Is Delhi Cheaper than Mumbai?

Delhi Nov 23, 2019

Mumbai has been ranked as the most expensive city in India by a report by Mercer. It is ranked as the 67th most expensive cities in the world and Delhi follows it, ranked 118 on the report and ranked second amongst Indian cities. Mumbai overtakes Melbourne, Frankfurt, Buenos Aires in terms of cost of living. In the report, Mumbai has climbed two ranks and Delhi’s rank has moved 4 spots down from the last survey. This is an indicator of the rising costs of living in Mumbai as compared to Delhi.

So what makes Mumbai the most expensive city to live in India?

Demand and Supply: Delhi, according to the 2011 census had a population of 1.1 crore while Mumbai had a population of 1.8 crore and was the most populated city in the country. The total geographic area of Delhi is 1,484 km² and of Mumbai it is 603.4 km². With more people per square kilometer in Mumbai as compared to Delhi, there is a lack of living spaces and hence higher demand and so the simple law of economics wherein higher demand means higher prices comes into play. The government’s in response to this raise, lower or do not modify, the Ready Reckoner rates or circle rate as it is known in Delhi. It is what the government perceives to be and fixes the minimum property values according to market conditions . While the Reckoner rates of Mumbai and Delhi cannot be compared because the nature of both property markets are different, the rates in Mumbai are known to steadily increase in response to the growing market. The government had increased RR rates by an average 15% in 2015, 22% in 2014 as compared to Delhi whose circle rates don’t see such increases. Though, the rate in Mumbai are being considered to being reduced to regulate the prices, Mumbai still has the tag of being one of the most expensive cities in Asia and the most expensive property market in India. This imbalance between demand and supply can be seen as the first component of the chain reaction which makes the cost of living so much higher in Mumbai as compared to Delhi – the property rates are higher, so businesses have to pay up more, so the customer is charged more, in order to remain profitable.

Geographic conditions: Mumbai, being an island city, does not have the scope for expansion, an option that Delhi has and has accommodated the neighboring cities of Noida, Ghaziabad, Gurugram, Faridabad as the National Capital region.  While Delhi is still the second most expensive city to live in, in India, Mumbai with its circumstances is the more expensive city.

Krutikaa Jawanjal

I work at Sair.