Delhi govt.’s fiscal deficit has come down, thanks to change in formula

The Delhi government’s fiscal deficit saw a dip as it changed the formula used to calculate the deficit in the budget documents and Economic Survey tabled in the Assembly this year.

The government reverted to a formula used to calculate the deficit till 2018-19 and revised the deficit figures for all the previous years mentioned in the 2022-23 Economic Survey. As a result, the fiscal deficit figures for these years have decreased.

Fiscal deficit — the shortfall between the government’s total earnings and expenditure — is the chief measure of a State’s finances. A lower fiscal deficit is linked with better financial health.

The government went back to calculating fiscal deficit using the old formula after realising that the formula used for the years 2019-20, 2020-21 and 2021-22 was incorrect, a source told The Hindu.

When asked, Finance Minister Kailash Gahlot said he was unaware of the change. A Delhi government spokesperson did not offer a comment.

The Hindu reported about the change in the formula on Tuesday when the Economic Survey of Delhi 2022-23 was tabled in the Assembly.

Manish Gupta, Associate Professor at the National Institute of Public Finance and Policy, New Delhi, said the fiscal deficit figures mentioned in this Economic Survey are correct as per his calculations.

“I did my own calculations and found that the fiscal deficit figures in this year’s Economic Survey are correct. The deficit figures also match the figures used by CAG in its reports,” Mr. Gupta said, adding that he used loan recoveries and repayment components for the calculation.

When asked why he thought the government had been using a different formula since 2018-19, he said, “I feel they didn’t realise it was wrong. It could have been an oversight on their part.”