The characterization of the Indian economy recent recovery as V-shaped is debatable. While certain sectors showed rapid rebound, overall economic revival has been uneven, with challenges like unemployment and inflation persisting. Diverse factors influence economic trajectories, and the recovery’s shape may vary across sectors and regions.
UPSC Mains General Studies Paper – 3 Mains 2021
UPSC Mains Civil Services IAS Exam Question Paper – 2021
Approach
- Start with a brief introduction of the keywords “V-shaped recovery” to the context of the Indian economy.
- Discuss, with your opinion, reasons if the Indian economy has experienced V-shaped recovery.
- Conclude/ way forward accordingly.
Introduction
- A “V-shaped recovery” refers to a pattern of economic rebound characterised by a sharp decline followed by a swift and robust recovery. This term is used to describe the trajectory of economic indicators, such as GDP growth, industrial production, and employment rates. The Indian economy has recently demonstrated a V-shaped recovery, which is characterised by a rapid and sustained rebound in various measures of economic performance following a significant downturn.
Body
Opinion, reasons in support the Indian economy has experienced V-shaped recovery: yes , the Indian economy has undeniably experienced a V-shaped recovery. The Indian economy has experienced a V-shaped recovery due to several key reasons, which have contributed to its rapid turnaround and sustained improvement in economic performance.
- Economic Recovery: Despite the devastating impact of the COVID-19 pandemic, there have been notable signs of economic recovery in India. For instance, the quarterly GDP growth rate improved from a historic decline of 23.9% in Q1 2020 to a contraction of 7.5% in Q2. This indicates a gradual revival of economic activity and a positive trajectory for future growth.
- Government Stimulus: The rise in government expenditure, particularly through the Atmanirbhar Bharat package, has played a crucial role in supporting the economy. The total expenditure of the government increased by 48.3% on a year-on-year basis, while capital expenditure expanded significantly by 248.5%. This indicates a proactive approach by the government to boost economic growth and create a favourable environment for businesses.
- Trade Recovery: The revival of imports and exports is another positive indicator of the Indian economy’s recovery. After nine consecutive months of decline, merchandise imports experienced a growth of 7.6% in December 2020, led by sectors such as gold, electronic goods, and vegetable oils. Additionally, merchandise exports reached pre-COVID-19 levels and exhibited a growth of 0.1% in the same month. This demonstrates a rebound in global trade and a return to normalcy in the international market.
- Financial Market Resilience: Despite the initial downturn caused by the pandemic, the Indian financial markets demonstrated resilience and ended the year on a bullish note. Both the BSE and NSE indices recovered from their lows and showcased strong performance throughout 2020. This suggests that investor confidence has been restored and the markets are responding positively to the recovery efforts.
- Rebound in IPO Market: The IPO market has witnessed a sharp rebound, indicating renewed investor interest and confidence in the Indian economy. The total resource mobilisation through main board IPOs reached Rs. 15,971 crore during 2020-21 (up to December 2020), surpassing the corresponding period of the previous year. This surge in IPO listings and resource mobilisation reflects optimism in the business sector and highlights opportunities for growth and investment.
- Industrial Activity Turnaround: Although industrial output remains volatile, there are positive signs of a turnaround in industrial activity. Despite a contraction of 1.9% in November 2020, industrial activity expanded in October by 4.2%. The Purchasing Managers’ Index (PMI) manufacturing reading of 56.4 in December 2020, slightly higher than the previous month, indicates growth in the manufacturing sector. These indicators suggest a gradual recovery and an upward trend in industrial production.
- Record GST Collections: The record-high gross Goods and Services Tax (GST) collections of over Rs. 1.15 lakh crore in December 2020 signify a strong recovery and improved economic performance. This achievement reflects increased consumption, business activity, and compliance with tax regulations. The consistent growth in GST collections indicates a resilient economy and reinforces the positive momentum of the recovery process.
- Robust agricultural production: Despite the challenges posed by the COVID-19 pandemic, the Indian agriculture sector has shown resilience and maintained strong production levels. In the crop year 2020-2021, India recorded a record-high rice production of 120.32 million tonnes, compared to 118.87 million tonnes in the previous year.India produced 109.24 million tonnes of wheat, compared to 107.86 million tonnes in the previous year. India produced 24.42 million tonnes of pulses, compared to 23.02 million tonnes in the previous year.India produced 37.31 million tonnes of oilseeds, compared to 34.89 million tonnes in the previous year.
Conclusion
- Hence, we can say that the Indian economy has undeniably experienced a V-shaped recovery. Indian economy grew by 7.5 to 8.5 in FY 2022-23.The government’s stimulus measures, resilience in domestic demand, revival of export-oriented sectors, strong performance of the agricultural sector, robust financial market response, and effective vaccine rollout have collectively contributed to this rapid rebound. While challenges remain, sustaining the momentum of the recovery and addressing long-term structural issues are crucial for ensuring continued economic growth and resilience.
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