InvestorQ : I just read a statement that RBI expects India to recover from COVID only by 2035? Is that correct?
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I just read a statement that RBI expects India to recover from COVID only by 2035? Is that correct?

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3 weeks ago
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The latest report on Currency and Finance published by the RBI for FY22 has said that all the cumulative losses that India had to undergo in the pandemic would only be fully recovered by FY2035. We are talking about the -6.6% contraction in GDP that would be an opportunity loss of more than $600 billion. That would take nearly 10 years for India to recover in terms of lost growth during the pandemic period.

The RBI Report has calculated that output losses would approximately be Rs.19.1 trillion for FY21, Rs.17.1 trillion for FY22 and Rs.16.4 trillion for FY23. RBI has observed in its report that the feasible range for medium-term sustainable GDP growth in India worked out to 6.5-8.5% and it would have to be supported by timely rebalancing of monetary and fiscal policies. That has started with the withdrawal of surplus liquidity in the system.

One down side of liquidity is that it boosts inflation. For example, every 100 bps increase in surplus liquidity above 1.50% of NDTL spikes the average inflation rate by 60 basis points annually. Since we talk of real growth, price stability is a necessary pre condition. When debt is above 66% of GDP, it puts growth at risk.

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