In the note, RBI stated that the for FY22, the central bank has projected real GDP growth of 9.5 per cent on the assumption that the impact of the second wave will be contained in the first quarter of the year in which strong base effects from last year’s precipitous contraction will come into play. Real GDP may hence grow by 18.5 per cent in the first quarter, slowing to 7.9 per cent in the second quarter, 7.2 per cent in the third quarter and 6.6 per cent in the last quarter of the year as base effects slowly wane.
RBI said, "The impact of the second wave is hence estimated at about Rs2 lakh crore of lost 2021-22 output."
As per RBI's current assessment, the second wave’s toll is mainly in terms of the hit to domestic demand on account of regional and specific containment rather than a nationwide lockdown.
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.”
Moreover, RBI also said that this wave has fanned into smaller cities and villages, sapping rural demand. The support from government
spending may also moderate from the extraordinary expansion undertaken last year. On the brighter side, several aspects of aggregate supply conditions such as agriculture and contactless services are holding up amidst pandemic protocols. Industrial production
and exports have surged on strong base effects, but there is also evidence of positive momentum. At the cost of reiteration, it is vaccination which will shape the recovery.