Delhi Budget: VAT collections save the day

Despite the cash deficit of over Rs 4,000 crore that the AAP government was facing, it has presented a surplus Budget for Delhi claiming that a surge in VAT collections has helped it overcome the financial crunch in the current financial year.

In its first full-fledged Budget for 2015-16, the AAP government increased the budgetary allocation by 18 per cent to Rs 41, 129 crore as compared to Rs 34,790 crore allocated by Finance Minister Arun Jaitley in the previous year when Delhi was under President's rule.

The surplus Budget presented by the Kejriwal government banks on a robust growth projection of VAT and excise tax collections to meet the higher expenditure. The AAP government said that the expenditure will be financed mainly from tax revenue raised from VAT and excise tax collections.

Chief Minister Arvind Kejriwal said the VAT (value added tax) collection during AAP's four-month rule has surged by 26 per cent and exuded confidence that the earnings would go up without initiating any 'coercive' measures against traders.

In contrast, the increase in VAT collection during President's rule was a mere 2.03 per cent. Kejriwal said corruption has come down in Delhi as a result of which the leakage in revenue has been plugged.

The government did not announce any hike in the rate of VAT on goods to spare consumers of a price hike but raised the luxury and entertainment tax which will mainly pinch the rich.

Presenting the Budget on Thursday, Deputy Chief Minister Manish Sisodia said the government targets to collect Rs 41,500 from various sources while the total expenditure is pegged at Rs 41, 129 crore. This will result in a cash surplus of Rs 371 crore.

According to government, 83 per cent of total receipts is expected to come from tax revenue while the remaining 17 per cent of revenue will come from non-tax revenue which includes small loans, central assistance, share in central taxes and centrally sponsored schemes. In order to finance the higher outgo on water and power subsidies, the government has increased the non-plan outlay by Rs 629 crore over the previous year.

The government, however, rued that there has been no hike in the state government's share in central taxes over the years.

In Association with Mail Today