Mumbai: A year after the Adani Group won the bid for the inordinately delayed redevelopment of the slum sprawl of Mumbai’s Dharavi, the project is still yet to fully take off and is embroiled in a controversy about the concessions given to the developer.
Opposition parties accuse the Eknath Shinde-led state government of giving undue incentives to the Adani Group, with the Shiv Sena (Uddhav Balasaheb Thackeray) announcing a protest march to the Mumbai office of the Adani Group on 16 December.
At the centre of the ongoing controversy are the norms regarding Transferable Development Rights, or TDR — a concept that allows developers to transfer the unused development potential of a plot and use it elsewhere in zones of the city that are not fully developed.
According to the Opposition, the ruling Eknath Shinde government has tweaked building development rules related to TDR to give Adani incentives.
मुंबईच्या गळ्याशी येणाऱ्या विकासकाला जाब विचारण्यासाठी पक्षप्रमुख मा. श्री. उद्धवसाहेब ठाकरे ह्यांच्या नेतृत्वाखाली धडक मोर्चा! pic.twitter.com/K9VGLTUwWr
— ShivSena – शिवसेना Uddhav Balasaheb Thackeray (@ShivSenaUBT_) December 7, 2023
Both Adani Group and the ruling coalition have denied this allegation. The state government says the terms and conditions of the Dharavi redevelopment tender were finalised during the former Uddhav Thackeray-led Maha Vikas Aghadi (MVA) government’s tenure. The MVA government comprised the undivided Shiv Sena and Nationalist Congress Party (NCP) and Congress.
However, ThePrint has learnt that the government resolutions (GRs) based on which incentives have been given to the Adani Group were issued in 2018 and 2022.
In 2018, it was the Bharatiya Janata Party’s (BJP) Devendra Fadnavis who led a coalition of the BJP and the then undivided Shiv Sena. Likewise, the 2022 GR was issued by the incumbent government of the Eknath Shinde-led Shiv Sena and BJP.
The Ajit Pawar-led NCP faction, which is the third ally in the ruling coalition, joined the government only in July 2023.
ThePrint has seen copies both resolutions. The GRs were issued before the Adani Group won the bid to redevelop Dharavi — a fact that the conglomerate is now stressing to refute charges of favouritism. However, although the Maharashtra government approved the Adani Group’s bid in July, Adani’s interest in the project was well known even when the 2022 GR was introduced.
Meanwhile, the project is yet to start on the ground as the state government has yet to issue one final notification in a string of notifications and circulars it had to publish to implement all the incentives promised to the Adani Group.
Requesting anonymity, a senior official of the state housing department said, “The day all the notifications are out, the clock will start ticking for the developer to complete the project. The only thing that remains now is the final notification on allowing the developer certain incentives with regards to Transferable Development Rights (TDR)”.
The state government issued a draft notification on the TDR incentives, as outlined in the 2022 GR, on 7 November, inviting suggestions and objections within one month of the date of publication of the notice.
It is this draft notification that has sparked the most recent controversy and has become a bone of contention between the government and the Opposition.
According to the Opposition, the state government’s decision to change the rules that govern TDR via its notification has given the Adani group a huge monetary advantage.
ThePrint tried to reach S.V.R. Srinivas, chief executive officer of the Dharavi Redevelopment Project, via calls and text message. This copy will updated if and when a response is received.
Also Read: Residents unsure of Adani’s bid to redevelop Dharavi slum amid financial setbacks
The Dharavi revamp project
The Dharavi redevelopment project was first conceived by the government of the Congress and the undivided Nationalist Congress Party (NCP) in Maharashtra in 2003 and a formal notification was issued in 2004.
According to data from the state government, Dharavi is spread across 259 hectares, of which 173.9 hectares will be part of the redevelopment project. Of this, 147.4 hectares are estimated to be currently occupied by slums.
