Economic survey: What’s helping Delhi economy revive after the pandemic?

The gradual revival of Delhi’s GDP growth makes it important to ask which sectors are leading the revival of Delhi’s economy

The advance estimates of Gross Domestic Product (GDP) for 2023-24 released with Delhi’s 2023-24 Economic Survey on March 1 show one promising trend. Even in real terms, the Capital’s GDP growth rate is now inching towards pre-pandemic growth.

The secondary sector – this comprises manufacturing, electricity, gas, water supply and other utility services, and construction sub-sectors – has contributed ₹15.02 lakh crore or 22% to the growth in Delhi’s GVA since 2019-20. (AFP)

The revival in the growth rate of Delhi’s economy can be seen through the compound annual growth rate (CAGR) of GDP, which papers over unusual annual fluctuations, such as a contraction in GDP in 2020-21 due to the Covid-19 pandemic. The CAGR of Delhi’s real GDP between 2019-20 and 2023-24 is estimated to be 3.5%. This is almost how much the GDP grew annually in 2019-20 (3.7%), just before Covid-19 disrupted the economy.

The gradual revival of Delhi’s GDP growth makes it important to ask which sectors are leading the revival of Delhi’s economy.

Services sector shines

Delhi’s Gross Value Added (GVA) – GDP is just GVA plus taxes less subsidies – was ₹512 lakh crore in 2019-20 and is estimated to be ₹581 lakh crore in 2023-24 at 2011-12 prices. This is a growth of ₹69.1 lakh crore in four years.

Of this, 85% of the growth in Delhi’s GVA since 2019-20 has been contributed by the tertiary or services sector. This sector has grown by ₹58.78 lakh crore in the four years since 2019-20 at 2011-12 prices.

The secondary sector – this comprises manufacturing, electricity, gas, water supply and other utility services, and construction sub-sectors – has contributed ₹15.02 lakh crore or 22% to the growth in Delhi’s GVA since 2019-20.

Primary sector drags

On the other hand is the primary sector – this comprises of all agricultural sub-sectors and mining and quarrying sub-sector. This sector is a drag on Delhi’s economy even now, with a negative contribution of 6.9% to Delhi’s GVA growth since 2019-20. This sector is still ₹4.75 lakh crore smaller (at 2011-12 prices) than its 2019-20 level.

To be sure, these broad sectors hide variations in the smaller sub-sectors within. For example, the trade, hotels, and restaurants sub-sector of services sector has made a negative contribution of 1% to Delhi’s GVA growth since 2019-20.

Key subsectors

Which are the highest contributing subsectors to Delhi’s GVA growth since 2019-20? In decreasing order of contribution, these are real estate, ownership of dwellings & professional services; miscellaneous other services; construction; public administration; and manufacturing. Their respective contributions to Delhi’s GVA growth since 2019-20 are 48.2%, 17.1%, 12.5%, 9.2%, and 7.2%.

The subsectors making negative contributions are mining and quarrying; trade, hotels and restaurants; and mining and quarrying. Their respective contributions to Delhi’s GVA growth since 2019-20 are -6.3%, -1.0%, and -0.6%. In 2011-12 prices, these subsectors have contracted by ₹4.3 lakh crore, ₹0.67 lakh crore, and ₹0.43 lakh crore.