Compared to financial crises, a health crisis can be more pervasive, persistent and debilitating in its impact on the real economy, as per the RBI annual report for 2020-21.
"Letting down the guard is perilous; it is best to prepare for future waves," the report said.
It added that private investment is the missing piece in the story of the Indian economy in 2020-21; reviving it awaits an environment in which "animal spirits" are rekindled and entrepreneurial energies are released so that backward and forward linkages and multipliers prepare the ground for a durable investment-driven recovery.
The report said 2020-21 will go down in history as the year of the Covid-19 pandemic break in the life and ethos of humanity.
"It altered economic activity, finance and, more generally, life and livelihoods in a drastic and deep way that may take several years to heal.
The pandemic also exposed the fragility of health care infrastructure and the inadequacy of health spending over the years.
The year 2020 will also be notable for unprecedented policy responses which, although not coordinated, turned out to be synchronised globally," the report said.