With just a few months likely before Delhi heads for Assembly elections, the state government has sought to borrow Rs 10,000 crore from the National Small Savings Fund (NSSF) to meet its expenditure for the current financial year, 2024-25. The proposal, being sent to the Union Ministry of Finance has been signed by Chief Minister Atishi despite objections by the state’s finance department, which expected lower expenditure due to the Model Code of Conduct (MCC). In fact, it said Delhi should quit from the NSSF. Besides Delhi, only three other states — Arunachal Pradesh, Kerala and Madhya Pradesh — borrow from NSSF, which comprises collections under small saving schemes, net of withdrawals. Most states have decided to stay out of NSSF since these loans are more expensive than market borrowings. In a September 2 note, Delhi’s Principal Secretary (Finance) Ashish Chandra Verma is learnt to have objected to the option of taking loans from the NSSF this fiscal. “In view of the hugely expanded interest liability, and the likelihood of reduced expenditure due to MCC (Model Code of Conduct), it is recommended to accept Scenario I (the option to quit from the NSSF scheme),” Verma had noted. In fact, in the last one week, the Aam Aadmi Party has conveyed its intent to continue with revdis (freebies) as part of its campaign for the Assembly elections in Delhi. Launching a 15-day campaign ‘revdi pe charcha’, the party’s National Convenor Arvind Kejriwal listed out Delhi government’s six revdis — free electricity, water, education, healthcare, bus tickets for women and pilgrimage for elderly and said, “Apart from these six revdis, the seventh one is coming soon.” He then promised to soon start depositing Rs 1,000 per month in every Delhi woman’s bank account. Responding to queries, a Delhi government spokesperson said, “How much debt does the government take in any particular year is a routine administrative decision keeping several factors in mind.” Further, the spokesperson said that the Economic Survey of Delhi 2023-24 shows that the total debt of Delhi government as a percentage of GDP has reduced from 6.4 per cent to 3.9 per cent. “This just isn’t the lowest in Delhi’s history but it is also the lowest in India,” the spokesperson said. Queries sent to Verma and the Union Ministry of Finance did not elicit a response. Delhi had not borrowed from NSSF in 2023-24, while it borrowed Rs 3,721 crore in 2022-23, much lower than Rs 10,000 crore-plus in each of the previous three years. In fact, it had even started pre-paying its older loans, to which the Union Ministry of Finance had objected. Despite the concerns raised by the state’s finance department, Chief Minister Atishi, who also holds the finance portfolio, gave a go ahead to taking loans from the NSSF scheme on existing terms and conditions. “The Finance Department to immediately communicate to the Ministry of Finance, Govt. of India, to ensure release from NSSF Loan Scheme for the current financial year,” Atishi said in an October 10 note. In his note, Principal Secretary (Finance) Verma said, “We are already six months into the current financial year and it can be estimated that 2-2.5 months will be taken up by the MCC for Delhi Legislative Assembly elections. This gives only 4-4.5 months for scheme expenditure on account of capital works.” What seemed more problematic for Verma was the requirement that the NSSF loan would have to be agreed not only for the current financial year but for the future too. This, he pointed out, will impose a huge interest burden. According to calculations by the Union Ministry of Finance, continuing with the NSSF loan from the current financial year till 2038-39 will result in an additional interest burden to the tune of Rs 45,980 crore in addition to Rs 1.27 lakh crore in principal amount. The Union Ministry of Finance had in July conveyed to the Delhi government that the option of availing loan from the NSSF would be a one-time option and not be available on a year-to-year basis. It had sought confirmation from the Delhi government whether it plans to continue with the NSSF loan as per the initial terms and conditions and also follow the repayment schedule. It spelt out two scenarios of repayment. Under Scenario I, the Delhi government had the option to quit the NSSF scheme with no liability on account of NSSF loan after March 2039. The outstanding amount would then be Rs 31,697.47 crore on account of the NSSF loan (the same as on April 1, 2024). Under Scenario II, if the Delhi government avails the option to continue with the NSSF loan, Rs 10,000 crore is estimated to be disbursed to Delhi every year from 2024-25 to 2038-39. This would result in an interest burden of Rs 57,661.68 crore on the NSSF loan borrowed till March 31, 2039. The difference in the interest amount between Scenario I and Scenario II works out to Rs 45,980 crore. Also, an amount of Rs 1,26,697.47 crore would be then payable during 2024-25 to 2038-39 as repayment of NSSF loan as against only Rs 31,697.47 crore payable for the same period under Scenario I with no further liabilities.
