The Hindu : New Delhi News : Sheila Government to review major policy decisions

Online edition of India's National Newspaper
Monday, Aug 23, 2004

New Delhi

New Delhi

Sheila Government to review major policy decisions

By Sujay Mehdudia

NEW DELHI, AUG 22. Succumbing to pressure from various lobbies, the Sheila Dikshit Government has gone back to the review mode indicating a major turn around on policy decisions. After having rolled back the hike in the sales tax on diesel, the Government is now preparing to review its various other decisions of the budget that has already been passed by the Delhi Assembly.

Making a mockery of the legislative norms, the Delhi Government has been wooing various sections right, left and centre. The reversals sound all the more strange as no elections are round the corner, a situation that could have pressurised the Government to resort to populist measures. During the presentation of his budget, the Finance Minister, A.K. Walia, had hiked the sales tax on diesel from 12 per cent to 20 per cent. The petrol pump owners raised a hue and cry and the Government succumbed to their pressure and reversed the hike. Similarly, on the plea of party MLAs, the sales tax on oiled and de-oiled cakes was also withdrawn citing "drought'' conditions as one of the major reasons.

As if this were not enough, Dr. Walia announced a review in the hike in sales tax on surgical instruments in the wake of representations received from various sections. The review was only an excuse and the Government is already trying to find a way out to withdraw the hike in sales tax on these surgical items which hardly affects the common man. Close on the heels of this review, the Government has also indicated that it would review the decision to change the point of taxation for bullion, articles and ornaments made of gold and silver from last point to first point. The trade has alleged that higher rate of sales tax on this account would result in shifting of activity to adjoining States. However, at the time of taking this decision, the Government had said that since there is practically no addition of cost value to these items whether sold by wholesalers to the retailers or by the retailers to the customers, it is proposed to bring these high priced items from last point to first point for taxation. What has forced the government to take such a step is not clear.

Similarly, the Government has also failed to issue the notification for the new tax regime for luxury tax imposed by hotels. Under this new policy, the Government would only consider the declared tariff regime in the area of luxury tax in order to make the billing system transparent for tourists and to plug the loss of revenue by way of evasion and discretionary reporting.

However, it is now under pressure from the Union Tourism Ministry as well as the hoteliers lobby to revert back to the old taxation system that did not result in any substantial increase in revenue. Despite the policy decision having got the seal of approval of the Delhi Assembly, the Delhi Government has still not issued the necessary notification in this regard.

Experts feel that budgetary proposals are indicators of the Government's policy and directions. Any unnecessary tampering to please some sections defeats the very purpose of presenting the budget and indicates an ad hoc approach of the Government. "If all this had to be done by the Finance Minister, then what was the need to incorporate all this in the Budget. This is not a healthy sign for any Government and succumbing to such pressures could well prove to be a financially unviable decision with larger ramifications.''

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