How Long Until Indian Economy Recovers From COVID Losses? This is What RBI Said
The Reserve Bank of India released the Report on Currency and Finance (RCF) for the year 2021-22 on Friday.
Mumbai: The Indian economy is likely to take over 12 years to overcome the COVID-19 losses, according to a report released by the Reserve Bank of India (RBI) on Friday. In its report on ‘currency and finance for the year 2021-22’, the RBI said, 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.
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“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,” the report noted.
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The RBI further noted in the report, the pre-COVID trend growth rate works out to 6.6 per cent (CAGR for 2012-13 to 2019-20) and excluding the slowdown years it works out to 7.1 per cent (CAGR for 2012-13 to 2016-17). “Taking the actual growth rate of (-) 6.6 per cent for 2020-21, 8.9 per cent for 2021-22 and assuming growth rate of 7.2 per cent for 2022-23, and 7.5 per cent beyond that, India is expected to overcome COVID-19 losses in 2034-35,” the report said.
How much loss in which year?
The output losses for individual years have been worked out to:
- Rs 19.1 lakh crore for 2020-21,
- Rs 17.1 lakh crore for 2021-22, and
- Rs 16.4 lakh crore for 2022-23.
Report themed upon ‘Revive and Reconstruct’
The Reserve Bank of India released the Report on Currency and Finance (RCF) for the year 2021-22 on Friday. The theme of the report is “Revive and Reconstruct” in the context of nurturing a durable recovery post-COVID and raising trend growth in the medium-term.
7 wheels of economic progress
The blueprint of reforms proposed in the report revolves around seven wheels of economic progress viz., aggregate demand; aggregate supply; institutions, intermediaries and markets; macroeconomic stability and policy coordination; productivity and technological progress; structural change; and sustainability.
‘Pandemic still not over’
The report noted that “the pandemic is not over yet. A fresh wave of COVID has hit China, South Korea and several parts of Europe. However, various economies are reacting divergently ranging from a no-COVID policy in some jurisdictions (e.g., China, Hong Kong and Bhutan) on the one hand to those with relatively open borders and removal of internal restrictions (e.g., Denmark and the UK). In India, the restriction levels are being dynamically calibrated at local levels in response to the evolving situation”.
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