Reforms 2.0

Let Indian Cities Grow Tall

Reform Idea.

Liberalise building height restrictions in Indian cities. 

How is building height regulated, and why?

Building height in India is regulated largely by State governments, and city development authorities (eg: MMRDA in Mumbai, BDA in Bangalore, DDA in Delhi) that are largely under control of State urban development departments. Building height restrictions, often framed as a cap on Floor Area Ratio (FAR) or Floor Space Index (FSI), limit the amount of floor space one can build as a multiple of the area of the plot of land the building is built on.

Prescribed FSI limits for residential buildings range from 1 to 4 in major Indian cities.

Building height restrictions stem from master plans of cities, which regulate land use and zoning in Indian cities, typically revised every 15 years or so. The 74th Amendment to the Indian Constitution recommends that State Governments devolve the function of land use planning and zoning to Metropolitan Planning Committees, but State governments currently retain control over the process.

Building heights are ostensibly capped to ensure sustainable loads on public infrastructure. If a tall building that houses more residents comes in the place of a smaller building, then it can put a strain on local traffic, parking needs, water supply, electricity and other basic services provided by the city.

Building height is restricted in order to prevent the externalities of congestion and pollution. It is also restricted to protect the environment, with greater access to greenery for the resident community. Initiatives like household rainwater harvesting also matter more on a per-person basis if people are living in shorter, squat settlements.

There is an apocryphal story in Bangalore that tall buildings are not allowed because the Karnataka Fire Department does not have ladders that are tall enough to manage fires in high rises.

What is the cost of inaction on reform? What are the negative consequences of building height restrictions?

The consequence of severe building height restrictions is urban sprawl. India’s cities are rapidly growing in population, and correspondingly increasing in their geographic footprint.

Cities are attractive places to live and work because they reduce many of the transaction costs of daily life. Cities allow residents to get to wherever they need to in a short time and at a low cost. Cities also allow for high quality provision of utilities at a fraction of the cost needed to do the same in a low density rural area. For example, if the Government wishes to provide clean water to a thousand people, more pipes are needed in a low-population-density village versus one pipe to an apartment complex.

Building height restrictions negate the raison d’être of cities. They result in longer commutes and greater reliance on a car and private-vehicle based pattern of commuting. The economic cost of traffic jams is immense.

FSI restrictions also increase the cost of real estate, by restricting supply. India’s real estate prices have consequently been soaring, and are comparable to much richer cities in other parts of the world.

As Edward Glaeser points out, building height restrictions can also counter-intuitively have worse environmental impacts. On a per-person basis, Glaeser finds that suburbs of US cities are “browner” than city centres, with higher per capita emissions and ecological footprints in suburbs. India’s tropical cities are different in that they have larger cooling requirements than heating requirements, but the rest of Glaeser’s findings can still hold true for Indian cities.

How can the reform be achieved?

Cities can start by progressively liberalising building height restrictions. Mumbai announced plans for FSI liberalisation in 2016, which came up against many adverse interest groups.

A popular option for allowing taller buildings is by the sale of TDRs – or Transfers of Development Rights. Governments can give (or sell) new property rights which give the owner the right to build additional floor space on any property they own, with some restrictions. These rights are also tradeable, where someone uninterested in building taller can sell the right to do so, to someone who is willing.

Governments can use the proceeds from the sale of TDRs to finance better quality infrastructure needed to support taller buildings.

Cities can also selectively relax height restrictions along public transport corridors such as metro lines, such that greater building density can have a minimal impact on traffic congestion. This is often one of the features in Transit-oriented-development, a new trend in city planning and governance.

Building height restrictions should not just be removed for residential and commercial buildings, but also for industries. Gujarat’s GIFT city allows for some of the tallest industrial buildings in India, and other states can follow suit as well.

Also on Pragati: Episode 11 of The Seen and the Unseen, where Alex Tabarrok joins Amit Varma to discuss FSI (The Floow Space Index), and explain why Mumbai should reclaim not just the sea, but also the sky.

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About the author

Pavan Srinath

Pavan Srinath is the Host of The Pragati Podcast and the Thale-Harate Kannada Podcast. He is a Fellow and Faculty Member at the Takshashila Institution, and tweets at @zeusisdead.