Model Question and Answers for APSC | Do you agree that the Indian economy has recently experienced V- shapes recovery? Give reasons in support of your answer.
Ans : V-shaped recovery is a type of economic recession and recovery that resembles a "V" shape in charting. Specifically, a V-shaped recovery represents the shape of a chart of economic measures economists create when examining recessions and recoveries. A V-shaped recovery involves a sharp rise back to a previous peak after a sharp decline in these metrics.
V- shapes recovery
1. India's GDP dipped a historic 23.9 per cent in the first quarter (Q1) of 2020. The contraction narrowed down to 7.5 per cent in the second quarter (Q2). As per official data, the country's GDP grew by 20% in Q1 of FY 2021-22 thus confirming the V-shaped trend.
2. After contracting for 9 consecutive months, merchandise imports finally experienced a growth of 7.6 per cent (y-o-y) in December 2020.
3. The last two quarters have seen a substantive recovery in the Indian economy. As growth has rebounded, so too has every indicator of the formal economy.
4. The corporate profitability of our largest firms has hit a new record this year. So have GST collections, another indicator of the formal economy, with an average monthly collection of Rs 1.2 trillion in the second and third quarters.
5. The budget deficit is expected to be well under what we forecasted last year. All of this is good news.
1. While the formal economy rebounded informal economy particularly construction, hospitality are still below pre pandemic levels
2. At the same time those economic that could shift to digital survived while others continue to suffer from pandemic led disruption to economic activities
With the rise of the omicron variant, and expectation of subsequent lockdown, some also feel that India may also see W based recovery.