A new Comptroller and Auditor General (CAG) report reveals that Delhi's economic growth is slowing compared to the national average. While the state's Gross State Domestic Product (GSDP) reached ₹12.15 lakh crore in 2024-25, its contribution to India’s total GDP dropped to 3.67%. The report highlights that high revenue expenditure, particularly on subsidies, is limiting the government's ability to fund critical infrastructure and capital projects.
A Comptroller and Auditor General (CAG) report tabled in the Delhi Assembly on Monday has highlighted a shift in the capital's economic trajectory. While Delhi's Gross State Domestic Product (GSDP) grew by 9.17% during the 2024-25 fiscal year, reaching ₹12.15 lakh crore, the report indicates that this pace is not keeping up with the rest of the country. This trend has raised questions about the state's long-term economic momentum relative to national growth.
Shrinking Contribution to National GDP
The CAG report shows a clear decline in Delhi’s relative economic weight. In the 2015-16 fiscal year, Delhi contributed 4% to India's overall GDP. By 2024-25, this share dropped to 3.67%. The report also pointed to a widening gap in per capita wealth. While Delhi's per capita GSDP remains higher than the national average, the premium has narrowed significantly. Ten years ago, Delhi’s per capita GSDP was 177% higher than the national average; by 2024-25, that figure fell to 135%, suggesting that income levels in the capital are growing slower than in other parts of the country.
Fiscal Priorities and Capital Spending
A major focus of the audit is the government’s spending pattern. The report identifies that revenue expenditure—money spent on day-to-day operations, salaries, and subsidies—makes up 88.38% of the total budget. This reliance on committed costs has created a squeeze on capital investment, which is money spent on creating long-term assets like roads, bridges, and public infrastructure.
Data from the report shows that capital expenditure fell sharply to ₹3,695 crore in 2024-25, down from ₹6,855 crore in the previous year. This contraction in infrastructure spending is largely attributed to the rising burden of subsidies, which increased by over ₹3,200 crore over the last decade. Power subsidies alone accounted for a significant portion of this rise, consuming fiscal space that could otherwise be directed toward public works.
Impact on Business and Infrastructure
For investors and companies operating in the infrastructure, construction, and urban development sectors, these trends are important to watch. When a state government prioritizes subsidies over capital investment, it often leads to a slowdown in public projects. The decline in non-tax revenue and reduced central grants mentioned in the report further complicate the state's ability to fund large-scale developments.
Investors monitoring the region will likely track how the government manages its revenue expenditure in future budgets. The key question for the coming periods is whether the administration can optimize its subsidy burden to free up more funds for infrastructure, which is a primary driver of long-term economic growth. Market participants and analysts will look for future budget announcements to see if there is any shift back toward higher capital allocation for essential public assets.