Economic Impact on Delhi due to COVID-19

With Delhi hitting 2 lac confirmed cases mark in the coming days, there exists an open-ended question that even after reopening the national capital with now Delhi Metro also being functional, will Delhi revive it's lost economy?


The city with a population of over 1.6 cr according to Census 2011 and around 97% population in the urban area is more risk-prone compared to other states because of increasing usage of shared mobilities, lack of awareness about social distancing, and density population per sq. Km ranging from 4057 in New Delhi District to 36115 in the North-East District of Delhi ( Source: Dept. of Economics and Statistics, GNCTD )


But will Delhi revive the economy?


Before coming to this question let's take a look at Delhi Economy.


Figure 1 Data Source : GNCTD Economic Survey 2018

Pre COVID in the last half-decade Delhi has seen a significant improvement in the economy. Delhi's per capita income is around INR 3.6 lacs which is three times the national average of around INR 1.2 lacs as per the Economic Survey 2018, i.e., a Delhite on an average is earning three times that of average Indian earnings.


Delhi's GSDP Compounded Annual Growth Rate ( CAGR ) has increased from 11.45 in 2014-15 to 12.96 in 2018-19 which is twice the GDP growth rate for the same period. Along with the increase in the budget expenditure as a part of fiscal policy acted as a catalyst in booming the economy.


Delhi's revenue can be broadly divided into three major categories taxable, non-taxable, and Grant in Aid and Contribution. Taxable revenue account for approx 80% of total revenue as per Budget Estimates 2020-21, while the other two accounts for 1% and 19% respectively.


What can Delhi do to restore the losses?

Figure 2 Data Source : Dept. of Finance GNCTD

Due to the role of the Central government and other governments in the other two sources of revenue Delhi's economy will be majorly dependent on taxable income for its revival. With the Delhi Government using the strategy of "survive, revive, thrive" the major focus will be to increase the economic activities taking into account all safety precautions. Activities like increasing operational hours for restaurants, easing out the process for licensing, and creating an ecosystem for the incubation of startups can act as some of the major reforms for the economic revival.



Delhi has the highest number of registered startups in India, close to around 60,000, and under the Industrial Policy 2010-21, the government has planned to set up a center of excellence, the result of which Startups in Delhi received the highest funding of USD 2.6 BIllion.


Ease of doing business, focus on tech in healthcare at the primary healthcare level, and improvement in the supply chain methods which are affected due to the restrictions on public transport, reverse migration, etc can be some of the potential steps towards the Delhi Governments vision of "survive, revive, thrive".


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