In a significant financial overhaul, the Delhi government on Monday entered into a formal agreement with the Reserve Bank of India (RBI). This landmark pact brings the national capital's treasury management at par with other Indian states, promising more professional handling of its money, borrowings, and public funds.
End of an Ad-Hoc Era
Until now, Delhi operated under an improvised financial system that frequently led to inefficiencies. A senior government official revealed that this old approach often left substantial public money idle in bank accounts, earning minimal or no interest. Conversely, when funds were urgently required, the administration was forced to borrow from alternative sources at exorbitant interest rates as high as 12-13%.
With the new agreement, the RBI will officially become the government's banker. This central role involves managing the state's cash flow, facilitating market borrowings, and efficiently investing surplus funds. Chief Minister Rekha Gupta, who also holds the finance portfolio, hailed this development as a "historic correction" that will safeguard public money and fortify Delhi's financial health for the future.
Tangible Benefits for Public Finances
The immediate impact of this reform is a drastic reduction in borrowing costs. The official explained that Delhi will now raise money directly from the market through RBI-managed loans at significantly lower rates, around 7%, similar to other states. This shift alone is anticipated to ease the burden on the public exchequer considerably.
Furthermore, any extra government cash will be automatically invested through the RBI, generating interest income instead of lying unused. The central bank will also assist in managing short-term cash shortages, eliminating the need for costly emergency borrowing.
These savings translate into more resources for public services and infrastructure. The government has clarified that all funds raised through this new mechanism will be strictly allocated for long-term capital projects, not routine expenditure.
Focus on Infrastructure and Growth
The Chief Minister's Office (CMO) listed key projects and sectors set to benefit from the improved financial efficiency:
- Yamuna river clean-up initiative
- Upgradation of drainage systems
- Drinking water supply networks
- Hospitals and healthcare facilities
- Public transport, roads, and flyovers
This move aligns with the government's 135% increase in capital spending outlined in the 2025–26 budget compared to the previous year. Officials emphasize that such asset-creating expenditure boosts employment and fosters long-term economic growth without imposing a financial debt on future generations.
A Result of Sustained Dialogue
Chief Minister Rekha Gupta attributed this major reform to persistent engagement with the Union government. The agreement followed her crucial meeting with Union Finance Minister Nirmala Sitharaman in December 2025, where pivotal issues regarding Delhi's fiscal autonomy and the modernization of its financial architecture were discussed.
The pact is also expected to wean the Delhi government away from its reliance on the high-cost National Small Savings Fund (NSSF), where it has been one of the top borrowers, enabling substantial savings for the state treasury.
