Indian Economy Will Take Another 12 Years To Recover From Impact Of COVID: What RBI Said

It has been more than two years since the COVID-19 pandemic brought the world to a standstill.

Though in 2022, COVID-19 is not as devastating as it was in 2020, the pandemic is still refusing to go away.

COVID-19 was not just a health crisis but also an economic one. In the early days, like most countries around the world, India too was forced to go into a nationwide lockdown in an attempt to prevent the spread of the virus.

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Lockdowns were also imposed during the devastating second wave last year and they had a major impact on the country's economy.

As factories, offices and businesses were forced to shut, millions of people including migrant workers and skilled laborers became unemployed, adding to the health crisis.

12 years to recover

According to the Reserve Bank of India, it will take over 12 years for the Indian economy to overcome the COVID-19 losses.

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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.

"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).

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"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.

Output losses of ?19.1 lakh crore in 2020-21

The output losses for individual years have been worked out to ? 19.1 lakh crore, ? 17.1 lakh crore and ? 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.

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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.

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