Delhi’s fiscal deficit has indeed seen a dramatic increase of nearly 900%, according to recent reports tied to the 2025-26 budget presented by Chief Minister Rekha Gupta. The budget documents indicate that the fiscal deficit is projected to rise from ₹1,523 crore in the revised estimate for 2024-25 to ₹13,702 crore in 2025-26. This sharp jump aligns with the Bharatiya Janata Party’s (BJP) ambitious ₹1 lakh crore budget, which marks a 43.8% increase in total outlay compared to the previous year.
Despite this steep rise, some experts argue it’s not a major cause for alarm. One key point is Delhi’s low debt-to-GSDP (Gross State Domestic Product) ratio, which is among the lowest in India according to Reserve Bank of India data. This suggests that Delhi has room to absorb a higher fiscal deficit without immediate risk to its financial stability. Manish Gupta, an Associate Professor at the National Institute of Public Finance and Policy, has been quoted saying that this low ratio means “we shouldn’t be scared of fiscal deficit” in Delhi’s context. The reasoning here is that a low debt-to-GSDP ratio indicates the state’s economy can handle increased borrowing without tipping into unsustainable territory.
However, this perspective isn’t without nuance. The budget’s focus on infrastructure, health, education, and schemes like the ₹5,100 crore Mahila Samridhi Yojana (offering ₹2,500 monthly to eligible women) drives the deficit spike. Capital expenditure has doubled to ₹28,115 crore, and the state plans to borrow ₹15,000 crore from the Centre under the National Small Savings Fund. While these investments could fuel growth, critics like Leader of Opposition Atishi have raised concerns about transparency and the lack of an economic survey, suggesting the government might be glossing over underlying financial strains.
So, while the 900% figure sounds staggering, the expert view hinges on Delhi’s relatively strong fiscal position compared to other states. Still, it’s worth watching how this borrowing and spending play out—growth isn’t guaranteed, and fiscal health can erode if revenues don’t keep pace.
