New Delhi, March 22: The Delhi government withdrew the subsidy on cooking gas, making LPG costlier by around Rs 40, and increased VAT on a whole range of items, including diesel and high-end mobile phones, to generate an additional Rs 1,100 crores to complete projects related to the forthcoming Commonwealth Games in the city.

CNG, the fuel mandatorily used in buses, taxis and autorickshaws, will for the first time be taxed at five per cent. At present there is no VAT on CNG.
Presenting the Delhi government’s Rs 26,000-crore Budget for 2010-11, state finance minister A.K. Walia also increased taxes across the board on items ranging from diesel, mobile phones and even tea and coffee to finance ongoing Commonwealth Games projects. The Rs 40 subsidy given on each LPG cylinder, accounting for Rs 170 crores annually, has been withdrawn. Diesel and CNG have been made dearer by Rs 2.37 per litre and Rs 1.09 per kg respectively.
An LPG cylinder will now cost Rs 322.80 after withdrawal of the Rs 40 subsidy, in effect since 2008. Diesel, on which VAT has been hiked from 12.5 per cent to 20 per cent, will now cost Rs 35.29 per litre in place of Rs 32.92 per litre.
Dr Walia told reporters after the Budget that the government’s expenditure had gone up due to preparations for the Commonwealth Games, and he therefore had no option but to hike VAT (value added tax) to get revenue. He said the Delhi government had already spent Rs 15,000 crores on Games projects so far.
The Rs 26,000-crore Budget includes Rs 11,200 crores for Plan expenditure, Rs 140 crores for Centrally-sponsored schemes and Rs 14,660 crores for non-Plan expenditure.
VAT has been increased on a range of household items — from five per cent to 12.5 per cent on items like desi ghee, dry fruits, tea, coffee, utensils and cutlery items, Glucose D, locks and all kinds of products used to kill mosquitos, rodents, weeds, pests.
Dr Walia targeted luxury items to raise an additional Rs 100 crores — by hiking VAT on mobile phones and accessories above Rs 10,000 from five per cent to 12.5 per cent, while raising taxes on watches costing above Rs 5,000 from 12.5 per cent to 20 per cent. Another Rs 10 crores will be raised with a hike in VAT on aerated drinks from 12.5 per cent to 20 per cent.
The transport sector again accounted for the highest allocation — of Rs 4,224 crores (37.71 per cent of the total Plan outlay), with Dr Walia stating that 3,775 low-floor buses would be bought at a cost of Rs 2,019 crores this year. Also, the minister announced an allocation of Rs 420 crores to cover another one lakh senior citizens under the old age pension scheme.
The minister also announced raising the maximum registration fee to Rs 500 in place of the existing Rs 100. He said that at an annual subsidy of Rs 156 crores, 2.6 million students will get uniform allowance at a rate of Rs 500 for MCD students and Rs 700 for students from Class 7 to Class 12 in government schools.

Manish Anand