Do you agree that the Indian economy has recently experienced V-shaped recovery ? Give reasons in support of your answer. UPSC 2021, 15 Marks

Q11. क्या आप सहमत हैं कि भारतीय अर्थव्यवस्था ने हाल ही में V-आकार के पुनरुत्थान का अनुभव किया है ? कारण सहित अपने उत्तर की पुष्टि कीजिए । (250 शब्दों में उत्तर दीजिए)
Q11. Do you agree that the Indian economy has recently experienced V-shaped recovery ? Give reasons in support of your answer. (Answer in 250 words) 15

Answer:

Indian Economy was adversely impacted last year due to the impact of covid 19 Pandemic. Government of India had to impose lockdown and other restrictions to contain the spread of the virus. Indian economy also registered negative growth rate in the second quarter of previous year.

This slowdown in economy was temporary and pandemic was the sole reason. Once central government and different state governments eased the restriction, Indian economy got a boost. 

What is V-shaped recovery? 

A V-shaped recovery occurs when an economy that has experienced a sharp economic decline experiences a rapid and strong rebound. Such recoveries are typically accompanied by a significant shift in economic activity as a result of a rapid re-adjustment of consumer demand and business investment spending. A V-shaped recovery can be thought of as the best-case scenario for an economy in recession because of the economy’s rapid adjustment and quick recovery in the major metrics of macroeconomic performance.

Points in support of India’s V-shaped recovery

  • According to the Economic Survey 2020-21, the Indian economy is on its way to a significantly faster growth recovery following the ‘once-in-a-century’ Covid-19 disaster. After the epidemic destroyed all important sectors of growth and disrupted demand, the survey predicts a ‘V-shaped’ economic recovery for the country.
  • According to the study, India’s economic growth will be 7.7 percent, in keeping with past government advanced forecasts of growth. Despite an annual decrease, India’s efforts enabled the country greatly reduce the impact of Covid-19 on economic growth. 
  • Demand-side initiatives were announced in a measured manner during the unlock phase. A public investment programme centered on the National Infrastructure Pipeline is likely to hasten this demand drive and further the recovery.
  • Another important point raised in the Economic Survey was the need for structural reforms to alleviate supply-side concerns. “As part of the Atmanirbhar Bharat Mission, India started a spate of multi-sectoral supply-side structural changes to add flexibility and resilience to supply chains.” 

Points against India’s V-shaped recovery

  • The government claimed that India was experiencing a V-shaped recovery by using the Year-on-Year (Y-o-Y) comparison method, which indicated that GDP expanded by 20% in Q1 this year compared to Q1 last year. Critics of the administration adopted the Quarter-On-Quarter (Q-o-Q) approach, which revealed that the economy fell by 17 percent in Q1 this year compared to Q4 (January, February, and March) of the previous fiscal year, to suggest that the economy was rapidly losing momentum.
  • Many economists also suggest that India is witnessing K shaped recovery post lockdown. Following a recession, different areas of the economy recover at different speeds, times, or magnitudes, resulting in a K-shaped recovery. This is in contrast to a consistent, uniform recovery throughout sectors, industries, or populations.

Though it is yet debatable that weather India is facing V-shaped recovery or not, but Indian Economy is surely on reviving side after the negative growth last year. Various government schemes and collaboration of public and private sector will certainly help India to achieve its economic goals.

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