Delhi CM Kejriwal Writes to FM Sitharaman Over Tax Share Discrimination

The CM requested Delhi's inclusion in 16th Finance Commission Terms of Reference as a unique case.

Delhi Chief Minister Arvind Kejriwal

(Photo: IANS)

Delhi Chief Minister Arvind Kejriwal on Tuesday, 25 July, wrote to Union Finance Minister Nirmala Sitharaman about the people of Delhi facing 'discrimination' over the past 23 years. In the letter, Kejriwal urged Sitharaman for fair treatment in the upcoming 16th Central Finance Commission.

The letter said that Delhiites paid Rs 1.78 lakh crore in income taxes, but the Centre reduced its share to zero in FY 2023–24. The CM wrote that Delhi received only Rs 350 crore in FY 2022–2023, when it should have received Rs. 7,378 crore; Delhi’s share of central taxes was frozen for the last 23 years.

Kejriwal requested that Delhi be considered a unique case and included in the 16th Finance Commission Terms of Reference.

"Multiple requests have been made by the Delhi Government to give Delhi its legitimate share in the Central Taxes, but no action has been taken in this regard. As you are well aware, NCT of Delhi enjoys a unique ('sui generis') status among all states and Union Territories in India. While it falls in the broad category of a Union Territory with Legislature, it has been working similarly to other states in financial matters. It has a separate Consolidated Fund, w.e.f. December 01, 1993,” the letter read.

Budget Comparison of Delhi and Other States 

In the letter, Kejriwal said that Delhi's budget funding is similar to that of other states. The government of the NCT of Delhi is meeting financial transactions like other states and devolving funds to local bodies, as per the letter.

"But despite this, the Government of the NCT of Delhi neither gets legitimate grants in lieu of a share of central taxes nor any share to supplement the resources of its local bodies, as is the case with other states," the letter read.

CM Kejriwal further said that Delhi, with a separate consolidated fund, has been deprived of its legitimate share in central taxes for two decades. According to the letter, the share has been stagnant at Rs 350 crore since 2001–02, despite a budget increase to Rs 73,760 crore in FY 2023–24.

The disparity becomes clear when compared to neighbouring states with similar populations. In FY 2022–23, Haryana and Punjab received more taxes than Delhi, with Delhi receiving only Rs 350 crore. CM Arvind Kejriwal emphasised that Delhi's share should have been Rs 7,378 crore if treated fairly.

Plight of Delhi's Urban Local Body

The letter highlighted the financial struggles of Delhi's Urban Local Body (ULB), the Municipal Corporation of Delhi (MCD), which has reportedly not received any grant-in-aid from the central government. The MCD, which serves 2 crore Delhites and provides essential services like primary education, healthcare facilities, and solid waste management, has faced unjust behaviour over the past few years.

"The 14th Central Finance Commission allocated a grant-in-aid of Rs 2,87,436 crore for the local bodies for the award period 2015–2020. Similarly, the 15th Central Finance Commission recommended Rs 4,36,361 crore for the years 2021–26. This amounts to Rs 500 per capita per year for the ULBs," the letter read.

“Based on the above recommendations of Central Finance Commissions, the cash-starved MCD would have received additional Rs 7000 cr since 2015. This would have been a boon for the cash strapped MCD, which is facing huge budget deficits, leading to late payments to vendors, delayed salaries to its employees and in turn, is not able to deliver at its full potential,” the letter further stated.

“It is my request to kindly consider Delhi as a unique case and include it in the Terms of Reference of the 16th Finance Commission, following the requisite procedure. It is high time that justice be done, and Delhi gets its reasonable share similar to what other states get. Delhites shall always be grateful for your help,” the letter added.