The city's finances are projected to enter a deficit for the first time by the end of the 2024-25 fiscal year, as expenditures are expected to exceed receipts, according to the finance department's briefing to the Chief Minister. Specifically, Delhi's revenue—comprising tax income, non-tax revenue, receipts from centrally sponsored schemes, and grants from the central government—is anticipated to decline from the budgetary estimate of ₹64,142 crore to ₹62,415 crore by the conclusion of FY25.

Revenue expenditure is projected to increase from ₹60,911 crore to ₹63,911 crore. Furthermore, the city government will need an additional ₹7,000 crore to complete various capital projects that were not accounted for in the budget. Officials noted that Delhi has traditionally operated as a revenue-surplus state, making this the first instance of a deficit since the reconstitution of the legislative assembly in 1993.

The budget division of Delhi’s finance department made these projections while preparing the revised estimates for the 2024-25 fiscal year. Sources reveal that the finance department recently presented a detailed note on the city’s financial status to Chief Minister Atishi, who also oversees the finance portfolio. This note outlines tax and non-tax revenues, as well as expenditures across various categories.

According to sources, the finance department has identified an additional need of ₹3,000 crore for various revenue expenditures in the current financial year.

These additional requirements were not included in the 2024-25 budget estimates and encompass funds for increased pensions and allowances as per the National Judicial Pay Commission, power subsidies, viability funding for electric buses, desilting of drains, road repairs, and covering a portion of Delhi Metro’s operational losses incurred during the Covid years.

“There is a strong possibility of revenue deficit, which may adversely affect the situation of Delhi government,” said an official.

Another official noted that the government will require funds to operationalise six hospitals currently undergoing remodelling, which is expected to be completed within the fiscal year. The exact amount needed for these hospitals has yet to be determined.

The government will require an additional ₹4,000 crore for capital expenditures to complete various infrastructure projects. These projects include the construction of new court complexes, bus depots and terminals, hospitals, improvements to jails and forensic science laboratories, as well as renovations and expansions of the high court and district courts.

Officials estimate that total expenditure, encompassing both revenue and capital, may exceed budgeted amounts by over ₹7,000 crore. Consequently, approximately ₹83,000 crore will be needed, compared to the original budget estimate of ₹76,000 crore.

A source indicated that while tax revenue collection is nearly on track, the Centre may withhold ₹951 crore from Delhi’s operational losses and other committed liabilities, similar to previous instances where such adjustments were made. Additionally, only ₹1,000 crore of the ₹3,224 crore earmarked for centrally sponsored schemes is anticipated to be received from the Centre, as the Delhi government has not met its commitments.

Officials stated that revised estimates for 2024-25 have been requested from departments, and the pace of expenditure may increase due to rising demands. Although the government’s cash balance is currently around ₹4,471 crore, the average monthly expenditure exceeds ₹5,000 crore. As a result, the existing surplus is only sufficient to cover approximately two months' worth of salaries.