Banking regulator the Reserve Bank of India in its June 2021 bulletin said that the impact of Covid-19 induced second wave is estimated at Rs2 lakh crore.
The central bank said that the wave’s effect is mainly in terms of fall in the domestic demand on account of regional and specific containment rather than a nationwide lockdown.
In the note, RBI said that for FY22, the central bank projected the real GDP growth of 9.5 percent on the assumption that the impact of the second wave will be limited in the first quarter of the year in which strong base effects from 2020’s steep contraction will come into the picture.
RBI said that the real GDP may hence grow by 18.5 percent in the first quarter, dropping to 7.9 percent in the second quarter, 7.2 percent in the third quarter and 6.6 percent in the last quarter of the year as the base effects slowly decline.
RBI said, “The impact of the second wave is hence estimated at about Rs2 lakh crore of lost 2021-22 output.”
RBI governor Shaktikanta Das said, “With the second wave intensifying this financial year, the focus of the Reserve Bank is increasingly turning from systemic liquidity to its equitable distribution. In fact, the enduring lesson from the experience of the pandemic in the Indian context has been the deployment of unconventional monetary policy measures that distribute liquidity among all stakeholders…” adding, “We shall continue with our proactive and pre-emptive approach, relying on market-based channels of transmission as we strive to mitigate the toll of the pandemic and return the economy to a path of high and durable growth.”
Das said, “We will continue to think and act out of the box, planning for the worst and hoping for the best…..The need of the hour is not to be overwhelmed by the current situation, but to collectively overcome it.”