Do you agree that the Indian economy has recently experienced V-shaped recovery? Give reasons in support of your answer.

In the very start of 2020, the whole world faced a once in a century crisis in the form of Covid-19 outbreak.

It plunged most of the economies into recession and there was a major impact on the Indian economy too. In Q1 of 2020-21, the economy contracted by 24% and other macro-economic parameters also showed negative growth. All this led to the Indian economy moving into recession.

Although after contracting for two consecutive quarters in 2020-21, the economy turned around and moved into positive territory in the third quarter.

The Economic Survey of 2020-21 and Ministry of Finance reiterated several times that the recovery of the Indian economy is V shaped although certain critics have termed the recovery as W shaped and K shaped also. In my view, the recovery of the Indian economy is V shaped due to the following reasons: 

• If we see the annual GDP growth data (Y-o-Y) in the graph, it clearly represents V shape recovery.

• Even if we faced a severe 2nd Covid wave in the first quarter of 2021-22, we achieved a high GDP growth of 20% in the first quarter indicating a sharp V shape recovery.

• The other high frequency indicators like core industries, IIP, GST, Tax collections, rail freight etc. all have shown a V shape recovery.

• These indicators have not only reached pre pandemic level but have surpassed the previous level.

Although some of the sectors like MSMEs and informal sectors have not been able to recover much and a lot of poor people mostly in the informal sector have lost jobs in this pandemic and their incomes have also declined. And when we see high tech companies and the rich class, then they have been able to increase their wealth in this pandemic, because of which some economists terming it a K shape recovery.

But if we see the overall economy, we can say that the recovery has been in V shape. And this was made possible because of the Govt.’s bold Atma Nirbhar Bharat reforms combined with huge liquidity pumped by RBI in the economy.