With Dharavi being a complex area comprising long stretches of multistorey slums, standalone buildings, commercial establishments, industries, and tanneries, the project has so far been a non-starter despite previous governments having made a few attempts to tender it out.
This made the state government take some measures to sweeten the deal for potential bidders and make the large redevelopment project more palatable.
Based on the 2018 government resolution, the Fadnavis government invited fresh bids for the project. Dubai’s Seclink Technology Corporation emerged as the highest bidder for the project, followed by Adani Infrastructure.
However, the Thackeray-led MVA government scrapped this tender in October 2020, saying that a 45-acre railway land parcel that later became a part of the project was not considered in the tender process.
In October 2022 — two months after the Shiv Sena-BJP government under Shinde was sworn in — the dispensation invited fresh bids, in which the Adani Group emerged as the most preferred bidder.
The TDR controversy
One of the measures taken by the state government to make the project more favourable for the developer is to be able to use TDR without indexation, according to the state urban development department’s draft notification dated 7 November, which ThePrint has seen.
Generally, the value of the TDR is indexed to the ready reckoner rate of the land, and the value of slum TDR is typically lower than other forms of TDR.
Moreover, according to the original development norms, the use of the TDR was indexed to the location of the receiving plot. This means, under the norms, the TDR could be directed to areas that have more development potential and not to areas that are almost fully developed, where it only could be used partially.
In its GR dated 5 November 2018, the state government under Fadnavis approved making a change in Mumbai’s Development Control Regulations. This would allow the special purpose vehicle formed for implementing the Dharavi revamp project to use or sell the TDR generated from the project anywhere in Mumbai, in the suburbs as well as in the Mumbai City district, which covers the southern and central parts of the city.
Further, after the Shinde government took over, it offered a few more concessions for the project and decided to invite fresh bids. In its GR dated 28 September 2022, the state government said: “Keeping in mind the conditions that have arisen out of the COVID-19 pandemic and the stagnation in the real estate market, the state cabinet decided to make some improvements in the terms and conditions by including railway land (of approximately 47.37 acres) in the project and give some additional concessions for the project”.
It was this GR that did away with the indexation of TDR generated from the Dharavi project.
By doing so, the state government has enabled two things. One, charging a higher rate for the TDR than the ready reckoner rate of Dharavi, although the state government has capped this price at 90 percent of the ready reckoner rate of the receiving plot.
Second, it allows TDR in full quantum of buildable area anywhere in the city, including the more developed parts, such as south and central Mumbai.
The same notification also made it mandatory for all developers in Mumbai to prioritise TDR generated from the Dharavi project for their use. This government resolution also mandated that the Dharavi TDR be used on priority, making developers compulsorily buy 50 percent of their TDR requirement from the Dharavi project.
However, the notification dated 7 November 2022 reduced this requirement to 40 percent. According to state government officials, this means that developers will have to mandatorily buy 40 percent of their TDR requirement from the special purpose vehicle set up for the Dharavi redevelopment project.
Also Read: Shinde govt revives delayed Dharavi revamp, but fed-up residents want to rebuild own societies
The allegations
According to the opposition, doing away with indexation and making it mandatory for other developers to buy at least 40 percent of the TDR they need from the Dharavi SPV will bring the Adani Group a huge monetary advantage.
Mumbai Congress President Varsha Gaikwad had last month slammed the state government notification about TDR, which came ahead of Diwali, as a “Diwali gift” to the Adani Group.
This corrupt, Mitr-centric government just gave PM Modi's closest friend (sorry boss) Gautam Adani a #DiwaliDhamaka gift.
The Shinde Sarkar has virtually gifted Mumbai's #realestate maket to Adani's conglomerate. Here's how 👇
Chief Minister @mieknathshinde's Urban… pic.twitter.com/PxADZIed8b
— Prof. Varsha Eknath Gaikwad (@VarshaEGaikwad) November 13, 2023
Bringing up the TDR issue again this month, Shiv Sena (UBT) chief Uddhav Thackeray Tuesday addressed a press conference questioning why the state government is letting Adani Group create a “TDR bank”.
