The second wave may result in a ₹2-lakh-crore loss in output during this fiscal, according to an estimate by the Reserve Bank of India (RBI), which recently said a loss of economic output may not have a direct correlation with the gross domestic product (GDP), but points to some loss in the value addition across the economy. Several agencies, including RBI, have lowered growth projections for the year.
The RBI’s output loss is factored into its revised GDP forecast in the latest monetary policy estimates, where it slashed growth projections from 10.5 per cent to 9.5 per cent. The State of the Economy report released recently said the projection was on the assumption that real GDP will grow by 18.5 per cent in the first quarter, which is on a much lower base given the contraction last year.The second wave may result in a ₹2-lakh-crore output loss this fiscal, according to an estimate by the Reserve Bank of India (RBI), which said a loss of economic output may not have a direct correlation with GDP, but points to some loss in the value addition across the economy. Several agencies, including RBI, have lowered growth projections for the year.#
RBI said the rate of decline in deposits has been higher, indicating that household savings have dropped in sharp contrast to the first wave. “Additionally, currency holding with the public has also decelerated significantly to 1.7 per cent during April 2021 in comparison to the growth of 3.5 per cent a year ago, implying heavy outgo towards COVID-induced medical expenditure,” it said.
It said the second wave’s toll is higher due to the impact on domestic demand as several aspects of aggregate supply, such as agriculture and contactless services, are holding, while industrial production and exports have surged amid pandemic protocols. “Going forward, the speed and scale of vaccination will shape the path of recovery,” the report said.
The report highlights the advantages of repurposing and reprioritising revenue and expenditures to extract “bang for the buck”. It said the public sector can lead the private sector in unlocking growth opportunities. In addition, it can collaborate with the private sector and step back to allow the private sector to take the lead in sunrise areas.
Fibre2Fashion News Desk (DS)
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