Center has given more to Delhi. How Kejriwal is telling lies on Delhi Budget:: HT


Budget : What is Delhi’s tax performance?

Delhi’s own tax revenue is expected to increase to ₹53,565 crore in 2023-24. This number is significantly higher than the ₹47,700 crore in the 2022-23 Budget Estimate (BE) numbers. To be sure, the Revised Estimate (RE) numbers for 2022-23 show that Delhi’s own tax revenue collection is likely to be ₹48,450 crore in 2022-23. More than 50% of Delhi’s own tax revenue comes from state GST, which is where the tax collections show the largest growth. The only major tax head which shows a fall between 2022-23 BE and RE numbers is state excise, where even the 2023-24 BE numbers are lower than what was assumed in the 2022-23 Budget. A better metric to assess a state’s tax performance is to look at the share of taxes in GSDP, or look at tax buoyancy which measures change in tax revenue per unit growth in GSDP. Because the Delhi Budget has not given a nominal GSDP number for 2023-24, these calculations are not possible for Delhi.

See Chart 1: 2021-22 A, 2022-23 BE, RE and 2023-24 BE tax-heads

Has the centre cut its funding to Delhi?

Although headline numbers will suggest that the Centre has cut funding for Delhi, it hasn’t really. Total grant-in-aid and contribution from the Centre has come down from ₹12,589 crore in 2022-23 BE to ₹8,137 crore in the 2023-24 BE numbers. To be sure, the 2022-23 RE number is slightly higher than the BE number at ₹13,776 crore. However, the fall in total grant-in-aid contribution from the Centre is solely on account of a sharp fall in GST compensation cess from ₹10,000 crore in 2022-23 BE to ₹3,802 crore in 2023-24. If one was to exclude this account – the five-year period for GST compensation cess ended in 2022-23 – Delhi has actually received more money from the Centre. While chief minister Arvind Kejriwal said that the Centre had stopped ₹325 crore of tax devolution to Delhi without giving any explanation, an analysis of demand for grants from the 2023-24 Union Budget shows that Delhi’s total transfers from the ministry of home affairs – the ₹325 crore transfer is a subset under this head – are unchanged between 2022-23 and 2023-24 at ₹1,168 crore.

See Chart 2: Grant-in-aid from centre

Is there a big cap-ex boost in this year’s Budget?

There isn’t a big capex boost in this Budget. If one were to make a year-on-year comparison, the share of capital spending in Delhi’s total spending has come down from 29.2% in 2022-23 BE to 27.7% in 2023-24 BE numbers. The 2022-23 RE number (26.5%) is lower than the allocation for capex in the 2022-23 BE numbers. However, a slightly long-term analysis of capital spending under the AAP government shows that it has been on a broadly rising trajectory. Still, Delhi has seen a much higher share of capital spending in the past.

See Chart 3: Share of capital spending in total spending of Delhi

What about health and education spending?

These sectors continue to be the focus. One of the biggest changes in Delhi’s spending priorities after the AAP government came to power has been an increase in budgetary allocation for health and education. This number increased from just above one-fourth to more than one-third of the total spending by the Delhi government. This year’s budget continues to adhere to these spending priorities. The total allocation for health and education in this year’s budget is ₹26,316 crore which is 33.4% of the total budgetary spending.

See Chart 4: Share of health and education in total spending of Delhi

Water and sanitation down, power spending up

The Delhi government did not spend almost half of the money it budgeted for water supply and sanitation in 2022-23. The RE for 2022-23 is ₹3,800 crore compared to ₹6,711 in the 2022-23 BE. In 2023-24, it has budgeted 19% less on this head than in 2022-23. Power spending in 2023-24 will, however, be more than both the BE and RE numbers for 2022-23. Including the small amount it spends on renewable energy (about half a percent of total energy spending), Delhi has planned to spend ₹3,348 crore in 2023-24 on energy, compared to ₹3,340 crore in 2023 BE, which was revised to ₹3,212 crore.

See Chart 5: spending on water and energy

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