A V-shaped recovery is characterized by a quick and sustained recovery in measures of economic performance after a sharp economic decline
Indian Economy has recently experienced V shaped recovery
- As per official data, country’s GDP grew by 20% in Q1 of FY 2021-22 in comparison to Q1 of FY 2020-21.
- The Economic Survey has also projected a strong V shaped recovery with an 11% growth in FY22.
- In the last four quarters’ numbers during the Covid pandemic, India is the only country that has registered two consecutive quarters of growth
- The Indian economy has shown resilient and V shaped recovery will be due to mega vaccination drive, robust recovery in the services sector, and robust growth in consumption and investment.
However, some experts are also hinting at a K shaped recovery.
- Non-uniform spread of COVID-19: The spatial and temporal spread of the pandemic has varied with varied impact on different regions and different sectors of economy. For instance, non-aggressive spread in eastern states helped sustain growth of agriculture.
- More vulnerabilities of some sectors: Sectors like supply chain, logistics, hospitality are dependent on human interactions which remain limited due to social distancing constraints.
- Role of technology: Expansion of digital economy and society through 4G, smart phones etc. have helped the service and knowledge sector to continue their economic activities, while limiting the activity in manufacturing.
- External factors: Strong integration of the Indian economy with the global economy in addition to skewed import dependence of Indian economy has impacted domestic recovery in different sectors in peculiar ways, such as disruptions from slowdown in import of raw goods and export of finished products.
With the rise of omicron variant, and expectation of subsequent lockdown, some also feel that India may also see W based recovery.