Delhi’s per capita income goes down to ₹3.54 lakh
This is the first time since 2010-11 that the per capita income in the country’s capital has shrunk.
Delhi’s per capita income, which has been the second highest in India after Goa’s for several years now, dropped from Rs.3,76,211 in 2019-20 to Rs.3,54,004 in 2020-21, while the state gross domestic product (SGDP) shrunk by around 5.68%, according to the economic survey tabled by the Delhi government in the assembly on Monday, which cited impact from the Covid-19 outbreak.
This is the first time since 2010-11 that the per capita income in the country’s capital has shrunk, a consequence of the Covid-19 pandemic, the economic survey said. The 5.7% contraction in the SGDP signals the city-state’s economy did better than the national average, which is expected to shrink in the 7-8% range for the financial year. “The contraction in GSDP in Delhi is 5.68% during 2020-21 compared to a contraction of 8% at the national level in 2020-21,” the economic survey said.
“All economies have been dented by Covid-19 and so has the economy of Delhi. GSDP of Delhi in real terms at constant prices is estimated to have contracted by 5.68%,” Delhi’s Lieutenant Governor Anil Baijal said in his speech addressing the members of the assembly marking the opening of the budget session on Monday.
On Monday, the government also tabled the Outcome Budget for 2020-21. Delhi’s finance minister Manish Sisodia said, “The financial year 2020-21 started in the shadow of Covid-19 pandemic and a strict lockdown that brought all socio-economic activities to a halt. While our government put up a brave fight against the pandemic, it caused great distortion in government’s routine activities. Revenue collection nose-dived and government’s resources and efforts were focused on minimising the impact of Covid-19.”
At market prices, the GSDP of Delhi for FY2021 is Rs.7,98,310 crore, which the government said represented a contraction of 3.92% over the previous year. In 2019-20, government data showed Delhi’s GSDP at market price was Rs.8,30,872 crore. The GSDP is the total value of all finished goods and services produced in a given period of time within the geographical boundaries of a state.
In terms of per capita income, the economic survey projected a drop from Rs.3,76,221 in 2019-20 to Rs.3,54,004 in 2020-21 – a decrease of 5.9%. The government noted in its report that Delhi’s per capita income pegged is “almost three times the national average of Rs.127,768”.
In 2011-12, Delhi’s per capita income at market price was Rs.1,85,001.
According to the Delhi government, the city-state has maintained a “consistent revenue surplus” – this was Rs.7,499 crore in 2019-20 and Rs.6,261 crore in 2018-19. The upcoming budget (2021-22) document will throw light on the estimated revenue surplus for 2020-21, said a senior government official, asking not to be named.
Rajat Kathuria, director and chief executive, Indian Council for Research on International Economic Relations, said, “Incomes have declined across the country. At this point, it is extremely essential for the Delhi government to continue investing in social infrastructure – healthcare, education and public transport among other fronts. The quality of social infrastructure has to be improved by using more inclusive forms of technology. A healthy social infrastructure acts not just as a safety net but also as a stimulant that can help improve state domestic product.”
Debolina Kundu, professor at the National Institute of Urban Affairs, said: “Gross state domestic product and per capita incomes have witnessed declines across the country in 2020-21 with people losing jobs and livelihoods because of the Covid-19 pandemic. With incomes going down, households are likely to refrain from spending on what they consider non-essentials. The government has to intervene in the upcoming fiscal year. Enterprises have to be boosted, especially start-ups, and the government should focus on generating jobs at various levels to improve the economic condition of the state.”
Avani Kapur, a fellow at the Centre for Policy Research, said the decline in GDP and real income does appear largely to be a result of the pandemic. “The tertiary sector is a major contributor to the GSVA (Gross State Value Added) contributing over 80% to it. This includes things like trade, hotels, restaurants, real estate, etc, all of which saw a hit this year due to Covid-19. But there are some promising trends too. For instance, while we have seen GST being hit everywhere and thus national income, Delhi estimates do suggest the recovery process has started. The main worrying aspect of revenue loss is non-tax revenue, which shows a big decline.”
Going forward, she said, it is going to be interesting to see how Delhi prioritises its revenues. “So far, education has been a big priority for the government and given the implications of the pandemic on learning, it is going to be interesting to see if that continues. Those details should come in the state budget tomorrow along with hopefully a plan for fiscal consolidation and recovery.”
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