The Planning Department, through a Government Resolution dated June 5, 2026, has mandated that all new and revised project proposals must be evaluated against the department’s actual expenditure over the past three financial years. The move comes amid concerns that several departments have been undertaking projects far exceeding their budgetary capacity, leading to delays and rising costs.

Under the new norms, departments must assess the total financial liability of ongoing projects along with proposed new ones. If the combined cost remains within twice the average annual expenditure of the past three years, approvals can proceed through the existing process.

However, if the total liability exceeds this threshold, the proposal must be cleared by a High-Powered Committee on construction headed by the Chief Secretary before being sent for final approval. This additional layer of scrutiny is expected to limit indiscriminate project approvals and improve prioritization.

The guidelines apply to a wide range of public works including roads, highways, bridges, railways, airports, irrigation projects, water supply schemes, drainage systems, and government buildings.

The government has also directed departments to ensure that all proposals align with the long-term vision outlined in the “Developed Maharashtra 2047” document.

Impact on the Common Man

For citizens, the decision could bring mixed but largely positive outcomes. On one hand, stricter financial checks may slow down the announcement of new projects, especially in sectors like housing, roads, and urban infrastructure. This could delay some local development works.

On the other hand, the policy is expected to improve execution quality. By preventing over-commitment of funds, the government aims to complete ongoing projects faster and avoid cost escalations that ultimately burden taxpayers.

In practical terms, this could mean fewer stalled infrastructure projects, better road quality, more timely completion of government housing schemes, and improved delivery of basic services like water supply and drainage.

Experts say the move signals a shift from “announcement-driven governance” to “execution-focused governance,” which could enhance long-term infrastructure reliability across the state.

The resolution has been issued with concurrence from the Finance Department and is now in effect across all administrative departments.

Also Read: Maharashtra Forms Panel to Explore Housing Options for Mumbai Mill Workers After Fresh Push

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Key Revisions

1. Increased Interest Rates:
   • The interest rate for new installment proposals has been raised from 8.5% to 12% per annum.
   • For defaulted payments, the interest rate will be 15% per annum for the first six months from the due date, and 18% for the following six months.
2. Default Payment Installments:
   • Defaulted amounts can now be paid in four installments within one year, which will include both regular and penal interest.
   • If the first installment is not paid within three months, a stop-work order will be issued immediately.
3. Payment Conditions:
   • Project proponents must submit a registered undertaking committing to the revised payment schedule.
   • Stop-work orders will only be lifted after the first installment has been paid.
4. Applicability:
   • The revised interest rates will apply only to new installment proposals not yet approved by the Deputy Chief Engineer (Building Proposals) at the time of the circular’s issuance.
   • Proposals approved under the previous installment scheme will remain unaffected.

This policy revision aims to improve the recovery process for building permission fees, ensuring timely payments while maintaining fairness and financial accountability. The circular will be issued for immediate implementation following approval from the Additional Municipal Commissioner (Projects) and the Municipal Commissioner.

Background

The installment payment facility was initially introduced to assist project proponents by providing a deferred payment option for building permission fees. The increase in interest rates comes in response to financial considerations and delays in payments by some proponents. The updated policy demonstrates the BMC’s commitment to enhancing governance and maintaining financial discipline while offering a structured payment mechanism for developers.

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