Surat shows the way: A ring road that costs nothing!

To build a 66km ring road, Surat will not take a penny from the state or centre. Nor will it spend a penny from it’s shallow pockets. So what’s this self-financing, self-sustaining model that is making waves in urban planning circles?


Puja Bhattacharjee | December 27, 2013

  “We have a problem with the laws, not development. SUDA has assured us that we will be allotted final plots at the site of original plots. But we are still opposed to the FSI clause”    Snehal Patel, farmer
“We have a problem with the laws, not development. SUDA has assured us that we will be allotted final plots at the site of original plots. But we are still opposed to the FSI clause” Snehal Patel, farmer

Chetan Patel, a young farmer from Kosmadi village, was once happy to see the nearby city of Surat grow fast. It gave him the best of both worlds. On the one hand, he could grow sugarcane, because water has never been a problem thanks to a highly favourable climate and good rains. On the other, proximity to the second largest city of Gujarat meant that the necessary infrastructural facilities like electricity and highways were available. He could live far away from the maddening crowd, and yet go with his family to the glitzy malls of Surat for a weekend outing.

But the unprecedented growth of Surat—the fastest growing city in India, according to one survey—is now giving him headaches. The civic authorities are going to acquire the rich farmlands of Patel and others to build an outer ring road encircling the city to ease the coming traffic woes.
Patel’s problem is peculiar—and not part of the oft-repeated pattern of farmers pitted against the industry.

Indeed, land acquisition will take place under a progressive law of the state (of 1976 vintage) that empowers civic bodies to acquire land for town planning, develop the area with various amenities like drainage, and return 50% of the land earlier acquired back to the original owners. Though there is no guarantee that one would get his/her own land back, it is a win-win situation for both sides; the civic bodies don’t need not spend a penny for the land, while the farmers gain as the improved infrastructure pushes up the land price manifold.

This arrangement, under the Gujarat Town Planning and Urban Development Act, has been so pragmatic that it is cited as the reason for Gujarat thus far not encountering the kind of problems the rest of the country has been facing in land acquisition. 

“In Gujarat we have the model of development by town planning (TP) schemes. Once a draft TP scheme is prepared, the law allows us to get land from people for development and give them back (a portion of) the developed land,” says Prakash Datta, a senior town planner with the SUDA.

An upshot of this law is that the civic bodies, which are not exactly flush with funds, do not have to seek financial support from the state or the centre.
This fair and progressive legislation that has stood the test of times for 37 years was further tweaked by the Surat Urban Development Authority (SUDA) and the Surat Municipal Corporation (SMC). These two urban local bodies are acquiring land for a 66-km outer ring road that would cater to Surat’s future transport and traffic needs. As per the plan, 60% of the land acquired for the project would be returned to the land owners in effect acquiring only 40% of the land. SUDA would build city infrastructure such as parks, playgrounds, public utilities, schools and hospitals on hree fourths of the acquired land (30% of the total land initially acquired) and sell one-fourth (10% of the total land) to real estate companies to build residential, commercial and industrial complexes. This infrastructure would extend up to 500 m on either side of the 90m-wide ring road.

“The aim is not only to develop a road for traffic movement but also to develop a high density corridor on either side of the the ring road,” says M K Das, commissioner, SMC and CEO of SUDA.

Even the original land owners would be allowed to construct residential complexes on the returned part of their land but with a reduced FSI (floor space index, a measure of how much ground can be covered and how many floors a building can have). While the usual FSI is Gujarat is 1.8, the free FSI allowed along the ring road is one third, 0.6. Beyond that, the owners will have to pay a fee to SUDA. SUDA estimates that it can generate about '11,960 crore over five years from the sale of 10% land to builders and from the fee accrued from additional FSI usage. With the estimated cost of of the 66km ring road being only '5796 crore, it would not just mean that Surat would get a brand new road for free, but that SUDA can use the additional funds for building citizen infrastructure around the road thus pushing up the real estate prices around it benefiting the land owners immensely.

This innovation in project finance was so unique that earlie this year Dr Sudhir Krishna, secretary, urban development ministry, government of India, urged all states to emulate the Surat project (see box).

Patel and other farmers, however, are unhappy because they want 70 percent of their land back and not 60 percent as offered by the Surat authorities. They also want a better choice of plot, if the returned land is not part of their own original plot. And they too want a slice of the growth pie with the right to build more on the returned land than what is being permitted.

In short, the protests building up on the outskirts of Surat are less about agriculture vs. growth and more about vying for more fruits of that growth. To understand the peculiar nature of these farmers’ demands, it would make sense to understand the peculiar nature of this ‘model’ project.

Why a ring road?

Surat, once the most prominent city in western India before Bombay came up in the 17th century, is regaining its glory. Today it is the eighth most populous city of India (population: 45 lakh), and growing very fast, attracting migrant labour to its booming textile and diamond units.

MK Das, commissioner of the Surat municipal corporation (SMC) and CEO of Surat Urban Development Authority (SUDA), explains: “Surat has expanded seven times in 32 years. It is growing at the rate of 60 to 80% every decade. It puts tremendous pressure on the infrastructure like drinking water, housing, roads and transport.”

Surat’s traffic situation is still under control; nowhere comparable to the headache that commuters face in Delhi and Mumbai. “Surat traffic moves with much ease today but keeping the future in mind planning has to begin before the problem starts. For one, the heavy traffic running between Mumbai and Ahmedabad needs to be diverted outside the city, and hence the outer ring road project.”

Besides, the outer ring road will link the industrial areas of Surat to the national highway and the express highway and link the main city to its twin, Navsari. The proposed outer ring road will be the widest ring road of Gujarat with a width of 90 metres.

