Robust revenue gives lever to new Delhi govt; surplus status may take a hit

Delhi remains one of India’s most prosp­erous states, with its estimated per capita income at 2.8 times the national average in 2023-24. In 2022-23, only Sikkim and Goa had higher per capita incomes. 

The state has strong tax receipts, with its own tax revenues now constituting 90 per cent of its revenue receipts. On the other hand, it does not bear the burden of many expenses, such as law and order, as it does not have full statehood. Delhi does not get tax devolution from the Centre. 

Over the years, the share of revenue expenditure in total allocations rose dra­stically, particularly since 2012-13, while capital outlay fell; both in prop­ortion to total expenditure and gross state domestic product (GSDP). This has led to a shrinking revenue surplus, while fiscal deficit has been controlled by curtailing capital outlay. The state has managed its sovereign debt well, keeping it close to 1 per cent of GSDP in recent years. 

With the Rekha Gupta government expected to continue the freebies announced by the previous regimes, and introduce new benefits for women and senior citizens, Delhi’s revenue expen­diture may take up a larger share of total spending. On Thursday, Gupta anno­un­ced that eligible women would start ge­tting Rs 2,500 per month by March 8. The Aam Aadmi Party (AAP) had promised Rs 2,100 for women aged 18 and above. 

However, the AAP government had made a provision of Rs 2,000 crore for the scheme in the 2024-25 Budget. At that time, the government had proposed Rs 1,000 per woman, though the scheme was never implemented. As such, part of the payment was already factored into the government’s public finance data. 

The Bharatiya Janata Party (BJP) has promised Rs 2,500 per month to poor women, not all females. While BJP has yet to define the eligibility criteria, only 3.4 per cent of Delhi’s population was under multidimensional poverty during 2019-21, according to a NITI Aayog report. 

The report did not give a gender-specific breakdown of poverty rates. 

It remains to be seen whether the BJP government will modify the existing free electricity scheme, but additional spending would be required to fulfill its other promises. 

These promises include a Rs 500 LPG cylinder subsidy for poor women, one free cylinder on Holi and Diwali, an increase in old-age pensions, Rs 5 meals for slum residents, one-time financial assistance of Rs 15,000 for competitive exam preparation, reimbursement of two-time travel and application fees, free education for needy students from kindergarten to  PG level in government institutions,  Rs 10 lakh life insurance and Rs 5 lakh accident cover for domestic help, and the Clean Yamuna project.