Delhi's GDP Growth Shows Promising Signs: Services Sector Leads the Revival

The advance estimates of Gross Domestic Product (GDP) for the fiscal year 2023-24, released alongside Delhi's 2023-24 Economic Survey on March 1, unveil a hopeful trend.

Despite the challenges posed by the pandemic, Delhi's GDP growth is steadily inching towards pre-pandemic levels. This article delves into the key sectors driving this revival and their respective contributions to Delhi's economic resurgence.

The Services Sector Takes the Lead

Delhi's Gross Value Added (GVA) – a measure of GDP plus taxes less subsidies – has witnessed notable growth from Rs.512 lakh crore in 2019-20 to an estimated Rs. 581 lakh crore in 2023-24, at 2011-12 prices. Notably, a staggering 85% of this growth can be attributed to the tertiary or services sector, which has surged by Rs.58.78 lakh crore over the past four years.

Secondary Sector's Contribution

While the services sector spearheads Delhi's economic revival, the secondary sector, encompassing manufacturing, electricity, gas, water supply, construction, and other utility services, has also played a significant role. Contributing Rs. 15.02 lakh crore, or 22%, to Delhi's GVA growth since 2019–20, the secondary sector underscores the diversified economic landscape of the capital.

Challenges Persist in the Primary Sector

Despite progress in other sectors, the primary sector, comprising agricultural and mining sub-sectors, remains a drag on Delhi's economy. With a negative contribution of 6.9% to GVA growth since 2019–20, this sector continues to lag, remaining Rs.4.75 lakh crore smaller than its 2019–20 level.

Key Subsectors Driving Growth

Delving deeper into subsectors, certain segments have emerged as pivotal drivers of Delhi's GVA growth since 2019-20. Real estate, ownership of dwellings & professional services; miscellaneous other services; construction; public administration; and manufacturing stand out as the highest contributing subsectors, collectively accounting for significant growth.

Challenges and Contractions

However, challenges persist, with subsectors such as mining and quarrying; trade, hotels, and restaurants; and mining and quarrying witnessing negative contributions to GVA growth since 2019–20. These sectors have experienced contractions, highlighting areas that require attention for a comprehensive economic recovery.

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As Delhi's economy gradually recovers from the pandemic-induced slowdown, the dominance of the services sector in driving growth underscores the importance of diversification and resilience.