CHENNAI:The Tamil Nadu government is seeking the help of the Indian Institute of Management, Bengaluru, in preparing the value capture policy for all Atal Mission for Rejuvenation and Urban Transformation (AMRUT) cities and towns in the State.
The Ministry of Urban Development has come out with a policy framework for an innovative resource mobilisation through the value capture financing (VCF) to enable States and cities to raise resources by tapping a share of increase in value of land and other properties such as buildings, resulting from public investments and policy initiatives in the identified area of influence.
The proposed VCF policy framework that works as a guide to states and cites will assist in assessing the scope of resource mobilisation, identifying the area of influence of proposed projects and optimising resource mobilisation.
The different instruments of the VCF are land value tax, fee for changing land use, betterment levy, development charges, transfer of development rights, premium on relaxation of floor space index and floor area ratio, vacant land tax, tax increment financing, zoning relaxation for land acquisition and land pooling system.
A high-level meeting was held on January 31, where the Tamil Nadu Urban Finance and Infrastructure Development Corporation Limited (TUFIDCO) has sought the help of the IIM, Bengaluru.A total of 33 towns in the State have been selected under the AMRUT scheme, of which eight are within the jurisdiction of the Chennai Metropolitan Development Authority and 25 are under the Directorate of Town and Country Planning (DTCP).
The Centre is also keen on integrating the VCF into project feasibility assessment for systematic and large-scale adoption of capturing a part of potential increase in the value of land and other properties resulting from the proposed investment.
It is learnt that the TUFIDCO has asked the CMDA to submit details like planning development fund, charges for premium floor space index, revenues from development charges, open space reservation charges and L&T Ramboll report on densification of MRTS corridor to the IIM, Bengaluru.
The Centre is implementing the VCF as the municipalities, which receive a fair share of support in the form of revenue and grants from the State as well as the Central government, are still struggling to meet their fiscal needs. A burgeoning urban population has also resulted in increased demands from the population for provision of services and amenities. Thus, adoption of the VCF mechanism by municipalities will strengthen and augment the fiscal resources of local bodies, sources said.
Urban infra
1A McKinsey report has estimated that around `3,25,000 crore of urban infrastructure investments are required annually
2The high-powered expert committee report, 2011, projects urban infrastructure requirement at 0.75%, which will increase to 1.5% of the GDP by 2032 (`97,500 crore to ` 1,95,000 crore annually)
3 Presently, national urban missions are investing about `32,500 crore annually, leading to an investment gap of nearly `65,000 crore
4 Value capture financing practised widely in the world is based on the principle that private land and buildings benefit from public investments in infrastructure and policy decisions of governments
5 VCF tools can be deployed to capture a part of the increment in value of land and buildings. In turn, they can be used to fund projects being set up for the public by the Central/State governments and urban local bodies