BJP government in Delhi faces both short-term and long-term challenges

The newly elected BJP government in Delhi faces long-term challenges.

(Sanghnomics is a weekly column that tracks down and demystifies the economic world view of Rashtriya Swayamsevak Sangh (RSS) and organisations inspired by its ideology.)

The newly elected Bharatiya Janata Party (BJP) government in Delhi faces two prime challenges. First, to deal with the financial mess created by the AAP government’s short-sightedness, which is reflected in the poor state of infrastructure. Second, to initiate long-term planning, keeping in mind the demographic changes Delhi is expected to undergo due to unabated migration from other parts of the country over the next couple of decades.

Long-term challenges

According to a study conducted by the Institute for Human Development, titled ‘Study on Population, Economy and Employment for Delhi: MPD-2041’, migration from other cities to Delhi will be the biggest challenge for policy planners. The projected annual migration rates for males are expected to be in the range of 2 to 4 percent, and for females, 2 to 3.5 percent.

Total interstate migration was found to be 1.54 million, 2.1 million, and 2.26 million in the census years 1991, 2001, and 2011, respectively.

Low projection estimates show a population of 27.8 million by 2041. The medium projection estimates a population of 29.2 million in 2041, and the high projection estimates the population of Delhi to reach as high as 30.8 million in 2041.

District projections for 2041 estimate the largest share of the population will reside in West and North-West districts, together comprising nearly 30 percent of the total population of NCT Delhi. The projected population of the West district is 4.2 million, 4.4 million, and 4.7 million by 2041 in the low, medium, and high scenarios, respectively. The corresponding figures for the North-West district are 3.7 million, 3.9 million, and 4.1 million by 2041.

Job creation

Employment generation will be a major challenge for any government, as the study has captured some notable trends.

The unemployment rate in Delhi has increased more than two-fold, from 3.9 percent in 2012 to 9.4 percent in 2018. These rates were 1.8 percent higher than the All-India Unemployment Rate in 2011-12 and 3.4 percent higher in 2018. There exists a gender difference in the unemployment rate as well. Female unemployment rates have always been higher than male unemployment rates in Delhi.

The labour force in Delhi has increased at an annual compound growth rate of 2.1 percent, from 58 lakh in 2011-12 to 69 lakh in 2017-18. Assuming other factors remain the same and the current long-term growth rate continues, the labour force is likely to reach around 98 lakh by 2030-31 and further to 120 lakh by 2040-41.

Total unemployment is likely to be in the tune of 10 lakh by 2030-31 and 13 lakh by 2040-41. The share of the secondary sector in employment generation is likely to increase from 32 percent in 2017-18 to 34 percent in 2030-31 and further to 35 percent in 2040-41. The employment share of the tertiary sector is likely to marginally decline from 66 percent in 2017-18 to 65 percent in 2030-31 and further to 64 percent in 2040-41. Modern industries capable of generating substantial employment are identified as: i) computer programming and related services, ii) non-traditional financial services, iii) legal and accounting services, and iv) office administrative, office support, and other business support activities. All these industries show considerable employment absorption capabilities in the future, according to the study.

Short-term challenges 

The AAP government’s 2024-25 budget for Delhi highlighted several concerning trends. The proposed capital outlay for 2024-25 stands at ₹5,919 crore, marking a 29% decline from the revised estimate for 2023-24.

The report further highlights significant reductions in capital outlay across key sectors in 2024-25 compared to the revised estimate for 2023-24, including transport (₹2,433 crore less), education (₹543 crore less), and health (₹402 crore less). Similarly, in 2023-24, Delhi’s capital outlay was estimated to be 25% lower than initially budgeted, with notable shortfalls in roads and bridges (₹950 crore), urban development (₹776 crore), and health (₹742 crore).
Between 2015-16 and 2021-22, Delhi, on average, spent 39% of its capital outlay compared to budget estimates—significantly higher than the 19% average underspending observed in other states.

Capital outlay refers to expenditures aimed at asset creation. A fall in capital expenditure has been reflected in poor conditions and a lack of roads, inefficient sewage and water supply systems, and absence of waste disposal management. The state of road transport is also a cause for concern.

The CAG report has highlighted that the net worth of both Delhi Transport Corporation (DTC) and Delhi Power Company Limited is negative. As of March 31, 2020, the net worth of Delhi Power Company Limited and DTC stood at ₹(-)37,124.89 crore.

According to the latest finalized accounts as of March 2020, seven State Public Sector Enterprises (SPSEs) reported financial losses. Their combined losses escalated from ₹3,859.78 crore in 2017-18 to ₹4,386.79 crore in 2018-19 and further to ₹5,294.16 crore in 2019-20. Notably, DTC accounted for ₹5,280.55 crore, or 99.74%, of the total losses among these SPSEs in 2019-20.

Earlier Sanghnomics columns can be read here.