Growth, revenue, deficit: Delhi's economy under two Chief Ministers

How Sheila Dikshit and Arvind Kejriwal have shaped the national capital's development

Aam Aadmi Party (AAP) leader Arvind Kejriwal resigned as Delhi's Chief Minister on Tuesday, two days after he was released from prison on bail. Kejriwal had announced his intention to resign over the weekend, saying he would take the post again only if the people of Delhi gave him a "certificate of honesty".

AAP made its electoral debut in 2013 Delhi assembly elections and has governed the national capital since, focussing on welfare measures such as affordable electricity and water for residents. Kejriwal spent five months in jail in connection with a now-scrapped liquor sales policy. He has denied the allegations against him.

Kejriwal's resignation turned attention to his government's performance and that of Sheila Dikshit, the Congress leader whom he defeated to become Chief Minister.

Comparing the last 10 years of Dikshit’s 15-year tenure from 2004-05 to 2013-14 and that of Kejriwal from 2014-15 to 2023-24 shows how the two have shaped Delhi's economic development.

Delhi achieved an average growth rate of 9.2 per cent in Dikshit's tenure in the period cited above, and 5.6 per cent under the Kejriwal government. Delhi's growth rate during the Dikshit government was better than India's. Kejriwal’s government had a shade lower growth rate than India (chart 1). 

Comparing Delhi's average per capita income under the two Chief Ministers is another way to measure them. By that metric, Delhi ranked second among Indian states for nine years. It was the top state in 2013-14. Under Kejriwal, Delhi’s ranking in terms of per capita income has fallen to third place since 2017-18.

Under Kejriwal, Delhi's capital outlay as a percentage of the gross state domestic product has declined. The proportion peaked at 2.79 per cent in 2009-10 – before his chief ministerial tenure – but declined intermittently before rising in 2020-21. It was sub-one per cent from 2015-16 to 2020-21. Delhi's own tax revenue as a percentage of total revenue receipts was robust during the two Chief Ministers' tenures and reached a high of 92.63 per cent in 2013-14.

Capital outlay has been rising since 2021-22 but has not touched 2 per cent (chart 2).

During Kejriwal's term, the city's revenue surplus was lower than it was under Dikshit. Fiscal deficit was still smaller under Kejriwal, likely due to a compression in capital outlay and which resulted in lower government debt as a proportion of Delhi's economy (chart 3).

AAP leader Atishi will take oath as Delhi's Chief Minister on Saturday. Dikshit died aged 81 in July 2019.