Commonwealth Games drill hole in common man's pocket

Commonwealth Games have drilled a hole in Common man's pocket. Living in Delhi has become more expensive thanks to the sporting extravaganza planned for later this year. Facing a cash crunch, Delhi government has resorted to widespread increase in taxes and reduction in subsidies to generate cash for the games.

So here is list of items and products for which the prices are increased as per 2010-2011 Delhi budget:

LPG cylinder: In the Budget presented for the capital on Monday, the government withdrew subsidy on LPG. This means LPG cylinders will cost 40 rupees more.

Diesel fuel: Diesel will also get costlier as Value Added Tax (VAT) has been hiked from 12.5 to 20 per cent. This means widespread increase in prices of all commodities and products as the transporters will pass on the cost increase to consumers

CNG: Though auto and bus fares have not been increased, but one will have to fight more with auto drivers now as they would have another excuse to harass you in the five per cent tax on the CNG. If you drive a personal vehicle then there is no chance you will save momey by switching to CNG fuel.

Bottled drinks, energy drinks, coffee, tea: Just when Delhi is bracing for another scortching summer, the prices of drinks have increased. Delhi government choose perfect day to burden Delhiites with increased prices as it was hottest March day in last 6 years. For those who savour an energy drink or lemon laced with glucose will have to pay more as Glucose D will cost 12.5 per cent more while aerated drinks like Coke, Pepsi, juices and other energy drinks will be dearer by 20 per cent. If you thought you can survive on Coffee or tea during summers then think again. Coffee and tea at outlets will be taxed at 12.5 percent.

Movie tickets: You will have to think twice now before hitting the nearby movie theatre. Movie tickets will be taxed at 12.5 per cent.

Home entertainment products: Just when you thought that you will spend time at home rather than watching movies in theatre, Delhi government had prepared this piece of news for you. DVDs, CDs and video games will also be taxed at the revised rate of 12.5 per cent.

Clothers, watches etc etc: Branded readymade garments, wrist watches, as all such commodities priced above Rs 5,000 will now attract 12.5 per cent tax. For women who like to dress ethnic, there is bad news. Though not as much as for the guys planning to buy an expensive suit or shirt, ladies suits with embroidery and zari work will now be costlier by at least five per cent.

Mobile phones: One will also have to spend more on new mobile phones. Even the phone accessories have not been spared. Phones priced above Rs 10,000 will also invite tax at 12.5 per cent.

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.

Commonwealth Games to hit Delhiites' pockets

Delhiites will have to shell out more from their pockets for virtually everything from cooking gas to diesel with the state government today withdrawing its subsidy on LPG and increasing VAT on many items to "generate" additional revenue.

(Interview with Delhi's finance minister on Commonwealth Games' impact on Delhi budget)

The minister proposed an increase in Value Added Tax (VAT) on diesel, CNG, mobile phones and accessories above Rs.10,000, watches and readymade garments above Rs.5,000, fertilizers, kerosene, coffee, tea, desi ghee, dry fruits, kesar (saffron), glucose-D, household plastic items, utensils and cutlery items and inverters.

'There has been a lot of developmental work in the city and more to happen. A lot more money is needed and the government has no option but to slightly burden the people to incur the losses,' she said.

'This is a growth-oriented budget keeping in mind the Commonwealth Games and 'aam aadmi'. We have exhausted all our resources as we have spent (so) much on Commonwealth Games project. We need more money,' he added.

Presenting the budget amid vociferous protests by the opposition BJP, finance minister AK Walia announced the withdrawal of the Rs40 subsidy on LPG cylinders for domestic consumers. He also announced an increase in the value-added tax (VAT) on diesel and CNG.

Walia also proposed an increase in VAT on various items like desi ghee, household plastic goods, kerosene stoves, wood, inverters, tea, coffee locks, lanterns, fertilisers, and all utensils and cutlery items, including pressure cookers and pans.

With an increase in the VAT to 20% from the existing 12.5%, diesel will now cost Rs35.29 per litre in the capital. At present, it costs Rs32.92 per litre.

With the withdrawal of subsidy on LPG, a cooking gas cylinder in the national capital region will now cost Rs322.80 from the earlier cost of Rs281.20.

A 5% tax has been imposed on compressed natural gas (CNG), the fuel used for public transport like buses and autorickshaws. At present, there is no VAT on CNG.

By doing this, the Delhi government plans to raise an amount of Rs1,100 crore for the Commonwealth Games to be held in the state later this year.

Noting that there has been an increase in expenditure in the last two years on projects and schemes related to the Commonwealth Games, Walia said, "Our revenue collection through taxes has not been adequate due to recession. Therefore, it has becomeessential to look for measures to generate additional revenue to sustain development."

Chief minister Sheila Dikshit, however, Indicated that in case the city government received additional funds from the Centre to meet the needs of the Games, "we would be happy to pass it on to the residents".

Presenting a Rs26,000 crore budget, Walia said the highest allocation went to the transport sector, which has been given Rs4,224 crore as against last budget's allocation of Rs3,069 crore.

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

'Delhiites are already suffering from inflation. This budget will further increase their woes. The government is out to kill the common man,' said BJP leader Harshvardhan.

Delhi's Congress unit is on the defensive. Its chief and MP from northeast Delhi J.P. Agarwal said: 'Delhi's budget was not discussed with me.'

The hike in diesel, CNG and LPG cylinder price came as a shocker for Delhiites.

'I am disappointed as rising food price are pinching the monthly budget and this will add salt to injury. I believe they could have withdrawn the subsidy from cooking fuel only after taming food prices,' said Sanjay Nanda, a young professional.

Delhi government has spent nearly Rs.15,000 crore on various Commonwealth Games related projects.

There has been widespread development - beautification, flyovers, street scaping, foot over bridges, roads, signages, public transport and health facilities - in the city for Commonwealth Games to be held from Oct 3-14.