New Delhi: The Aam Aadmi Party (AAP) government's decision to fulfill its election promise of slashing power tariff by half and providing free water to Delhiities is likely to affect its financial health.
Senior Delhi government officials said that subsidy is only going to put tremendous pressure on the financial health of the city government and ultimately people will be burdened with it.
Sources said that the Arvind Kejriwal-led government had set a revenue target of Rs 30,000 crore for the current financial year but it is most likely to miss it by over Rs 3,000 crore.
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They also said that subsidy might work for a short period of time but can't be a long-time solution.
The government is expected to spend Rs 2,768 crore per year on power and water subsidy.
Twelve days after taking over the reigns of power in Delhi, the AAP government yesterday announced a 50 per cent slash in power tariff up to 400 units and 20,000 litres of free water per household. The rates will come into effect from March 1.
It should also be noted that the process of power tariff revision for 2015-16 is already under way. If the regulator hikes power tariff, the government will have to provide another set of subsidy to slash the bills by 50 per cent.
Sources also said that Value Added Tax (VAT) collections dipped after prices of petroleum products declined. Besides, collections from stamps and registration fee were also on the lower side.
During its last stint of 49 days in Delhi in 2013-2014, the AAP government had cut power rates by 50 per cent and made 667 litres of water per day for all metered households free. The AAP had highlighted these two populist measures during its campaign in the run up to the February 7 Delhi elections.