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How Much Time Does The Indian Economy Will Take to Overcome Covid Losses

There is no doubt that Covid Pandemic hit the Indian Economy hard, and it will take time  to overcome the Pandemic’s economic effect completely.

In April 2022, the Reserve Bank of India (RBI) mentioned in its Report that it would take 12 years for India to overcome covid economic losses wholly. RBI believes that the economic disruption caused by the Pandemic will be fully recovered by the financial year 2035.

In the Report, RBI also mentioned that Indian Monetary policy should prioritize price stability for future growth and counter any upcoming tragedy.

The Report on currency and finance (RCF) published for 2021-22 mentioned that India suffered from the deadly COVID-19 Pandemic, which squandered livelihood, Economy and all other outputs worldwide.

It has been two years, but barely any improvement in the economic condition yet, which can make it pre-pandemic level.

Also, RBI said that due to deep-rooted structural bottlenecks and the Pandemic’s effects, India’s economic rebound is facing complex challenges.

The war conflict between Ukraine-Russia is further slowing economic recovery, the war impact causing inflation in global commodities, lowering global economic growth and tightening the financial condition.

Further, RBI believes that the concern of deglobalization is affecting future trade, supply chains, and capital flows, Inducing uncertainties in the global business environment.

RBI said about Covid-19 that, Pandemic worked as a watershed moment, and the changes caused by the Pandemic can potentially alter the medium-term growth path.

According to RBI, the government’s sustained trust in capital expenditure and the push towards digitalization and growth of new investment opportunities in several areas like e-commerce, renewables, start-ups and supply chain logistics could become the contributory step to the growth trend. It can close the formal-informal gap in the Indian Economy.

The pre-covid growth rate was 6.6 % (CAGR for 2012-13 to 2029-20) which becomes 7.1% if we exclude slowdown in the financial years, i.e., CAGR for 2012-13 to 2016-17.

The actual growth rates for 2020-21 and 2021-22 were – 6.6% and 8.9%, respectively, and we can assume a different growth rate for 2022-23 of 7.2% and for future years 7.5%.

“India is expected to overcome COVID-19 losses in 2034-35,” further said by the Reserve Bank of India.

RBI highlighted that new risk factors have emerged for inflation and growth because of the Russia-Ukraine war and monetary policy normalization in the United States, making recovery of economic activities dependent on stimulus factors.

RBI said, “For re-establishing and reproducing a strategy climate helpful for the private area that can drive development post-COVID, convenient rebalancing of fiscal and monetary policies simulation might become an important factor, given the ongoing setups of obligation and liquidity.”

“Governmental debt surpassing fixed levels causes additional pressure on the term premium and dampens development. Fiscal consolidation is not economic growth hindering, once the Economy comes to steady state, suggested by time varying fiscal multipliers.”

The debt plan throughout the following five years, even in the best possible situation, may additionally squeeze fiscal space except if critical approach endeavors covering the two charges and consumption focus on designated solidification.”

At last

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