India pandemic economy shock India

Potential long-term economic consequences of the pandemic

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₹146-149 trillion at constant (2011-12) prices. Two years have been lost to the pandemic. But where will the economy go from there?

In a recent exercise at the National Council of Applied Economic Research, we have looked at a few possible scenarios and their long-term implications, benchmarked against a counterfactual growth path the economy might have followed had there been no pandemic.

These exercises reveal hysteresis—effects of the pandemic shock that will persist for a very long time. In the optimistic scenario, it is assumed that after recording a growth of over 10% this year, the economy will continue to grow at a high trend rate of 7%.

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