No new taxes in Delhi Budget

New Delhi: Laying a major thrust on improving the education, healthcare, transport and water distribution infrastructure in the city, the Aam Aadmi Party government on Wednesday tabled a Rs 48,000-crore Budget for the national Capital. The government sought to bolster its pro-poor image by not levying any new taxes and slashing the Value Added Tax on several items including sanitary napkins costing above Rs 20, timber and marble from 12.5 per cent to 5 per cent. Also, in a departure from traditional outlay-oriented Budget, the Delhi government will make its 2017-18 Budget an “outcome Budget” to inject openness and accountability in public spending.

The outcome Budget will be made public on March 31 and prove to be a milestone, finance minister Manish Sisodia said in his Budget speech in Delhi Assembly. He said it will serve as a contract between city residents and their elected government. “Delhi will become the first state in India to adopt this budgeting,” Mr Sisodia said, adding that the outcome Budget will not only focus on accountability vis-a-vis utilisation of allotted funds but also monitor how many people benefited from the government’s decisions.

The outcome Budget comprises scheme or project-wise outlays for all departments and these will be listed against their measurable outcomes.

Out of the total Budget, the AAP government has allocated the lion’s share — Rs 11,300 crore to education, Rs 5,736 crore for health, Rs 5,506 crore for transport and Rs 3,467 crore for social security and welfare. “We were the first government to allocate maximum share to the education (sector) and this is the consecutive third year that we have been doing that,” Mr Sisodia said.

Chief minister Arvind Kejriwal highlighted the tax-free components in the Delhi Budget saying that the AAP government has taken care of every section of the society in the Budget by not increasing tax on any item. “It is a wonderful Budget for the poor and the middle-class people. The Delhi government has tabled a zero-tax Budget. No new tax has been introduced in this Budget,” he said. The CM said the AAP government has not imposed any new tax for the third consecutive year.

“Earlier, a major part of public money went into corruption, but since we have come to power, the public money is being saved due to which we are investing more in education, health and infrastructure projects,” the CM said.

Eyeing the upcoming municipal polls in the city, the government has also increased the allocation to the local bodies. Mr Sisodia said that Rs 7,571 crore has been allocated to the local bodies, which is 15.8 per cent of the total Budget and 14.9 per cent higher than the funds provided last year. “Moreover, in view of poor financial position of north and east corporations, we have not recovered the principal and interest amount of the outstanding loan liabilities airing the year 2015-16 and 2016-17 from the grants being released to them,” he said.

Mr Sisodia slammed the Centre’s demonetisation move saying that the move has adversely affected the national Capital’s economic growth, forcing his government to slash spending on various development projects by about Rs 4,100 crore. Mr Sisodia, who was severely critical of the demonetisation decision, said the cash crunch led to “economic scarcity” and flight of labourers from the city, who were the “worst-hit section”.

While the Aam Aadmi Party has been extremely vocal against the decision announced by Prime Minister Narendra Modi on November 8 last year, for the first time, it has official data at its disposal to back its persistent claims. “At Rs 16,500 crore, revised plan outlay is around 4,100 crore less than the 2016-17 budget estimate of 20,600 crore,” Mr Sisodia said.

He said “despite” demonetisation, the city’s economy was likely to grow at the rate of 12.76 per cent in the current fiscal i.e 2016-17. However, at constant prices (inflation adjusted), the rate would be 8.26 per cent, down from 8.82 per cent registered in 2015-16.

“Economy cannot be run by tossing coins, you need to do brainstorming for that. Note ban was one such measure. Labourers were the worst hit and I came across instances where few committed suicides. GSDP (constant prices) has gone down but it is till more than country’s projected growth rate. We would not have to reduce the plan outlay had demonetisation not been executed,” he said.

Since the Arvind Kejriwal government has abolished the plan and non-plan expenditure heads and presented the budget, its third, in terms of revenue and capital classification, area-specific targets for tax collection were not available. The budget though projected the tax revenue collection for 2017-18 at Rs 38,700 crore which is 19.33 per cent higher than the 2016-17 revised estimates at Rs 32,430 crore.

Low tax collection has remained a concern area for the government as it has failed to achieve the targeted VAT collection of Rs 24,000 crore for the current financial year. It has been revised to Rs 20,245 crore. “GST has been approved. With its implementation from July 1, 2017, we expect a positive impact on tax revenue collection of the government,” Mr Sisodia said.