For the first time in its fiscal history, Delhi is on the brink of a severe financial crisis in the current fiscal, with its expenditure likely to cross the limit of receipts. Data from the Finance Department show its earnings through non tax revenues, tax revenues may drop to Rs 62 415 cr as against the budgetary estimate of Rs 64142 cr by the end of fiscal year 2025. )
Delhi has historically been a revenue-surplus state and this would be the first instance of a deficit since the reconstitution of the Legislative Assembly in 1993. Notably, data shows a continuous streak of fiscal surplus from the fiscal year 2017-18 through the projected budget of 2024-25.
As per the data, Revenue expenditure is expected to rise from Rs 60911 cr to Rs 63911 cr. The revenue receipts have consistently been higher than the revenue expenditure starting with a surplus of Rs 4913.25 crores in 2017-18, which further increased to a significant surplus of Rs 14456.91 crores in 2022-23.
Even for the fiscal year 2023-24, a healthy surplus of Rs 6462.29 crores is anticipated. However, the forecast for 2024-25 presents a potential challenge: while the initial Budget Estimates (BE) show a surplus of Rs 3231.19 crores, the possible inclusion of additional demand could lead to a deficit of Rs 1495.48 crores.
Notably, the Arvind Kejriwal government is giving free ride to women in DTC buses, free water up to 20,000 litre per family, free electricity up to 200 units per family, free pilgrimage to senior citizens to the people of Delhi.
Lambasting the Aam aadmi Party (AAP) government, Delhi Bharatiya Janata Party (BJP) President, Virendra Sachdeva, alleged that this Arvind Kejriwal government has pushed the national capital into a financial crisis through ten years of economic mismanagement. He pointed out that despite claims of surplus budgets, the city is now facing its first deficit budget for the fiscal year 2024-25.
Sachdeva highlighted that during the BJP-led government under Madan Lal Khurana in 1994-95, Delhi had its first surplus budget, a legacy that continued until 2022-23. He claimed, “The result of Arvind Kejriwal’s 10 years of economic mismanagement is that due to the slippery economic condition in 2023-24, the budget of 2024-25 has now become the first deficit budget in the legislative history of Delhi.
This is all because of AAP’s corrupt practices.” According to the Delhi BJP chief, the capital’s revenue has been increasing year-on-year, the deficit is a result of the AAP government’s failure to develop new economic resources while simultaneously launching numerous public welfare schemes.
The budget division of Delhi’s finance department made these projections while preparing the revised estimates for the 2024 fiscal year. Sources indicate that the finance department recently shared a note on the city’s financial situation with chief minister Atishi who also holds the finance portfolio, detailing tax, non-tax revenues, and expenditures under various categories.
The financial situation of the Delhi Government, as outlined by the BE for the fiscal year 2024-2025, suggests a cautious stance amidst mounting fiscal demands. These funds are primarily allocated to cover revenue expenditures essential for running the government, addressing operational costs, maintaining infrastructure, and subsidising welfare schemes.
However, additional resource requirements on the revenue front have been identified, potentially straining the budget further. Key departmental needs include Rs. 141 crores for the Law Department to fund pensions and allowances in alignment with the 2nd National Judicial Pay Commission recommendations.
The Power Department seeks Rs. 512 crores for consumer subsidies channelled through DISCOMs, while the Transport Department requires Rs. 941 crores to support the viability of electric buses. Moreover, the Health Department is earmarked for expenditures on the remodelling of hospitals due for completion this year.
Additional pressing needs include Rs. 447 crores for the Irrigation and Flood Control department for necessary de-silting and restoration works, and a significant Rs. 3,271 crores for the Delhi Metro Rail Corporation (DMRC), addressing operational losses from the COVID-19 pandemic and loan obligations to the Japan International Cooperation Agency (JICA).
An extra Rs. 250 crores is also necessary for acquiring the University College of Medical Science under the Health and Family Welfare Department. These requirements amount to an additional Rs. 7,362 crores.
With a monthly expenditure on salaries, wages, and interest repayments pegged at Rs. 2,240 crores and a current cash reserve of Rs. 4,471 crores, the Delhi Government is confronting a fiscal challenge. This financial scenario underscores concerns over the government’s ability to sustain even two months of operational expenses, stressing the imperative for strategic fiscal oversight and possibly seeking avenues for additional revenue generation or cost-cutting measures.
