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Taxes make Delhi rich

Mumbai maybe the economic capital of the country, but with this year?s budget, which will be presented on Thursday, Delhi aims to compete with the city in economic terms.

india Updated: Mar 09, 2006 15:51 IST

Mumbai maybe the economic capital of the country, but with this year’s budget, which will be presented on Thursday, Delhi aims to compete with the city in economic terms.

Delhi’s confidence stems from its record revenue generation and the need to do away with loans from small savings and grants from the Planning Commission.

Chief Minister Sheila Dikshit on Wednesday said revenue from VAT, after its implementation on April 1, had risen by around 31 per cent over last year’s figure.

The other notable increases have been on the excise and stamp duty front, where the figures are around 20-25 per cent higher over last year’s.

Due to the increased earnings, the social sector outlay would be significantly higher in the budget to be presented by Finance Minister A.K. Walia.

It is understood the government would announce several new projects and plans for education, health, urban infrastructure and transport. Upgradation of facilities in hospitals, bringing government schools on par with public schools and new flyovers would be a part of the announcements. Asked about the key proposals in his budget, Walia told HT, “Wait and watch for a day”.

Due to the implementation of VAT, there would be no new tax proposal as such. However, in certain areas the government is likely to seek concessions from the Empowered Committee. These are lowering the tax structure on bullion and on bedsheets, towels etc.

The price of diesel is another grey area for the government. While the VAT regime prescribes 20 per cent tax, the Delhi government has kept it at 12.5 per cent citing a similar tax structure in the neighbouring states. It is unlikely that the government would increase the tax and price of diesel fearing political fallout. Prices of LPG (cooking gas) too would not be touched. At present, Delhi levies 12.5 per cent on LPG though it wants to bring it down to 8 per cent to help the middle class.

First Published: Mar 09, 2006 15:51 IST