New Delhi: Delhi may be posting headline economic growth, but a decade-long trend flagged by the Comptroller and Auditor General (CAG) points to a more uncomfortable reality: the capital's economy is gradually losing ground relative to the rest of India.
A CAG report on the finances of the Delhi government for 2024-25, tabled in the Delhi Assembly by Chief Minister Rekha Gupta on Monday, said Delhi's gross state domestic product (GSDP) grew 9.17 percent to Rs 12.15 lakh crore in 2024-25. Yet, its contribution to India's GDP has steadily declined over the past decade, falling from 4 percent in 2015-16 to 3.67 percent in 2024-25.
Follow The PSUWatch Channel on WhatsApp
The numbers suggest that growth in Delhi has not kept pace with the expansion of the national economy, despite the Union Territory continuing to enjoy one of the country's highest per capita income levels.
The CAG noted that Delhi's per capita GSDP grew at a compound annual growth rate (CAGR) of 6.39 percent between 2015 and 2025, against 8.14 percent growth in India's per capita GDP during the same period.
The relative advantage that Delhi enjoyed over the national average has consequently narrowed. Its per capita GSDP was 177.07 percent higher than India's per capita GDP in 2015-16. By 2024-25, that premium had fallen to 135.34 percent.
The CAG described this as evidence of “slightly slower” economic growth in Delhi compared with the rest of the country.
The audit also raises questions about the composition of Delhi's government finances.
Revenue receipts increased 9.57 percent, helped primarily by higher tax collections, particularly GST. But the improvement in receipts was accompanied by an 11.04 percent decline in non-tax revenue, while grants from the Centre also fell.
More importantly, a substantial part of government spending remained locked into revenue expenditure and committed costs, limiting the room available for creating new assets and strengthening infrastructure.
The CAG said revenue expenditure accounted for 88.38 percent of total expenditure, with committed expenditure and subsidies contributing significantly to the spending burden.
The sharp increase in subsidies stands out.
Subsidy expenditure increased by Rs 3,222 crore, or 172.48 percent, between 2015-16 and 2024-25. Power subsidies alone rose by Rs 2,033 crore, or 128.83 percent, over the period.
The issue is not simply the size of subsidies, but what their rising share means for the government's ability to fund long-term investments.
The clearest warning in the CAG's assessment comes from capital expenditure.
Delhi's capital expenditure remained between 7 percent and 15 percent of total expenditure during 2015-25, the audit said, pointing to constraints on infrastructure investment and capital formation.
In 2024-25, capital expenditure fell sharply to Rs 3,695 crore from Rs 6,855 crore a year earlier — a decline of about 46 percent in a single year.
The fall was attributed to lower spending in areas including roads and bridges and road transport.
That contraction is particularly significant at a time when Delhi faces persistent demands for investment in transport infrastructure, roads, urban mobility and other public assets.
The numbers therefore present a more nuanced picture than the headline GSDP growth suggests. Delhi's economy is expanding, but its relative contribution to the national economy is shrinking; government revenues are rising, but an increasing share of expenditure is being absorbed by revenue commitments and subsidies; and capital spending, the component most directly associated with asset creation, has fallen sharply.
Follow PSU Watch on LinkedIN
The CAG report does not suggest that Delhi's economy is contracting. Quite the opposite: the GSDP continues to grow and remains substantially above the national per capita income level.
But the audit's longer-term comparison raises a more important policy question: is Delhi converting its economic strength into enough productive public investment to maintain its lead as the rest of India's economy expands faster?
(PSU Watch is India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy. 👉 Click to join our channel now: PSUWatch WhatsApp Channel. Prefer LinkedIn? Follow PSU Watch on LinkedIN. Click to stay connected on Twitter here and stay updated)