The National Capital Territory government of Delhi is in a financial crisis,with the Sheila Dikshit administration sounding the alarm bells after sustaining estimated revenue losses worth nearly Rs 1,700 crore so far this fiscal something that could seriously jeopardise the prospects of the Commonwealth Games 2010. The state is understood to have shot off a letter to the Centre seeking financial assistance to maintain the tempo of its existing projects as well as the impending Games. The state government is understood to have sent an SOS to the Centre highlighting its plight,saying it sustained the revenue losses primarily due to dipping realizations in Value Added Tax and stamp duty.
The revenue loss from stamp duty is believed to be much more than VAT losses implying that revenue realizations from the real estate sector are visibly down. A senior official of the Congress-led government confirmed the losses and expressed serious concern that it could have a direct bearing on funding for the Commonwealth Games,whose outlay is said to have shot up high. The outlay of Rs 1,200 crore approved by the Centre for the Games is simply inadequate and hence more money is needed to expedite the works in this connection,he said. As an immediate measure,the Diskhit administration has sought Rs 500 crore this fiscal in addition to Rs 750 crore for the Games,it is understood to have already received so far.
The fear of reduced revenue collections has caused agony within the state government with Dikshit asking her finance department last month to expedite tax collections.
The anticipated shortfall in stamp duty collection is around Rs 700-800 crore,which is about half of the targeted Rs 1,400 crore. Besides,the finance department is expecting a deficit of Rs 500 crore of its total VAT collection target this fiscal. Of the outlayed funds for the Commonwealth Games,the government has so far received Rs 750 crore in two installments of Rs 300 crore and Rs 450 crore. The sliding property market and fall in tax collection owing to lowering of excise on petroleum has been a factor in lowering revenue realizations,which are the main sources of VAT.
We need assistance from the Centre for more funds for the Games in view of this situation, the official said and pointed out that it has already communicated the same to the Manmohan Singh government. The state is wary that if it is not given adequate funds next year,this revenue deficit could wreak havoc on its social sector programmes as well.