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Fiscal Health of Delhi Government

SUBSIDISED SCHEMES RUN BY DELHI GOVERNMENT

• Free bus rides for women in Delhi.
• Subsidy for those using less than 400 units of electricity.

• Free water for families that use less than 20,000 litres a month.

• Free treatment, medicines and test facilities in nearly 200 mohalla clinics.

But the maximum stress of these schemes is towards Education & Healthcare

BENEFITS

• Delhi government has lowest fiscal deficit compared with any other state in the country.

• Usually subsidies and freebies tend to raise the revenue expenditure but currently it is still in positive territory.

• Subsidies have directly benefited the citizens of Delhi and increased their disposable income.

• It is better to spend more money into improving the functioning of existing schools and hospitals to improve the quality of services.

• More expenditure on Health and education helps in improving the human capital.

WHERE IS THE PROBLEM THEN?

• Delhi’s revenue surplus is coming down with each passing year and its fiscal deficit is starting to grow       significantly.

• Delhi’s own tax revenues (OTRs) have fallen from 5.49% of GSDP in 2015-16 to 4.93% in 2018-19.

• It is a worry for sustaining expenditures.

• There is another structural problem related to Capital expenditure — that is investments into making new infrastructure like schools and hospitals.

• It will be very difficult for any government to remove these subsidies in future.

• This may create bottlenecks in the medium- to long-term in a metropolitan city like Delhi.

GSDP of Delhi for 2018-19 is estimated to be Rs 7,79,652 crore.
Total expenditure for 2019-20 is estimated to be Rs 60,000 crore.

Total receipts (excluding borrowings) for 2019-20 are estimated to be Rs 50,767 crore
Revenue surplus for 2019-20 is targeted at Rs 5,236 crore.
Capital expenditure for 2019-20 is proposed to be Rs 15,219 crore.
But it had fallen from 1.16% of GSDP in 2011-12 to 0.54% in 2018-19.

WAY FORWARD

• Subsidies could be more Targeted, like DBT.

• Expenditure on Health & education is a welcome step but providing subsidies on many things may be problematic in medium to long term.

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