Indian economy likely to take 12 years to overcome COVID losses: RBI
New Delhi, Apr 29: The Reserve Bank of India on Friday said in a report that the Indian economy is likely to take over 12 years to overcome the COVID-19 losses. 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, it said in its report on 'currency and finance for the year 2021-22'.
"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. 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. The output losses for individual years have been worked out to 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.
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. 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.
The RBI report further claimed that the pandemic is not over yet.