In its latest report, the Reserve Bank of India (RBI) said that the second wave of coronavirus could leave a Rs 2 lakh crore dent in the country’s economic output.
But the central bank is optimistic about its rehabilitation as it said that the speed and scale of vaccination will shape the path of recovery.
The report highlighted that the domestic demand was the worst hit because of the pandemic but “on the brighter side, several aspects of aggregate supply conditions – agriculture and contactless services are holding up, while industrial production and exports have surged compared to last year amidst pandemic protocols,” the report said.
The article on the ‘State of the economy’ written jointly by RBI Deputy Governor M D Patra and other officials said, “we have to learn to live with the virus, complementing vaccines with ramping up investment in healthcare, logistics, and research.
The pandemic is a real shock with real consequences. Hence, there is a need to ensure that the recovery is built on a solid foundation of business investment and productivity growth.”
In comparison to the domestic demand which took a hit, agriculture and contactless services are holding up, while industrial production and exports have surged compared to last year amidst pandemic protocols, the bulletin stated.
Indicating that some sectors might continue to have a long-lasting effect, RBI said that “Life- and work-style transformation such as increased remote work and online shopping may likely endure. When patterns of demand shift, some firms may face closure.”
According to the RBI data, currency holding has decelerated from the 3.5% growth last year to 1.7% during April 2021, indicating major outflux towards the medical expenditure during the pandemic.
The RBI document also highlighted the major dip in the bank deposits and currency holdings with the public in the second wave.
The Department of Economic Affairs, Ministry of Finance, in its Monthly Economic Review, has explained that in order to speed up the recovery process and immunize the population, the finance ministry estimated that the target vaccination is 70 crore by September 2021.
To achieve this target it noted that at least 113 crores more doses and around 93 lakh vaccinations per day are needed, while the peak vaccination rate to date is 42.65 lakh.
While the peak daily vaccination rate attained to date is 42.65 lakh, “doubling the shifts and possibly vaccinating 24×7 for a couple of months can enable the ambitious, but possible, the throughput of 1 crore shots a day”, the review mentioned.