Delhi projected to slip into revenue deficit for first time in 31 years

NEW DELHI : The city’s finances may fall into deficit for the first time by the end of 2024-25, with its expenditure likely to exceed its receipts, the finance department has informed the CM.
Delhi’s earnings — through tax revenue, non-tax revenue, receipts under centrally sponsored schemes and grants from the Centre — are projected to drop from the budgetary estimate of Rs 64,142 crore to Rs 62,415 crore by the end of FY25.
Revenue expenditure is expected to rise from Rs 60,911 crore to Rs 63,911 crore. Additionally, the city govt would require Rs 7,000 crore to complete various capital projects, which were not provisioned in the budget.
Officials said that 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.
The budget division of Delhi’s finance department made these projections while preparing the revised estimates for the 2024-25 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.
According to sources, the finance department has identified an additional requirement of Rs 3,000 crore for various revenue expenditures in the current financial year.
These were not accounted for in the 2024-25 budget estimates and include funds for enhanced pensions and allowances as per the National Judicial Pay Commission, power subsidies, viability funding for electric buses, desilting of drains, repair of roads and covering part of Delhi Metro’s operational losses during the Covid years.
“There is a strong possibility of revenue deficit, which may adversely affect the situation of Delhi govt,” said an official.
Another official mentioned that the govt will need funds to operationalise six hospitals currently being remodelled, which are expected to be completed within the fiscal year. The amount required for these hospitals has yet to be determined.
The govt will need an additional Rs 4,000 crore for capital expenditures to complete various infrastructure projects, such as the construction of new court complexes, bus depots and terminals, new hospitals, improvement of jail and forensic science laboratory, and renovation and addition of high court and district courts.
Officials estimate that the total expenditure (both revenue and capital) may exceed budgeted amounts by over Rs 7,000 crore. As a result, about Rs 83,000 crore will be required, compared to the original budget estimate of Rs 76,000 crore.
A source added that while tax revenue collection is almost on track, the Centre may adjust Rs 951 crore against Delhi’s operational losses and other committed liabilities, as was done in the last fiscal year, meaning the amount may not be released. Similarly, only Rs 1,000 crore of the Rs 3,224 crore earmarked for centrally sponsored schemes is expected to be received from the Centre, as Delhi govt failed to fulfil its commitments.
Officials said that revised estimates for 2024-25 have been sought from departments, and the pace of expenditure may accelerate due to rising demands. Although the govt’s cash balance is currently around Rs 4,471 crore, the average monthly expenditure exceeds Rs 5,000 crore. The current available surplus is sufficient to meet just 2 months of salaries.