RBI expects the Indian economy to overcome losses arising out of the pandemic only by 2034-35. The output losses on account of the pandemic are estimated to be over Rs 52 lakh crore over the last three years.
In its first detailed analysis of the impact of the pandemic, the RBI published a report ‘Scars of the pandemic’ in its annual publication on currency and finance. According to the report, the capital expenditure push in the FY23 Budget can help achieve sustainable high growth by enhancing productive capacity, crowding in private investment and strengthening aggregate demand. While private consumption expenditure and investment marginally surpassed their respective pre-pandemic levels in FY22, the RBI said there is a need to strengthen the growth momentum to compensate for the lost output.
“Taking the actual growth rate of -6.6% for FY21, 8.9% for FY22 and assuming a growth rate of 7.2% for FY23 and 7.5% beyond that, India is expected to overcome Covid losses in FY35,” the RBI said in its forecast. Here, FY34 refers to the year the economy will be in the same position it would have been had there been no Covid.