Delhi Government today raised VAT on a whole range of products including diesel and high-end mobiles and withdrew the subsidy on cooking gas to fetch an additional Rs 1,100 crores to raise funds for the Commonwealth Games.
Presenting a Rs 26,000 crore budget, Delhi Finance Minister A K Walia said the government has also decided to impose a five per cent tax on the Compressed Natural Gas (CNG), the fuel used for public transport like buses and auto-rickshaws. At present, there is no VAT on CNG.
Walia announced the withdrawal of subsidy on cooking gas of Rs 40 and increase of VAT on many items, including diesel, to "generate" additional revenue, he attributed the escalation to the mega sporting event which was creating a dent in the city government's pockets.
He proposed rise in VAT on various items like desi ghee, house-hold plastic items, kerosene stoves, wood, inverters, tea, coffee locks, lanterns, fertilisers, and all utensils and cutlery items, including pressure cookers and pans.
With the withdrawal of subsidy on LPG, a cooking gas cylinder in the national capital will now cost Rs 322.80 from the earlier cost of Rs 281.20.
After the increase in VAT from 12.5 per cent to 20 per cent on diesel, the fuel will now cost Rs 35.29 per litre in the capital. At present, it costs Rs 32.92 per litre.
Noting that there has been an increase in expenditure in last two years on Commonwealth Games related projects and schemes, Walia said, "our revenue collection through taxes has not been adequate due to recession. Therefore, it has become essential to look for measures to generate additional revenue to sustain development."
Indicating that in case the city government received substantial additional funds from the Centre for meeting its financial needs of the games, Chief Minister Sheila Dikshit said, "we would be happy to pass it on to the residents".
Opposition BJP MLAs were on their feet as soon as Walia announced the increase in VAT rates. They staged a walkout when Walia announced the withdrawal of subsidy on LPG cylinders.
Leader of Opposition V K Malhotra later told reporters that BJP is planning agitation against the increase in VAT rates.
"The government has betrayed the trust of its residents. We are planning to launch an agitation as well as gherao of Assembly," Malhotra said.
However, she added the government would not review rolling back the subsidy withdrawal on LPG and the hike in VAT on diesel and other items now.
Walia said, in the transport sector, 1,475 more low floor buses will be purchased before August for which Rs 675 crore has been allocated.
He also announced the launch of a GPS based vehicle tracking system to make online bus information system operational.
The DTC will also introduce a special non-stop service on 50 important routes.
Government has also set aside Rs 749 crore in the budget for development of basic services in the unauthorised colonies. It has already invested Rs 2,851 crore in these colonies.
The old age pension scheme will be extended to 3.5 lakh people from existing 2.5 lakh. Besides this, it has allocated Rs 46 crore for giving pension to widows.
The Finance Minister also proposed the setting up three 200-bedded hospitals in Vikaspuri, Burari and Ambedkar Nagar and another 750-bedded hospital at Dwarka.