Presenting its Budget for 2012-13, the Delhi government on Monday did away with the 20 per cent value-added tax (VAT) on the recent rise in the price of petrol, making the fuel cheaper by Rs 1.26 a litre. The hit on the exchequer, however, would be offset by the government's move to impose five per cent VAT on compressed natural gas (CNG) in the transport sector, making the fuel dearer by Rs 1.77 a kg. VAT on tobacco and textile products has also been increased.
Petrol would now cost Rs 71.92 a litre, against Rs 73.18 after the recent rise in prices, Chief Minister Sheila Dikshit, who also holds the finance portfolio, said, while presenting the state Budget. The price of CNG, however, would now rise from Rs 35.45 a kg to Rs 37.22 a kg.
Dikshit said the price of petrol in Delhi was the lowest among all the metros. It was also lower than the prices of the fuel in the neighbouring states of Haryana and Uttar Pradesh, she added.
When told the move on petrol would not offer much relief to people, Dikshit said, “We have given as much relief as we could, but we can’t always do what we want, owing to limitation of funds.” On the five per cent VAT imposed on CNG, Dikshit said this was required for generating revenue. “Since the introduction of the VAT system in Delhi, we have continuously forgone VAT on CNG used in the transport sector,” she said, adding it “should be taxed at 12.5 per cent, according to the recommendations of the empowered committee of state finance ministers.”
The government also raised VAT on tobacco used for ‘bidis’ and ‘hooka’ from 12.5 per cent to 20 per cent, on a par with that used for ‘gutkha’.
The textile sector above a particular threshold would be taxed at five per cent, with the exception of khadi. The sector was earlier moved to a VAT system from one in which additional excise duty was collected by the Centre and distributed to states.
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As much as 78.2 per cent of the budget would be funded from tax revenue, targeted atRs 26,150 crore for 2012-13, 31 per cent higher thanRs 19,972 crore collected in 2011-12. The tax-state gross domestic product ratio is expected to rise from 6.36 per cent in 2011-12 to seven per cent in 2012-13. The government’s total receipts were pegged atRs 29,531.82 crore, a 22.7 per cent rise overRs 24,058.86 crore in 2011-12 (revised estimates).
Reversing the earlier situation, the Plan allocation in 2012-13 was estimated to be lower than non-Plan expenditure, owing to non-Plan loans ofRs 1,831 crore after the trifurcation of Delhi municipal corporations and additional provisions ofRs 275 crore for devolution to local bodies, as a result of an increase in this financial year’s tax collection target.
While Plan expenditure was pegged atRs 15,168 crore, non-Plan allocation was pegged atRs 18,268 crore. The previous budget had a Plan outlay ofRs 13,600 crore and non-Plan expenditure ofRs 13,307 crore.
With just a year and a half remaining before the state legislative assembly election, the government increased the expenditure in budget 2012-13 toRs 33,436 crore fromRs 30,970 crore proposed in the interim budget in March. Despite this, the state government’s fiscal deficit is estimated to decline toRs 2,604 crore, lower, even in absolute terms, fromRs 3,177 crore in the last financial year (revised estimates), as well as the budget estimate ofRs 2,767 crore. In 2011-12, fiscal deficit actual accounted for 1.01 per cent of state gross domestic product.
The state was estimated to continue with a revenue surplus, pegged atRs 6,105.57 crore for 2012-13, 67 per cent higher thanRs 3,648.46 crore in the last financial year (revised estimates). The surplus revenue, however, declined marginally from the budget estimate ofRs 3,965.94 crore.
A FINE BALANCE
Petrol to now costRs 71.92 a litre, againstRs 73.18 after the recent rise
The price of CNG will rise fromRs 35.45 a kg toRs 37.22 a kg
VAT on tobacco used for ‘bidis’, ‘hooka’ raised from 12.5% to 20%
78.2% of the budget would be funded from tax revenue
Plan expenditure pegged atRs 15,168 cr, non-Plan allocation atRs 18,268 cr