Tuesday, 23 March 2010

Delhi still cheap to live in: Government

Delhi’s finance minister for seven years, Ashok Kumar Walia (61) called this year’s budget a “tough call”.

“It was by no means easy announcing tax increases specifically when we are already facing high inflation. Our financial position has forced us to raise taxes and withdraw various subsidies. However cost of living in Delhi is still low compared to other cities.”

Excerpts from an interview with Mr Walia:

Q: The Commonwealth Games are proving to be a costly affair for Delhi. Is it fair to make ordinary residents pay higher taxes when they are already hard hit by the rising inflation?

We are in a tight situation as far as the Commonwealth Games go. From Rs 11,000 crore in 2007-2008, our savings have dwindled to about Rs 2,000-odd crore. We used up our savings to give rebates and subsidies. These subsidies and discounts cannot last forever. Our budget has also gone up. We had to revise our tax structure to improve our collections.

Q. Will Delhi residents be made to suffer next year, too?

Increase in taxes and withdrawal of subsidies is never permanent. We were the only government to give a subsidy of Rs 40 on domestic LPG cylinders when the Centre hiked the cylinder prices. Tax on diesel is lowest in India. We incurred losses in our revenue collections due to deviations in VAT. Due to these deviations, the Centre also reduced our annual compensation by Rs 300 crore annually.

Q. Just three weeks back, diesel and petrol prices were hiked in the Union Budget. And you have again raised diesel prices. Is it fair? Will it not have a cascading impact on prices of all essential items (by way of increased transportation cost)?

It is not unfair. Tax on diesel in most states is more than 20 per cent. In Punjab, it is 27.5 per cent, in Gujarat it is 25 per cent, in most south Indian states the tax on diesel is 25-27.5 per cent. We kept it low at just 12.5 per cent for many years. Unlike other states, the government in Delhi does not own land. It is with the DDA. We are in a tight financial position and have to look for avenues to increase our revenue.

Q. You had presented soft budgets in 2008 and 2009. Was the government waiting for elections to get over to announce harsh measures?

We gave subsidies as long as we could afford. But our budget has grown now. We give pension to a large number of widows, physically challenged and old people. Subsidy on uniform has been increased. We still give Rs 250 crore subsidy on power. We are doing whatever best we can do. Delhi is still the cheapest place to live in.


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