976 (ULCR Act), along with delinking its property tax in relation to the gross ratable value.
While forwarding the state government's proposal to the WB for consideration, the Union government has categorically stated that reform by Maharashtra on these aspects as well as mobilisation efforts to generate additional tax and non-tax revenue prior to the WB-aided development plan would be an essential requirement.
The state government had earlier attempted to rationalise property tax structures across Mumbai and its suburbs, a move that met with stiff opposition from BJP leaders Kirit Sommaiya and Raj Purohit.
Currently property owners in the suburbs of Mumbai pay tax at the rate of Rs 2 and even up to Rs 9 per square foot of property tax, while in the island city, that boasts of the most expensive dwelling and commercial units, has a low tax level.
For instance, in the Marine Line region, a mere 0.05 paise per square foot is charged as property tax.
The Union government expects this anomaly to be rectified through the rationalisation of property taxes across the city and its suburbs.
Similarly, the repealing of the ULCR Act is expected to further release tracts of land in the city for development purposes and meeting the social housing needs of the average citizen. While even the Union government has scrapped the ULCR Act, Maharashtra is probably the only state that is yet to repeal the Act.