MUMBAI: India’s economy could take more than a decade to recover from losses resulting from the Covid-19 pandemic, according to a report by the Reserve Bank of India.
In an analysis of the impact of Covid-19 on the economy, the report estimated production losses during the pandemic period at around Rs 52 lakh crore.
Disruptions caused by repeated waves of Covid-19 have hampered a sustained recovery and quarterly GDP trends have essentially followed the ebbs and flows of the pandemic, says the Currency Report’s “Scars of the Pandemic” chapter. and finance (RCF) for the year 2021-22.
After a sharp contraction in the first quarter of 2020-21, economic momentum gradually accelerated until being hit by the second wave in April-June 2021-22.
Similarly, the impact of the third wave, concentrated in January 2022, partially undermined the recovery process.
With the ongoing conflict between Russia and Ukraine, downside risks to global and domestic growth are heightened due to soaring commodity prices and global supply chain disruptions, a- he noted.
“The pandemic is a watershed moment and ongoing structural changes catalyzed by the pandemic have the potential to alter the medium-term growth trajectory,” the report said.
The pre-COVID trend growth rate is 6.6% (2012-2013 to 2019-20 CAGR) and excluding the downturn years it is 7.1% (2012-2013 to 2016 CAGR) -2017).
“Taking the real growth rate of (-) 6.6% for 2020-21, 8.9% for 2021-22 and assuming a growth rate of 7.2% for 2022-23, and 7.5 % beyond that, India is expected to overcome Covid-19 losses in 2034-35,” the report said.
It set production losses for individual years 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. The report was authored by officials from the Department of Economic and Policy Research (DEPR) of the RBI.
The RBI, however, said the findings and conclusions expressed in the report are entirely those of the contributors and do not represent the views of the central bank.
The dividends from the reforms initiated to counter the pre-COVID downturn as well as the additional measures and initiatives during the pandemic will help launch the economy onto a high and sustainable growth trajectory, he said.
According to the report, the behavioral and technological changes brought about by the pandemic could usher in a new normal that would not necessarily resemble pre-pandemic trends, but would be built on more efficient, fair, clean and green foundations.