Rs 12,000 crore GST hit may impact big projects: Delhi FM Kailash Gahlot

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Concerned that the discontinuation of the Goods and Services Tax compensation could adversely affect Delhi’s revenues, finance minister Kailash Gahlot said on Thursday that this might also impact the rollout of some schemes announced by Delhi government.

A day after presenting his maiden budget, Gahlot said in an interview with TOI that Delhi had taken a hit of nearly Rs 12,000 crore due to the GST measure. “If we don’t ramp up our revenue generation, it will be challenging to complete the big projects that we have announced. We will have to increase our GST collection as much as we can,” said Gahlot.

Delhi government presented a Rs 78,800-crore budget on Wednesday, allocating Rs 21,817 crore for capital expenditure for 2023-24. The government has estimated a collection of Rs 53,565 crore, or 68% of the budget outlay, from tax revenue with GST and Value Added Tax accounting for the biggest chunk of Rs 37,200 crore.

Gahlot said his government had expected the year-on-year growth of GST to be around 14% in 2022-23 over the previous year, but it stayed below 10%. Though the government is now exploring options on how to increase GST collections, the finance minister has urged the central government to continue providing compensation for the next five years until collections achieve the 14% annual growth rate.

“GST is our biggest tax component. The Centre’s assurance of GST leading to a buoyant state revenue hasn’t been realised because of several reasons,” said Gahlot. “The resulting gap in revenue collection can lead to a drastic reduction in expenditure for various development programmes and the overall growth of the capital.”

He added that the budget outlay would have been bigger if the GST shortfall of Rs 12,000 crore hadn’t had to be considered.

The minister also claimed that the Centre had subsumed the Rs 325 crore that Delhi received every year as its share of central taxes under a different head. He expressed apprehension about the capital ever getting his amount from the next financial year. “This component of Rs 325 crore is our right. Ideally, like other states, Delhi should get an equal share from the 42% allocation of the central taxes. For Delhi, this would amount to more than Rs 6,000 crore. But the Centre hasn’t ever given us our rightful share,” Gahlot said.

Propelled into the post of finance minister after Manish Sisodia, who held the portfolio since 2015, was arrested allegedly for connivance in corruption in the formulation of the now abandoned excise policy, Gahlot had less than a week to look at the budget before it was sent to the LG and then to the Union home ministry for approval.

Asked about the brief given to him by CM Arvind Kejriwal, Gahlot said the instructions were clear. “He told me that all schemes for the common man should continue, we should strengthen all departments and make Delhi a better city to live in. I kept that in mind and I think we have provided the city a good budget,” said Gahlot. “We worked with a common vision of all schemes and programmes being made keeping the aam aadmi (common man) at its centre.”

On the question of reduced allocation for all sectors save education and housing and urban development (which gives money to the Municipal Corporation of Delhi), Gahlot said there was no cut in funds in real terms for development projects. “If the allocation for a particular sector has dipped, it is because the development projects in the sector had been completed and additional funds were not required. We have not discontinued any scheme,” the minister said.

About the strict deadlines for completing the disposal of legacy waste from the three landfills and the cleaning of the Yamuna, Gahlot said Delhi government was doing everything under its power to fulfil the promises.

As to why his budget speech didn’t mention the projects announced last year in the Rozgar Budget, Gahlot said, “It was a conscious decision. Most schemes in that budget required close working with MCD. We hope to have better coordination with the civic body since AAP controls it now. All projects will be taken up this fiscal.”

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