The Report on Currency and Finance — released by the Reserve Bank of India (RBI) last week — did finally present a wider outlook to India's economic situation and the impact of Covid-19 on its growth prospect. The report explores three key aspects — the economic slowdown before the pandemic; post-Covid economic scenario; and potential challenges along the path to recovery. The report states that "India's recovery from the pandemic, despite its innate strength of macroeconomic fundamentals, remains fragile and is yet to become broad-based". The RBI report very succinctly refutes all the arguments that base the genesis of continuing economic slump to the pandemic — by clearly enunciating that India's economy was on a steep downslide even before the pandemic hit the country. The pandemic, at best, has been an exacerbating factor. The report highlights that India's GDP growth moderated for eight consecutive quarters before the onset of the pandemic. The severity of the pre-pandemic slump can be gauged from RBI's conviction that "a cyclical downturn had set in the Indian economy from 2017-18, culminating in the lowest growth of 3.7 per cent in 2019-20 since the global financial crisis (GFC)." The primary reason behind India's pre-pandemic economic distress is traced to decline in consumption. Notably, the rising consumption had been the driving factor behind the country's GDP growth all the while — be it the post-GFC revival or the spontaneous growth during 2014-15. The RBI report makes a clear demarcation by marking 2017-18 as the period from where things started taking unfavourable turns. Coincidently, the period follows the year in which the Indian government experimented with demonetisation — something which the opposition leaders often criticise for disrupting the economy. In the period following 2017-18, consumption — the backbone of India's economic growth — has been declining. The fall in consumption led to a decline in demand. The RBI's view that India's degrowth had been demand-driven stands in sharp contradiction with the government's efforts towards buttressing largely the supply side for achieving higher growth. Inferences from the report also show that slowdown coincided with the sluggishness in the labour market. This automatically brings to mind the horrifying pictures of migrant labourers returning to their homes afoot, many perishing on their way, during the second wave of the pandemic. Even in the absence of any quantitative measure of the exacerbating impact of the pandemic on India's job market and the overall economy, one can qualitatively feel the disastrous aftermaths to the skin. The depth of the current economic turmoil is such that the RBI has projected the time period for recovery of India's pre-pandemic growth trajectory to be 13 years from now! And then, economic experts point out that the projection is very much optimistic, given the fact that it assumes that the economy will grow at 7.2 per cent in 2022-23 and 7.5 per cent thereafter. Given the current situation — under the shadow of Russia-Ukraine conflict and rising Covid cases — and potential uncertainties ahead, such projections appear to be rosy. We may take longer than expected to get back to the pre-pandemic levels. In totality, three key challenges lie ahead of the nation in recovering from the economic slump — boosting consumption and investment in the economy; managing liquidity in the market to desirable limits so that inflation can be checked; and maintaining India's debt-GDP ratio under control. Additionally, RBI's forthcoming monetary policy will have to take a long-term approach to supplement fiscal policies aimed at economic recovery. The RBI report also acknowledged the role of finance in revitalising growth. It stated that the PSBs need to be kept away from government recapitalisation "as a precondition to achieving greater privatisation of the sector". This forces one to be sceptical whether the privatisation of public sector banks will serve as a panacea to the ailments of the financial sector? Certainly not. It is high time that effective sectoral reforms be brought into existence to provide a strong financial ecosystem for the economy to recover at the required pace. The RBI report has been silent on this issue but a framework must be formulated in pursuance with the daunting task that lies ahead of the Indian economy. Be it fiscal and monetary measures or the question of structural reforms — India cannot afford to fail at any one aspect if it truly aims at pulling itself out of the quagmire by the earliest.