Number Theory: Understanding the Delhi budget — in three charts

While the 2024-25 BE expenditure is 1.47% more than the ₹74,900 crore spent in 2023-24 as per R.E. numbers, it's a reduction if compared to 2023-24 B.E. numbers

The Delhi government presented its 2024-25 budget on March 4. Coming just before the general elections, the budget promises a spending of ₹76,000 crore, more than three-fourths of which will be financed by Delhi’s own tax revenues (OTR). This basic fact notwithstanding, here are four charts which put Delhi’s budget in context.

Delhi chief minister Arvind Kejriwal and finance minister Atishi address a joint press conference after the presentation of the Budget of the Delhi government at Vidhan Sabha on Monday. (ANI)

Number Theory: Understanding the Delhi budget — in three charts

• 
  Compared to 2023-24, this is a contractionary budget

  According to the 2024-25 Budget Estimates (BE), Delhi will spend ₹76,000 crore in the next fiscal with a rough break-up ₹60,910.75 crore on revenue and ₹15,089.25 crore on capital spending. While the 2024-25 BE expenditure is 1.47% more than the ₹74,900 crore spent in 2023-24 as per the Revised Estimate (RE) numbers presented in the “Budget at a Glance” document, it is a reduction if one were to compare it to the 2023-24 BE numbers which projected a total spending of ₹78,800 crore. To be sure, even the Union Budget (technically a vote-on-account) saw the 2023-24 RE number for total expenditure being lower than the 2023-24 BE number, but it did not project a lower 2024-25 BE expenditure compared to 2023-24 BE number, which is the case for the Delhi budget. This basically means that Delhi’s budget has made a bigger pivot towards fiscal consolidation than what the vote-on-account has done at the all-India level.
• 
  Excise continues to disappoint as a source of revenue

  The controversy and now legal proceedings in the excise policy case continue to haunt the Aam Admi Party (AAP)-led Delhi government and its top leadership. This year’s budget numbers show that Delhi’s excise troubles are as much fiscal as they are political. A comparison of tax-head revenues for 2022-23 actual, 2023-24 BE, 2023-24 RE and 2024-25 BE shows that excise as a source of revenues has been the only lagging component in Delhi’s revenue generation efforts. The AAP government in Delhi had to revert back to its old excise policy in July 2022 after the new policy got mired in controversy. Its failure to move to the new policy seems to have left a big hole in excise revenues. Excise tax collections in 2023-24 RE are 18.54% less than what the 2023-24 BE numbers projected them to be. Excise is the only major tax head for which the 2023-24 RE number is lower than the BE number. In fact, even the 2024-25 BE numbers show the lowest growth in excise collections compared to 2022-23 actual collections among major tax heads. 2022-23 is the year when the new excise policy was in place.
• 
  Is Delhi really an outlier in terms of subsidy spending?

  Promises such as subsidised power and water bills are what helped the AAP break political ground in Delhi and then win two back-to-back landslide victories in the 2015 and 2020 elections. This raises a question whether Delhi really outspends other governments in terms of subsidy spending. While this question is difficult to answer for all state governments because of haphazard nature of budget statements, one can make this comparison for Delhi and the Union government. The 2024-25 'Budget at a Glance' released by the Delhi government lists six subsidy heads in four broad sectors: electricity, power, water, transport, and sugar. The sum total of these amounts comes to ₹4,247.75 crore for 2024-25 BE numbers with power subsidy being the biggest component of it at ₹3,250 core. The total amount spent on subsidies which the Delhi government intends to spend in 2024-25 is 5.6% of the total spending of ₹76,000 crore in budget. The 2024-25 vote-on-account of the Union government has budgeted a spending of ₹3.81 lakh crore on subsidies which are divided into the heads of food, fertiliser, and petroleum. This amount works out to around 8% of the total budget spending of ₹47.7 lakh crore in the vote-on-account. This means that proportionately speaking, the Centre actually spends more on subsidies than Delhi government. To be sure, such comparisons need to be read with the caveat that subsidies are not the only welfare or pro-poor spending made by either the central or state governments.