Covid aftermath: It will take 12 years to recover from the economic loss caused by pandemic, output loss of more than 50 lakh crores in 3 years
Winning Bizness Desk
Mumbai. The research team of Reserve Bank of India (RBI) has admitted that the country's economy has suffered a lot due to Covid-19. According to the RBI, it may take up to 12 years (2034-2035) for our economy to recover from the losses caused by the Covid pandemic. RBI has released the 'Currency and Finance 2021-22' report on Friday which has been prepared by the research team of the Central Bank.
Output loss of 50 lakh crores
The report has estimated an output loss (production deficit) of more than 50 lakh crores to India in 3 years. The deficit has been estimated at 19.1 lakh crores in 2020-21, 17.1 lakh crores in 2021-22 and 16.4 lakh crores in 2022-23. The report also said that the promotion of digitization and increasing new investment opportunities in sectors such as e-commerce, start-ups, renewable and supply chain logistics can contribute to the growth.
Covid waves affected recovery
According to the report, the economic recovery is being affected due to repeated waves of the pandemic. After a sharp contraction in the June 2020 quarter, the economic recovery was bullish till the arrival of the second wave. Similarly, the recovery process was partially affected by the third wave in January 2022. It also said that the pandemic is not over yet, especially when we take into account the fresh wave of infections in China, South Korea and many parts of Europe.
Russia-Ukraine war also hurts the economy
The research team has also expressed concern over the situation arising out of the Russia-Ukraine war. It added that supply constraints and increased delivery times have pushed up shipping costs and commodity prices. This has increased inflation, affecting the economic recovery all over the world. India is also grappling with the problems of the global supply chain. Prolonged delivery times and high raw material prices are weighing on Indian firms' profits.
IMF also reduced India's GDP estimate
Recently, the International Monetary Fund (IMF) reduced India's GDP estimate by 80 basis points to 8.2% for the financial year 2022-23. In January, the IMF had forecast 9% growth. The growth forecast has been reduced in view of the Russia-Ukraine war. The IMF believes that the Russia-Ukraine war has increased crude oil prices and will adversely affect domestic consumption and private investment.
The growth forecast of the world economy was also reduced
The world economy is expected to grow by 3.6% in 2023, which is 20 basis points lower than previously estimated. IMF Chief Economist Pierre-Olivier Gourenchus said, "The global economic prospects have been badly affected due to Russia's invasion of Ukraine." The war has exacerbated supply chain problems. Like seismic waves, its effect will be far-reaching.