BJP government in Delhi will need to find another Rs 13,000 crore to fund its welfare promises

Delhi BJP would need to find Rs 13,000 crore extra to fund its subsidy schemes

The incoming BJP government in Delhi will need to find over Rs 13,000 crore to fund its subsidies, as it prepares to make good of its poll promises in the national Capital, where it has been voted to power after 27 years, a Moneycontrol analysis has found.

The Rs 13,000 crore is over and above the Rs 11,000 crore that the government spends on electricity and other welfare programmes, which the BJP has promised to continue. Along with BJP promises, the subsidy bill will go up to nearly 30 percent of the city’s budget.

The bulk of the money is expected to go towards the scheme promising women from lower-income households a monthly transfer of Rs 2,500, on the lines of Maharashtra and Madhya Pradesh where the BJP is the ruling party or part of the alliance in power.

With 3.8 million women eligible for the benefit in Delhi, this scheme can cost the exchequer Rs 11,400 crore.

In the run-up to the election, all parties guaranteed cash transfers to women of lower-income households.

The BJP swept to power in Delhi, a prize that eluded it for almost three decades, on February 8, bagging 48 of 70 assembly seats . It won 13 of the 19 seats with a higher proportion of women population than the state average.

The party has promised Rs 21,000 to each pregnant woman, adding a few hundred crores to its bill. It has also vowed to increase the pension to Rs 2,500 a month from Rs 2,000 for those aged between 60 and 70. Those above 70 will receive an additional Rs 500 a month.

The added subsidy spend would be over double the national capital’s capital expenditure target for FY25 and nearly as much as it spent on education in this fiscal and nearly four times the funds allocated for urban development.

Can Delhi afford additional spending on subsidies?

While Delhi has one of the lowest fiscal deficits in the country at below 1 percent, the city-state has been revenue surplus, till now. The increased spending on subsidies is expected to change that.

For instance, while the government was expecting Rs 3,231 crore revenue surplus in FY25, down from Rs 4,966 the previous year and a fifth of Rs 14,457 crore accumulated in FY23, a 1.5-fold increase in spending may push the Capital into a revenue deficit in the coming fiscal.

If the government does try to absorb the extra spends by cutting back expenditure, it could have a detrimental impact on capital’s infrastructure, which was a major poll issue.

An earlier analysis by Moneycontrol found that the ratio of spending on capex has been declining over the last decade.

While the government spent 1.1 percent of the Budget on capital outlay in 2013-14, the ratio of spending declined to 0.8 percent by 2023-24 and is likely to be slip further at 0.5 percent in the current fiscal.

In value terms, capital outlay is expected to shrink 29 percent in the current fiscal to Rs 5,919 crore against Rs 8,338 crore spent in the previous year .