New Delhi: The Reserve Bank of India has estimated that the country’s economy could suffer output loss of Rs 2 lakh crores due to the second wave of coronavirus pandemic in the financial year 2021-22. In its monthly bulletin, released on June 16, the apex bank in its estimates added that for 2021-22, the projected real GDP growth of 9.5 per cent on the assumption that the impact of the second wave will be contained in the first quarter of the year in which strong base effects from last year’s precipitous contraction will come into play.
Real GDP is expected to grow by 18.5 per cent in the first quarter, slowing to 7.9 per cent in the second quarter, 7.2 per cent in the third quarter and 6.6 per cent in the last quarter of the year as base effects slowly wane.
The GDP numbers released by the National Statistical Office (NSO) on May 31, show during the first quarter of 2020-21, India’s GDP had shrunk by 24.38 per cent, hit mainly by the Covid-19 pandemic. The contraction roughly translates to over 10 lakh crores losses during the first quarter of 2020-21.
RBI’s current assessment says the second wave’s toll is mainly due to drying domestic demand on account of regional and specific containment rather than a nation-wide lockdown.
“Moreover, this wave has fanned into smaller cities and villages, sapping rural demand. The support from government spending may also moderate from the extraordinary expansion undertaken last year,” RBI said in its assessment.
On the brighter side, RBI noted that several aspects of aggregate supply conditions such as agriculture and contactless services are holding up amidst pandemic protocols.
Industrial production and exports have surged on strong base effects, but there is also evidence of positive momentum. In its bulletin, RBI highlighted that it is the scale of vaccination in the country that will shape the recovery.
RBI added that in early June the level of foreign exchange reserves crossed US$ 600 billion. With this development, India is now the 5th largest reserve holding country in the world, the 12th largest foreign holder of the US treasury.
To read the RBI bulletin, Click here