After 10 years of Aam Aadmi Party (AAP) rule, the Bharatiya Janata Party (BJP) on Tuesday presented the 2025-26 Delhi Budget. Abhishek Jha explains how this budget was different from previous ones, and what it told us about the economics of regime change in Delhi after a decade.
…Growth in spending from previous budgets
The newly elected Bharatiya Janata Party (BJP) government in Delhi presented a budget with a total outlay of ₹1 lakh crore for 2025-26 on March 25. This implies a growth of nearly 44% in spending compared to the revised estimate of ₹69,500 crore in 2024-25.
The growth in spending in 2025-26 will be the highest for full budgets of the Delhi government, which have been presented since 1994-95.
The only other year when the growth in Delhi’s spending was almost as high as 2025-26 was in 2007-08, when spending increased by 40%.
To be sure, 2007-08 was a year of high growth for India, (growth can help government spending by increasing tax receipts). Moreover, the Delhi government was also preparing for the 2010 Commonwealth Games at the time.
…Own tax revenue’s role in financing this year’s massive spending hike
Since the 2025-26 budget starts with an opening balance of ₹2,965 crore, Delhi’s receipts need to increase by ₹29,993 crore compared to the revised estimate for 2024-25. Only ₹9,500 crore of this (31.7%) growth will come from growth in Delhi’s own tax revenue. The breakup of Delhi’s tax revenue shows that State GST is expected to contribute more than half (57.9%) the growth in Delhi’s own taxes in 2025-26. State excise and stamps and registration fees are both expected to contribute 14.7% each to the growth in Delhi’s taxes.
… The central government funding’s tailwinds to Delhi’s budgetary spending
Nearly all of the growth in Delhi’s receipts over and above its own tax revenue is budgeted to come from the central government. The growth in central government’s contribution to Delhi’s receipts in 2025-26 is budgeted at ₹20,276 crore, which is slightly over two-thirds of the overall growth in receipts. This underlines the “double-engine” nature of the current Delhi government, one of the slogans regularly used by the BJP in regional elections. Breakup of the growth in central funding to Delhi shows that grants-in-aid from the central government will increase by ₹8,876 crore. Of this amount, ₹6,000 crore are funds received from central government for capital projects, a line item which amounted to nil in the past two years. Almost all of the rest of the growth in grants-in-aid is for centrally sponsored schemes.
The bigger chunk of the growth in central funding is in the form of capital receipts or loans and advances. Loans and advances from the central government will increase by ₹11,400 crore. To be sure, the previous two budgets had also estimated around ₹10,000 crore of receipts in loans and advances from the central government. However, this was revised down to only ₹3,000-4000 crore in the actual and revised estimates.
…Spending priorities of the new government
Of the ₹30,500 additional spending in 2025-26 compared to 2024-25 RE numbers, ₹17,179 crore will go towards revenue spending while the remaining ₹13,321 crore growth will be in capital spending. The latter is meant for creation of new assets. This means that revenue spending will increase by 31% and capital spending by 90%. These are both high rates of growth.
Growth in revenue spending is the third highest after the 2001-02 and 1995-96 budgets, when it increased by 36.5% and 32.9%. The growth in capital spending is the highest ever. The relatively higher growth in capital spending also means that Delhi’s budget will tilt back towards capital spending. Capex share in total spending is estimated at 28.1% in 2025-26, the highest since 2013-14, when this number was 34.3%. From 2014-15 to 2024-25 – the period during which an Aam Aadmi Party (AAP) government presented budgets – the highest capex share was 25.1%.
