Corona's second wave hit GDP by Rs 2 lakh crore

The government cannot spend as much as last year to boost demand: RBI

MUMBAI: The second wave of Corona is likely to erode the gross domestic product (GDP) by Rs 2 trillion in the current financial year 2021-22, the Reserve Bank said in a report.

In a report on how the second wave of Corona has affected the country's economy, the Reserve Bank said that the second wave of Corona has affected rural demand reaching small towns and villages.

The report said the government could not spend as much as last year to boost demand. Corona's second wave has hit the country's economy, but cautious optimism is emerging. The report also said that pressure on inflation will continue as international commodity prices continue to rise.

During the monetary policy review meeting in the first week of June, the Reserve Bank's Monetary Policy Committee cut the country's economic growth forecast for the current financial year to 9.50 from 10.50. Compared to the first wave of Corona, the amount of deposits in banks is declining in the second wave which is a sign of declining domestic savings. In the first wave, deposit growth was stronger than bank lending.