India is expected to recover the losses during the pandemic till 2034-35, the “Currency and Finance Report” of the Reserve Bank of India (RBI) has said.

“Taking the actual growth rate of (-) 6.6 per cent for 2020-21, 8.9 per cent for 2021-22 and assuming a growth rate of 7.2 per cent for 2022-23, and 7.5 per cent beyond that, India is expected to overcome Covid-19 losses in 2034-35,” said in the report of RBI.

“The output losses for individual years have been worked out to Rs 19.1 lakh crore, Rs 17.1 lakh crore and Rs 16.4 lakh crore for 2020-21, 2021-22 and 2022-23, respectively,” it said.

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The report for the 2021-22 year has the theme “Revive and Reconstruct” in the context of nurturing a durable recovery post-Covid and raising trend growth in the medium term.

The RBI has said the report reflects the views of the contributors and not it’s own. The report observed the feasible range for medium-term steady-state GDP growth in India worked out to 6.5-8.5 per cent.

It said a timely rebalancing of monetary and fiscal policies would likely be the first step to achieving such growth. The first step, according to the report, is withdrawing the huge surplus liquidity present in the banking system now.
“First, the large surplus liquidity overhang has to be withdrawn — every percentage point increase in surplus liquidity above 1.5 per cent of NDTL (net demand and time liabilities) causes average inflation to rise by 60 basis points in a year,” the report said.