पक्षप्रमुख उद्धवसाहेब ठाकरे यांच्या हस्ते नूतनीकरण केलेल्या "शिवालय" या पक्ष कार्यालयाचे उद्घाटन व पत्रकार परिषद । मुंबई – #LIVE https://t.co/c5FYgmY8ZW
— ShivSena – शिवसेना Uddhav Balasaheb Thackeray (@ShivSenaUBT_) December 5, 2023
“The TDR that will be generated there can be used across Mumbai. This TDR is going to be banked and any developer implementing any project in Mumbai will have to buy 40 percent TDR from Adani. If you have to make such compulsions, why let Adani sell TDR? The government can form a company and do it,” Thackeray said.
He said this is not just about Dharavi, but about the future of all of Mumbai.
“All this means everyone else’s TDR will go into cold storage and only Adani will benefit. This is not acceptable to us,” Thackeray added.
The domino effect
Responding to the draft notification, developers’ bodies such as MCHI-CREDAI and National Real Estate Development Council (NAREDCO) have written to the state government saying it will be feasible for prospective buyers to purchase Dharavi TDR only if it increases the permissible Floor Space Index (FSI) of their plot. FSI is the ratio of the extent of construction permissible on a given plot size.
The development bodies have sought higher FSI and relaxations in certain premiums if they are mandated to buy TDR from the Dharavi project. ThePrint has seen the submissions by both industry bodies to the state government.
Both developer bodies have proposed that if they have to mandatorily buy TDR from the Dharavi project, they should be allowed to use FSI of up to 3 for plots abutting roads that are 12 metres wide and up to 4 for plots abutting 18-metre-wide roads. Currently, the FSI for plots abutting 18-metre-wide roads is 3.
NAREDCO has further suggested that the sale price of TDR should not exceed 75 percent of the ready reckoner rate of the receiving plot, and not 90 percent.
‘No favouritism’
Despite opposition allegations, the Shinde government maintains that they have not introduced any new conditions in the Dharavi revamp project to favour any developer.
Speaking to reporters in Nagpur Wednesday, Deputy Chief Minister Fadnavis said: “The tender to which they are objecting, all the conditions that were changed for that tender were changed by the Uddhav Thackeray government. All the terms and conditions are the ones created by the Uddhav Thackeray government. None of them has been created by the Shinde government. Now they are opposing it,” he said.
Fadnavis said the incumbent government has only brought in transparency by saying that the sale of TDR can’t be done on paper and will now have to be on an open digital platform.
But officials from the state housing department say that the conditions in the tender awarded to the Adani Group were largely laid out in a GR in 2018, when Fadnavis was the CM, and that there were a few more relaxations granted in 2022 when Shinde was CM.
Following the Congress’ allegations of the Shinde government giving Adani a “Diwali gift” with relaxations in TDR usage, the Adani Group put out a statement in which it emphasised the 2018 and 2022 government resolutions to show that the decisions were taken much before the conglomerate entered the fray as a bidder and the project’s lead developer.
The statement, issued on 18 November 2023, said: “In fact, the GR issued before the onset of the 2018 tendering process had a provision for the sale of TDR generated from the DRP across Mumbai. The GR introduced in September 2022, before the tendering process commenced, introduced two vital changes. Importantly, these changes were available for due diligence to all the bidders. Contrary to the claim that these policy changes are going to benefit a single entity, the final notification from the government has, in fact, capped the minimum usage of TDR in other projects at 40 percent instead of 50 percent, as mentioned in the September 2022 GR”.
It further slammed the allegations of favouritism as a “mischievous ploy to muddy the waters”.
Also Read: 7 lakh ‘ineligible’ residents, tight deadline: Potential bidders voice doubts about Dharavi revamp