Explained: Issues in Delhi govt’s request for Rs 10,000 cr loan from National Small Savings Fund

In this context, the state’s Finance Department internally objected to the request to get from the NSSF. There is besides the contented of aboriginal governments having to woody with indebtedness repayments worthy thousands of crores. We explain.

What is the NSSF and what is the Delhi government’s indebtedness proposal?

The Delhi authorities has written to the Union Ministry of Finance to get Rs 10,000 crore from the NSSF. Chief Minister Atishi signed the connection contempt objections by the state’s Finance Department, which said that Delhi should discontinue the NSSF.

Besides Delhi, lone 3 different states — Arunachal Pradesh, Kerala and Madhya Pradesh — get from NSSF, which comprises collections nether tiny redeeming schemes nett of withdrawals by subscribers. Most states person decided to enactment retired of it since these loans are much costly than marketplace borrowings.

NSSF besides invests successful the authorities and cardinal authorities securities arsenic per Government of India norms.

What is the contented with the Delhi government’s other borrowing?

The Delhi authorities earlier ran into occupation with the Union Ministry of Finance erstwhile it started prepaying its older NSSF loans. The ministry powerfully objected to this, arsenic prepayment of loans by immoderate authorities can interaction different authorities entities accessing high-cost borrowings from NSSF. 

As a result, Delhi did not get to get from NSSF successful 2023-24, portion successful 2022-23 it borrowed Rs 3,721 crore — overmuch little than Rs 10,000 crore-plus borrowing successful each of the erstwhile 3 years.

In July this year, the Finance Ministry conveyed to the Delhi authorities that availing loans from the NSSF would beryllium a one-time enactment and not done annually. It sought confirmation from the Delhi authorities connected whether it plans to proceed with the NSSF indebtedness arsenic per the archetypal presumption and conditions and travel the repayment schedule.

It past spelt retired 2 scenarios of repayment. Under Scenario I, the Delhi authorities had the enactment to discontinue the NSSF scheme, with nary liability connected relationship of the NSSF indebtedness aft March 2039. The outstanding magnitude would past beryllium Rs 31,697.47 crore (the aforesaid arsenic connected April 1, 2024).

Under Scenario II, if the Delhi authorities continues with the NSSF loan, Rs 10,000 crore is estimated to beryllium disbursed to Delhi each twelvemonth from 2024-25 to 2038-39. This would effect successful an involvement load of Rs 57,661.68 crore connected the NSSF indebtedness borrowed till March 31, 2039.

The quality successful the involvement magnitude betwixt Scenario I and Scenario II is Rs 45,980 crore. Also, the main magnitude of Rs 1,26,697.47 crore would beryllium payable nether Scenario II from 2024-25 to 2038-39, arsenic against lone Rs 31,697.47 crore successful the aforesaid play nether Scenario I with nary further liabilities.

What was the objection from Delhi’s Finance Department?

In a September 2 note, Delhi’s Principal Secretary (Finance) Ashish Chandra Verma is learnt to person objected to taking loans from the NSSF this fiscal, fixed the expected simplification successful expenditure owed to the MCC coming into effect.

“In presumption of the hugely expanded involvement liability, and the likelihood of reduced expenditure owed to MCC, it is recommended to judge Scenario I (the enactment to discontinue from the NSSF scheme),” Verma had noted. He further said, “We are already six months into the existent fiscal twelvemonth and it tin beryllium estimated that 2-2.5 months volition beryllium taken up by the MCC for Delhi Legislative Assembly elections. This gives lone 4-4.5 months for strategy expenditure connected relationship of superior works.”

The much problematic portion for Verma was the request that the NSSF indebtedness would beryllium agreed to not lone for the existent fiscal twelvemonth but the future, too, perchance posing challenges for aboriginal authorities governments. Agreeing to it would “impose a immense involvement burden” and “will person to beryllium cautiously assessed,” helium noted.

Despite these concerns, CM Atishi, who besides holds the concern portfolio, gave the go-ahead to instrumentality loans from the NSSF strategy connected existing presumption and conditions. “The Finance Department to instantly pass to the Ministry of Finance, Govt. of India, to guarantee merchandise from NSSF Loan Scheme for the existent fiscal year,” she said successful an October 10 note.

What are the expenditure estimates for FY25 for Delhi?

Up to July this year, the Delhi authorities had spent 24.63 per cent of the FY25 budget expenditure estimate, that is Rs 18,719.95 crore of Rs 76,000 crore. As per the government’s interior calculations, its expenditure is expected to emergence to Rs 68,300 crore during the existent fiscal twelvemonth 2024-25, marking a grounds high.

Calculations amusement that if 1 were to spell by the expenditure trends implicit the past 5 fiscal years, from 2019-20 to 2023-24, the Delhi authorities spent astir 85 per cent connected mean arsenic compared to the fund estimates. The highest expenditure magnitude was seen successful 2023-24 astatine Rs 65,824.14 crore.

At this complaint of utilisation of the allocated magnitude for expenditure, Delhi’s expenditure is expected to emergence to Rs 68,300 crore successful the existent fiscal year. However, its finances whitethorn travel nether unit arsenic the authorities has decided to proceed with much schemes to administer what its governmental opponents person called “revdi” oregon freebies. It has different pending outgo obligations too, including towards the Delhi Metro Rail Corporation.

In the past week, the Aam Aadmi Party has conveyed its intent to proceed escaped services. On Friday, portion launching a 15-day run called “Revdi pe Charcha” (discussions connected freebies), the party’s nationalist convenor Arvind Kejriwal listed the Delhi government’s six revdis — escaped electricity, water, education, healthcare, autobus tickets for women and pilgrimage for elderly.

He said, “Apart from these six revdis, the seventh 1 is coming soon,” promising to statesman depositing Rs 1,000 per period successful each Delhi woman’s slope account.

When contacted by The Indian Express astir the interaction of this other borrowing, a Delhi authorities spokesperson said, “How overmuch indebtedness does the authorities instrumentality successful immoderate peculiar twelvemonth is simply a regular administrative determination keeping respective factors successful mind.”

Further, the spokesperson said that the Economic Survey of Delhi 2023-24 shows that the full indebtedness of the Delhi authorities arsenic a percent of GDP has reduced from 6.4 per cent successful 2013-14 to 3.9 per cent successful 2023. “This conscionable isn’t the lowest successful Delhi’s past but it is besides the lowest successful India,” the spokesperson said.