Farmers want more

However, as good as it might seem, farmers are not happy with what they are getting under this deal. They want a bigger piece of the development pie. They have joined hands in common cause, formed a committee and have been petitioning administrators and legislators such as Surat MP, CR Patil and state revenue minister Anandiben Patel. Bharatsinh Gohil, a lawyer by profession who also owns about 8,900 square metres of farming land, sums up the grievances of farmers: “The authorities have notified that they will take 40% of our land for development purposes. As per our estimate, they should not be taking more than 30% of our land. Out of the 40%, they plan to sell 10% to the builders. This is totally unfair.”

“Moreover the whole of Gujarat allows up to 1.8 FSI for free. But we can avail only up to 0.6 FSI for free; anything over that is chargeable. This will be a huge loss for us,” he adds.

Apart from the two general grouses, some farmers have specific problems to contend with. Going by the tentative allotment made by the authorities, most farmers fear that the plot that will be allotted in return for their land will not be part of their own land, but somewhere else.

“I have painstakingly installed irrigation channels on my plot. But the final plot allotted to me is nowhere near the irrigation channel. Moreover, the plot which has been allotted (tentatively) is in unlevelled land. How am I supposed to do farming there?” asks Surendra Singh Meghat, owner of 12 acres.  
“It will take at least a decade to implement the town planning schemes. Farming is my sole occupation. How will I manage in the interim? I do not want to part with any portion of my land but am forced to,” he adds.

Chetan Patel, of Kosmada village, says that the new plot of land identified for tentative allotment to him in lieu of his four acres has a high-tension power supply cable passing over it. This means he cannot do much construction on it and take benefit of the higher value of new land.

Snehal Patel, another farmer, complains, “We have a problem with the laws, not development. SUDA has assured us that we will be allotted final plots at the site of original plots. But we are still opposed to the FSI clause.”

Authorities’ explanation

Town planner Datta argues that farmers’ fears are unfounded. As for their demand for limiting acquisition to 30 percent land instead of 40 percent as planned, he maintains that under the TP Act the authority can take up to 50 percent land for the purpose of development. “But we figured that with 40 percent we will be able to satisfy our purpose so we are returning 60% of the land instead of the mandatory 50%. Besides, along with the outer ring road, SUDA will also construct schools, hospitals, affordable housing, a sewage treatment plant and other amenities. The value of the 60 percent land with complete infrastructure will be much more than the original land,” he says. Datta justifies the selling of 10 percent of the acquired land to real-estate developers saying that the revenue thus generated will help finance the road construction. “This will be people’s contribution for a project we are developing to make their lives better,” he says.

It is the same logic on the FSI front. “The estimated cost of the ring road alone is '5,796 crore. We deduced that by imposing charges for FSI above 0.6 we will be able to create public infrastructure and make this a self-sustaining financial model.”

Datta says most landowners feel uneasy only because the project is yet to take shape, and once they see it they will believe it. One hopes he is right and the ring road becomes a model for fair development for the rest of the country.

Why centre is all praise for Surat project
Urban development ministry recommends it to states for replication

Urban development secretary Sudhir Krishna wrote to all states earlier this year, mentioning a few projects as best-practice case studies worth replicating. He singled out the Surat outer ring road project for its unique method of meeting the land requirements: not through acquisition but through participation.
Moreover, this requires no financial assistance from the state or the centre. The increase in land value thanks to development will pay for the projects and may deliver some revenue too. Excerpts from the letter:

“Surat Municipal Corporation (SMC) and Surat Urban Development Authority (SUDA) have jointly come up with the model to generate about '11,960 crore from the development of proposed road over five years. This will mean that these bodies would get the entire project cost of '5,796 crore. The additional revenue can be used for projects such as high-speed transit system.

“To execute the project, SUDA and SMC would set up a Special Purpose Vehicle (SPV) and will generate infrastructure fund by sale of FSI (floor space index) and commercial plots around the 66-km-long and 90 meter wide road.

“The project envisages modern infrastructure for transport, mass rapid transport and dedicated provision of services such as water supply, sewerage, drainage and electricity.

“As per the plan, 60% of the land acquired for this project would be returned to the land owners as final plot with all infrastructure in place. About 40% of the land will be acquired for development of infrastructure such as parks, playgrounds, public utilities, for sale of residential, commercial and industrial use.”

Gujarat’s law of 1976 vintage makes Surat model unique

At the heart of the Surat model of urban development that the centre has praised is Gujarat’s town-planning law of 1976 that derives from a practice of the British rule. Technically, similar laws exist in a few other states too, but not in practice.
The town planning (TP) scheme, under the law, enables the civic authorities to get land from people for urban infrastructure and roads and return part of that land to the owner after development.

On the basis of the development plan (DP) for a city, smaller plans for various areas (called town planning schemes) are prepared, outlining various amenities. On this, consultations are held with citizens, and land is identified for development. Here is the beauty of the deal: civic authorities do not have to pay for the land, and the owner stands to benefit thanks to the appreciation in land value after development.
Much of Ahmedabad has developed that way, and the latest success story was the outer ring road that has come up according to the development plan of 2002.

Salient features of the project

  •   90m wide 66-km outer ring road on the periphery of the city to provide easy access to all
  • About 40% land is taken for the purpose of physical and social infrastructures
  •  About 60% land given back to landowners as final plot
  •  About 15% land can be developed for the purpose of roads in the TP scheme area

Total land pool system

  •     10% length for amenities
  •   20% for roads
  •     10% for sale
  •  60% allotted back to owners





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