Kejriwal writes to Sitharaman, points to Delhi’s ‘frozen’ share of central taxes

Arvind Kejriwal, the Chief Minister of Delhi, sent a letter to Union Finance Minister Nirmala Sitaraman on Tuesday expressing concern over Delhi’s “stepmotherly and unfair” treatment over the past 23 years. Prior to the establishment of the 16th Central Finance Commission, CM Arvind Kejriwal demanded the fair treatment of Delhi as a UT with legislature.

In the letter to Nirmala Sitharaman, Chief Minister Arvind Kejriwal wrote, “Delhites pay 1.78 lakh crore just like income tax in FY 2021-22, the second highest among all States and Union Territories in India after Maharashtra.”

However, Delhi only received 350 crores in FY23 when it should have received 7,378 crores.

“Unfortunately, Delhi’s share from the central tax pool has stagnated at 350 crore since 2001-2002 when Delhi’s budget was 8.93 crore. To our great surprise, in FY2023-24, when Delhi’s budget has been increased by 8 times to 73,760 crore, Delhi’s share of central taxes has been reduced to 0,” he added.

To explain the case of Delhi, the CM requested that Delhi be regarded as a unique case. The chief minister said it was clear that as Delhi’s name has been removed (because it is a Union territory) from the Finance Commission’s ‘Terms of Reference’, it is not under the purview of tax decentralization and therefore not treated like other states.

“But Delhi is a special case of ‘Union Territory with Legislature’ and also has the character of the state, with Delhi managing its finances in the same way as other states,” he stated.

Kejriwal appealed to the Union Finance Minister to treat Delhi as a “unique case” and include it in the ‘Terms of Reference’ of the 16th Finance Commission. He stressed the need for fairness and urged Delhi to receive a fair share similar to other states.

The central government is expected to establish the 16th Finance Commission this year, which will determine the tax-sharing ratio between the center and the states for the next five years, starting April 1, 2026.

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According to the Delhi CM, the 14th and 15th finance committees have respectively allocated Rs 2,87,436 crore for 2015-2020 and Rs 4,36,361 crore for 2021-26 to the local agencies across the country. This equates to Rs 500 per capita per annum for urban local bodies, according to his statements.

“The MCD currently serves two crore Delhiites and is responsible for providing basic education, healthcare facilities and solid waste management, similar to what urban local authorities do in other states. Based on the above recommendations of the Central Finance Commissions, the money-poor MCD would have received Rs 7,000 crore since 2015,” said Kejriwal.

Adding “MCD (Municipal Corporation of Delhi) has faced extreme unjust behavior in recent years and received nothing from the Central Government.”

“The cash-poor MCD is said to have received Rs 7,000 crore since 2015,” said Kejriwal. He went on to explain that this would have been a boon for the money-poor MCD, which is facing huge budget deficits, “leading to late payments to suppliers, delayed salaries to its employees and in turn being unable to reach its full potential.”

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