23 March 2010;timesofindia.indiatimes.com:NEW DELHI: Delhi just became a more expensive city to live in and you can thank the Commonwealth Games for it. The NCT government's finance minister A K Walia on Monday unveiled a budget that hiked taxes on a host of items from diesel to mobile phones, watches to furniture and withdrew the subsidy on cooking gas. His justification for doing so was that expenditure on Games projects had exceeded estimates while the "recession" had meant that revenues didn't keep pace. If last year, with general elections round the corner, Walia had presented what chief minister Shiela Dikshit dubbed a "thanksgiving budget", this time round the message to the aam admi, already reeling under the weight of high inflation, particularly in food items, is clear -- it's payback time. The hike that is likely to hurt most is the increase in the value-added tax (VAT) on diesel from 12.5% to 20%, coming on top of the hikes Pranab Mukherjee had imposed in the Union budget less than a month ago. Higher VAT would mean diesel will cost Rs 2.37 more per litre. Given the widespread use of diesel in transporting goods, it is likely to lead to a cascading effect across the board, partly due to its actual impact on transport costs and partly because it also provides traders with a ready excuse for raising prices. Higher cooking gas prices would also hit home, quite literally. The Rs 40 per cylinder subsidy on LPG which has been continuing from June 2008 has been withdrawn. In absolute terms, the hike in the cost of an LPG cylinder will come to Rs 41.60 because of the incremental increase in local levies. Diesel is just one in a long list of items on which VAT has been hiked. These include tea, coffee, cutlery, school bags costing more Rs 300, compressed natural gas for transport, wood and timber, dry fruits and desi ghee, all of which are set to get more expensive. The LPG subsidy issue and the hike in VAT rates of tea and coffee reportedly caused some division in the cabinet with some ministers demanding an increase in excise rates on liquor rather than targetting the middle class kitchen. The budget also clearly shows how the unruly scenes in the Assembly at the start of the session over price rise and some theatrics from opposition MLAs to highlight the issue have failed to make any impact on the government's psyche -- far less foolhardy than it might seem, given the fact that there are no immediate elections in sight. The items which have escaped the almost across-the-board hike in VAT are foodgrains, atta, maida, suji, unbranded goli and toffee, kirana items except dry fruits etc, amla, harad, jute and jute products, blood filters, tricycles meant for disabled persons, piped natural gas and mid-day meal supplied by agencies approved by the Delhi government. Walia defended both the subsidy withdrawal and the diesel VAT hike by citing examples of other states: "States like Madhya Pradesh and Punjab charge a far higher VAT on diesel than we do and we made the best efforts to keep the hike at the minimum possible, which is why we did not touch the VAT on petrol. As for the subsidy, name one state that continued it for so long after the original hike that had necessitated it was withdrawn. We were concerned so we footed the bill, but now we need this money for other welfare projects like widow pension etc."
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