In recent weeks, the financial situation of the Delhi government has become a subject of intense scrutiny and concern. What was once touted as a model of efficient governance is now showing signs of severe financial mismanagement, with reports emerging of the government struggling to pay basic salaries. The situation has brought to light the impact of populist “freebie politics,” misallocation of funds, and a lack of transparency, leading to a potentially crippling financial crisis.
The Crisis Unfolds: From Surplus Claims to Deficit Reality
In the lead-up to this crisis, the Delhi government, led by Chief Minister Arvind Kejriwal, was widely promoting its budget as being in surplus. In March 2024, Finance Minister Atishi Marlena had proudly announced a surplus budget for the year, emphasizing that Delhi had enough funds to sustain its welfare programs while also investing in essential infrastructure like hospitals and courts.
However, these claims have now been called into question. As per recent reports, the government’s financial health is much worse than projected, with a severe revenue deficit. This financial downturn is largely attributed to the significant strain placed by free welfare schemes—such as free electricity, water, and transportation—on the state’s resources. Critics argue that the Kejriwal administration has prioritized populism over sound financial management, leading to a cash crunch that has now reached alarming levels.
The Weight of Freebies: Popular Schemes, Troubled Finances
Delhi’s administration has introduced a range of free services in recent years, including:
Free electricity up to 200 units per household
Free water up to 20,000 liters per household
Free public bus services for women
While these schemes have been popular among the electorate, they have taken a heavy toll on the state’s finances. The power department, for instance, is requesting an additional Rs 512 crore to clear dues with discoms. While citizens may enjoy the benefits of these schemes at no cost, the government still has to make the payments to power and water suppliers, who are not willing to waive their fees.
Similarly, the transport department is seeking Rs 941 crore, primarily to cover the cost of maintaining the free bus rides for women. The department is facing a growing backlog of expenses, including the procurement of electric buses, which it can no longer afford. The cumulative pressure of such welfare schemes, combined with the general cost of running the government, has pushed Delhi’s finances into a corner.
Departmental Demands: Escalating Costs Amid a Cash Crunch
A wide range of government departments is now reporting financial distress and requesting urgent funds from the government. These include:
Law Department: Rs 141 crore needed for pensions and allowances as per judicial recommendations.
Health Department: Over Rs 500 crore requested to complete remodeling of hospitals and medical infrastructure.
Irrigation Department: Rs 447 crore needed for essential flood control projects, particularly after the devastation caused by recent floods that have filled unmaintained drains.
Delhi Metro Rail Corporation (DMRC): Rs 3,271 crore to cover COVID-19 pandemic losses and loan obligations to Japan’s International Cooperation Agency (JICA).
The combined requirement across various departments stands at Rs 7,362 crore, far exceeding the Rs 4,471 crore currently available in the government’s coffers. These budget shortfalls not only hinder the smooth operation of essential services but also raise questions about the government’s ability to function for even the next two months without taking drastic action.
The Missing CAG Reports: Lack of Transparency and Accountability
Adding to the mounting concerns is the absence of the Comptroller and Auditor General (CAG) reports. For years, the Delhi government has not tabled its CAG reports, which are critical for assessing the true financial and administrative health of the state. The opposition, led by the BJP, has demanded that these reports be presented in the Delhi Assembly, accusing the government of hiding its financial troubles from the public.
In a special assembly session, Leader of the Opposition Vijender Gupta called for the immediate release of the 12 pending CAG reports, which, according to him, will expose the true extent of corruption and financial mismanagement under the Kejriwal administration. Gupta expressed his concerns in a letter to CM Atishi, stating that under Article 151 of the Constitution and the Delhi Government Act of 1991, it is mandatory to present these reports to ensure accountability.
The Lieutenant Governor (LG) has also stepped in, issuing directives to the Delhi administration to release the pending CAG reports. There is widespread belief that the delay in releasing these reports is intentional, as the government fears that the revelations could further damage its credibility.
Opposition Strikes: Supreme Court Involvement
The opposition parties are not only relying on political pressure but are also threatening to take legal action. There is talk of knocking on the doors of the Supreme Court if the government continues to withhold the CAG reports. The opposition is framing this as a constitutional issue, accusing the government of violating its legal obligations to the citizens of Delhi by not disclosing its financial accounts.
If the Supreme Court gets involved, the Kejriwal government could face legal as well as political repercussions. Opposition leaders argue that the financial crisis and lack of transparency could have been avoided if the government had adhered to standard fiscal and constitutional protocols.
The Bigger Picture: The Consequences of Fiscal Mismanagement
Beyond the immediate concerns of unpaid salaries and pending government projects, the financial crisis in Delhi raises broader questions about fiscal responsibility and governance. The reliance on populist schemes without proper long-term financial planning is leading to a situation where the government’s ability to meet even basic operational costs is under threat.
This situation may result in the following challenges:
Disruption of essential services: With critical departments like health, transport, and power asking for funds, delays in payments could lead to breakdowns in services, further inconveniencing the public.
Employee unrest: Protests have already erupted among government employees, including teachers, who have not received salaries for several months.
Political instability: As financial mismanagement becomes a central political issue, the Kejriwal administration will face increasing pressure from both the opposition and civil society groups.
A Call for Reform
The current financial crisis in Delhi is a cautionary tale about the dangers of populist governance without sound financial planning. While welfare schemes like free electricity, water, and transportation are popular with voters, they come at a cost that, if not properly managed, can threaten the sustainability of a government. The Delhi administration now faces the challenge of addressing its revenue shortfalls, responding to the demands of its departments, and providing transparency through the release of CAG reports.
As the situation develops, there is a need for comprehensive financial reform, prioritization of essential services, and, most importantly, transparency to restore public confidence in the government’s ability to manage the state’s resources responsibly.