New Jantri creates frenzy

Author – Dr. Jigar Pandya

The proposed Jantri rate hike in Gujarat has raised concerns across the real estate sector. The proposed rates will increase by 100 to 2000 percent and will significantly raise property prices, making land acquisition and construction more expensive. Builders, developers, and property buyers are particularly concerned about the suddenness and magnitude of the increase, which is seen as unreasonable, especially after 12 years of no revisions. CREDAI, the apex body of real estate developers, has requested justification for noting that the government spent 18 months preparing the new rates but allotted only one month for public feedback.
 

The Gujarat government claims that the new Jantri (ASR) is scientific and is justified in taking the recent average of land transaction rates. However, currently an online feedback system is limiting the access to several affected farmers who can only provide offline/written feedback. The proposed hike will also raise residential and commercial construction prices by 30 to 40 percent, as the Jantri is also linked with payment FSI. Homes will become unaffordable. Additionally, the new Jantri’s land premium and NA conversion will highly impact the land trading market. The proposed Jantri prices of open land on the outskirts of the city in many developing villages are 8 to 20 times higher than prevailing Jantri rates. Furthermore, farmers, especially those with large landholdings, would be disproportionately affected by the new rates.
 

Redevelopment projects will be severely affected as their viability will require recalculation by developers and societies. Owners of existing homes and offices will have to pay higher property taxes. Slum redevelopment projects offering TDR to the developer will find limited buyers for their projects, thus hampering future slum redevelopment projects. The current stamp duty rates will make registration of all properties very expensive for new owners.
 

On the positive side, Gujarat will attract more formal financial investment in land and built property from corporates of other Indian states and foreign funding. There will be increased transparency in the Gujarat real estate sector, and major cities like Ahmedabad, Gandhinagar, Rajkot, and Surat will attract higher infrastructure capital. However, to achieve this, the government should reduce the tax burden by making important changes needed to implement the newly proposed Jantri for its acceptance and success.