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Expressing views over India’s economic situation, the Reserve Bank of India (RBI) in the Report on Currency and Finance for 2021-22 stated that the country’s economy may take more than a decade to overcome the losses emanating from the COVID-19 pandemic. The report has estimated the output losses during the pandemic period at around Rs 52 lakh crore. The Report said ‘the perturbations from repeated waves of COVID-19 have come in the way of sustained recovery and the quarterly trends in GDP essentially followed the ebbs and flows of the pandemic’.

Following a sharp contraction in the first quarter of FY21, the economic momentum progressively picked up till it was hit by the second wave in April-June 2021. Similarly, the impact of the third wave in January 2022 partially dented the recovery process. It noted that with the ongoing Russia-Ukraine war, the downward risks to global and domestic growth are getting accentuated through a surge in commodity prices and global supply chain disruptions. It 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’.

As per the report, the pre-COVID-19 trend growth rate works out to 6.6% (CAGR for 2012-13 to 2019-20) and excluding the slowdown years, it stood at 7.1% (CAGR for 2012-13 to 2016-17). Taking the actual growth rate of (-) 6.6% for 2020-21, 8.9% for 2021-22 and assuming growth rate of 7.2% for 2022-23, and 7.5% beyond that, India is expected to overcome COVID-19 losses in 2034-35. It pegged the output losses for individual years at Rs 19.1 lakh crore, Rs 17.1 lakh crore and Rs16.4 lakh crore for FY21, FY22 and FY23, respectively.

The report has been authored by officials in the RBI’s Department of Economic and Policy Research. However, the central bank said that the findings and conclusions expressed in the report are entirely those of the contributors and do not represent the views of the banking regulator.