Delhi budget: No new taxes; education gets most

Sweets, namkeens, watches, shoes set to be cheaper

Rs 6,919 crore allocated to 3 civic bodies

Presenting its second Budget on Monday, the Aam Aadmi Party government opted to go for a “tax-free” Budget by rationalising the VAT structure which is likely to reduce the cost of products such as readymade garments, shoes, watches and electric and hybrid vehicles in the national capital. Deputy chief minister, who also holds the finance portfolio, reduced VAT on a slew of products, including sweets, namkeens and readymade garments, from 12.5 to 5 per cent.

Mr Sisodia presented a Rs 46,600 crore annual Budget for 2016-17, pegging plan outlay at Rs 20,600 crore. As expected, education, health and transport sectors received the lion’s share of the total planned outlay for the next fiscal.

Addressing the media after the Budget, chief minister Arvind Kejriwal said that his government was committed to reducing taxes to make Delhi a state with the lowest taxes in the country. “VAT has been reduced on many goods. We are sure that if people of Delhi can follow the odd-even scheme, then they will also cooperate and pay taxes properly. This is how we’ll be able to reduce and rationalise taxes. We will keep reducing taxes and VAT, and within four-five years taxes in Delhi will be the lowest in India,” Mr Kejriwal said.

Mr Sisodia said that sweets and namkeens are daily consumable items and needed to be made cheaper. He also announced reduction in the VAT on marble from 12.5 to 5 per cent. He announced that VAT on watches costing above Rs 5,000 has been proposed to be reduced from a high of 20 per cent to 12.5 per cent.

“We tried to bring balance in the rates of goods in Delhi on par with other states to avoid outflow of tax. It was made possible through voluntary compliance, and not through imposition,” he said. Mr Sisodia said that VAT on battery operated e-rickshaws, hybrid vehicles has been proposed to be reduced from 12.5 per cent to 5 per cent.

The Budget has also proposed to provide piped drinking water supply to all authorised and unauthorised colonies by December 2017. “Despite being in the national capital, we have to drink bottled water. Our aim is to provide drinking water through pipelines to all households in authorised or unauthorised colonies by December 2017,” Mr Sisodia said.

The finance minister said that it was endeavour of the Kejriwal government to supply clean drinking water to every Delhite and “eradicate the water tanker mafia” from the city. “Three hundred new unauthorised colonies will be provided piped water supply in the year 2016-17. I have allocated 676 crore for this purpose,” he said. The government has also extended the water subsidy of providing 20 kilo litre of water free of cost to every citizen for the next fiscal.

The Budget has also proposed to allocate Rs 10,690 crore for education, a rise of 8.68 per cent over last year. Of this, Rs 4,645 crore is for plan expenditure (23 per cent), highest among all the heads. “Twenty one new school buildings have been constructed while 8,000 new classrooms are being built. It equals to the infrastructure of 200 schools. Every classroom will have CCTV cameras installed for which Rs 100 crore has been set aside,” Mr Sisodia said.

Curbing on the differential VAT system on a slew of items, Mr Sisodia said, “The government is committed to reducing tax arbitrage and will attempt to keep a uniform rate with neighbouring states. In several items such as sweets — namkeen, watches, readymade garments, lower tax rate in neighbouring states was causing erosion in the same. We have made efforts to remove such imbalances in our VAT structure,” he said.

Elaborating on its three-tier public health roadmap, the government alloted Rs 5,250 crore, which forms 16 per cent of the total expenditure, against last year’s allocation of Rs 4787 crore. The transport sector emerged as another priority area with around Rs 1,735 crore being allocated. Rs 10 crore has been alloted for the construction of Aam Aadmi Canteens.

Highlighting that his government has given a huge chunk of the total outlay to the education and health sectors, Mr Kejriwal took a swipe at the other state governments whose allocation for these sectors has shown a downward trend. “Education and health Budget has been reduced by other state governments to promote private education and private hospitals. This is because many ministers in other states own schools and hospitals. They have spoiled the public education system and public health system,” the chief minister said.

The government has also allocated Rs 6,919 crore to the three civic bodies in the Budget. “We hope the amount will be spent wisely,” Mr Sisodia said.

The Gross State Domestic Product of Delhi at current prices is likely to increase to Rs 5,58,745 crore in 2015-16 from Rs 4,94,460 crore in 2014-15, indicating a growth of 13 per cent, he said.