Indian Economy May Take Over a Decade to Overcome COVID-19 Losses: RBI Report

The report for the year 2021-22 estimates the output losses amid this period to be around Rs 52 lakh crore.

Reserve Bank of India (RBI). Image used for representative purposes. 

(File Photo: IANS)

A report published by the Reserve Bank of India (RBI), analysing the impact of the COVID-19 pandemic on the Indian economy has said that the economy may take over a decade to recoup the losses stemming amid the health emergency.

"Taking the actual growth rate of (pre-COVID) 6.6 percent for 2020-21, 8.9 percent for 2021-22 and assuming growth rate of 7.2 percent for 2022-23, and 7.5 percent beyond that, India is expected to overcome COVID-19 losses in 2034-35," the report said.

The Currency and Finance (RCF) report for the year 2021-22 estimates the output losses amid this period to be around Rs 52 lakh crore.

The individual yearly losses were calculated to be at Rs 19.1 lakh crore, Rs 17.1 lakh crore, and Rs 16.4 lakh crore for 2020-21, 2021-22 and 2022-23, respectively.

It notes that after a steep contraction in the first quarter of 2020-21, gradual recovery took hold during the second half of the year till the second, more deadly wave in 2021.

"Camouflaged by statistical base effects, the level of GDP fell 8.3 percent below the pre-pandemic (or corresponding 2019- 20) level," the report read.

Similarly, the third wave's impact in January 2022, also hindered the recovery process.

As per the report, "the pandemic is a watershed moment and the ongoing structural changes catalysed by the pandemic can potentially alter the growth trajectory in the medium-term".

Further, the RBI report also notes that the downward risks to global and domestic growth are getting accentuated through surge in commodity prices and global supply chain disruptions amidst the Russia-Ukraine conflict.

The writers of the report have underlined that "sustained thrust on capital expenditure by the government, push to digitalisation and growing opportunities for new investment in areas like e-commerce, start-ups, renewables and supply chain logistics could in turn, contribute to step up the trend growth while closing the formal-informal gap in the economy".