CAG raises concerns over declining capex in Delhi

The Comptroller and Auditor General (CAG) has flagged declining capital expenditure, rising subsidies and poor returns on government investments as key concerns in Delhi’s finances, even as the city’s economy continued to grow

The Comptroller and Auditor General (CAG) has flagged declining capital expenditure, rising subsidies and poor returns on government investments as key concerns in Delhi’s finances, even as the city’s economy continued to grow.

CAG raises concerns over declining capex in Delhi

Chief minister Rekha Gupta tabled the CAG’s report on state finances for 2024-25 in the Delhi assembly on Monday, the second day of the monsoon session.

Delhi’s gross state domestic product (GSDP) grew 9.17% to ₹12.15 lakh crore in 2024-25, accounting for 3.67% of India’s GDP. However, the CAG noted that growth in Delhi’s per-capita GSDP between 2015-16 and 2024-25 was slower than the growth in the country’s per-capita GDP, indicating that Delhi’s economic growth had moderated relative to the national average.

Revenue receipts rose 9.57%, driven mainly by higher tax collections, particularly GST. However, non-tax revenue fell 11.04% and central grants declined. The CAG noted that Delhi’s own revenue performance had improved and its dependence on central grants had reduced over the years.

Subsidies increased by ₹3,222 crore, or 172.48%, during the period, with power subsidies accounting for ₹2,033 crore of the increase.

At the same time, capital expenditure, or the spending on infrastructure and long-term assets, fell sharply, from ₹8,311 crore in 2021-22 to ₹3,695 crore in 2024-25. Its share of total expenditure remained between 7% and 15% during 2015-25, raising concerns over sustained investment in infrastructure and asset creation.

Social services accounted for 49-55% of total expenditure, reflecting spending on health, education and social security. The CAG, however, stressed the need to balance welfare commitments with long-term investment.

The report also flagged limited spending by local bodies on creating capital assets. Only 6-27% of financial assistance provided to local bodies and institutions was used to create assets, while 73-94% was spent on day-to-day requirements.

Government investments rose from ₹18,492 crore in 2015-16 to ₹21,810 crore in 2024-25. However, these investments generated returns of less than 1%, compared with borrowing costs of 7.6-8.7%.

The CAG recommended increasing revenue, strengthening tax enforcement, improving non-tax revenue collection and controlling expenditure. It also called for more judicious budget provisioning and greater transparency in accounting and financial reporting.