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Delhi elections: AAP govt spending spree on health, education rides on low fiscal deficit, high tax base

The focus of the Delhi government’s Budgets has been to increase spending on health, education and transport sectors, even as it has come at a cost of working losses of entities like Delhi Transport Corporation (DTC) and Delhi Jal Board surging over the years.

Written by Sunny Verma | New Delhi | Updated: February 7, 2020 7:19:38 am
Delhi Assembly elections, Delhi Budget, Delhi elections budget, Delhi elections, Elections news, Indian Express The government has been providing assistance and grant to run operations of DTC.

Heading into elections on February 8, Delhi’s economy has recorded relatively stable performance on various parameters over the past four years for which data is available.

The focus of the Delhi government’s Budgets has been to increase spending on health, education and transport sectors, even as it has come at a cost of working losses of entities like Delhi Transport Corporation (DTC) and Delhi Jal Board surging over the years. Relatively low fiscal deficit at 0.4 per cent of Gross State Domestic Product (GSDP) in 2018-19, along with high tax base compared to many other states, enables Delhi to provide subsidy on electricity, health and transport sectors — a key theme of the Aam Aadmi Party government.

Delhi’s economy grew at 8.61 per cent in 2018-19, recording an annual average GSDP of 8.92 per cent over the last four years from 2015-16 to 2018-19. During the same four-year period, India’s average annual GDP growth rate was 7.35 per cent. In 2018-19, for instance, Delhi’s GSDP growth rate was 8.61 per cent, in contrast to all-India expansion of 6.1 per cent. Delhi’s per capital income at Rs 2,79,601 in 2018-19, has been higher than the national average of Rs 91,921 in 2018-19.

During the past four years, the state has been in revenue surplus, which means revenue receipts were more than revenue expenditure, but the surplus has fallen with each passing year. It recorded fiscal deficit in two of the last four years. Fiscal deficit at 0.40 per cent has been lower than the all states’ rate of 2.59 per cent in 2018-19 as well as in the previous three years. However, the Delhi government has estimated its fiscal deficit at Rs 5,902 crore in 2019-20, an increase of Rs 5,213 crore over the Revised Estimate (RE) of 2018-19.

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The Budget 2019-20 of Delhi has pegged its total expenditure at Rs 60,000 crore — of which education, health, transport and water supply have been allocated over 56 per cent at Rs 33,780 crore. Education sector gets the highest allocation at Rs 15,133 crore in 2019-20, compared to Rs 11,201 crore in 2018-19 in RE. Health and family welfare expenditure has been pegged at Rs 7,458 crore in 2019-20, up from Rs 5,968 crore in 2018-19 RE. Transport and water supply, sanitation, housing and urban development have been allocated Rs 5,882 crore and Rs 5,280 crore, up from Rs 4,268 crore and Rs 4,768 crore, respectively.

Delhi’s spend on education as a percentage of total expenditure is 27.8 per cent in 2019-20 (BE), compared to 15.9 per cent for average of 27 states in 2018-19 BE. Delhi’s spend on health as a percentage of total expenditure is 13.8 per cent in 2019-20 (BE) as compared to 5.2 per cent for average of 27 states in 2018-19 BE.

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Key subsidies being provided through 2019-20 Delhi Budget include Rs 108 crore for DTC concessional passes, Rs 468 crore for subsidising consumers of Delhi Jal Board and another Rs 1,720 crore for providing subsidies to consumers through electricity distribution companies (discoms). While subsidies on transport, electricity and water have been welcomed by residents, these have led to working losses at state entities like DTC and Delhi Jal Board. DTC’s working losses have surged over the years to Rs 1,750.37 crore in 2018-19, compared to Rs 1,250.14 crore in 2015-16, while income of DTC fell to Rs 955.31 crore from Rs 1,005 crore during the same period, as per the latest data available in the Delhi Economic Survey 2018-19. The government has been providing assistance and grant to run operations of DTC. Even Delhi Jal Board recorded a working deficit of Rs 133.78 crore in 2018-19, compared to a surplus of Rs 8.15 crore in 2015-16 as expenses surged more than the income. Delhi Jal Board had recorded consecutive working surplus during 2013-14 to 2015-16.

Commerce and trade contribute more to Delhi’s economy than manufacturing & agriculture. Merchandise exports from Delhi rose to $9.46 billion in 2018-19, up from $8.71 billion in 2017-18. Electric machinery, man-made fibres, readymade cotton, gold and other precious metal jewellery accounted for a major chunk of the exports, with the state’s key industrial areas in Narela, Mangolpuri, Kirti Nagar, Naraina and Okhla serving a large number of MSMEs and large industries.

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