V-SHAPED ECONOMIC RECOVERY

  • Recently, the National Statistical Office data has revealed that the Indian economy grew at a record pace of 20.1% in April-June 2021, as compared to the corresponding period last year.
  • Last year, Gross domestic product (GDP) contracted 24.4% in the same period, when the national lockdown due to the Covid-19 pandemic had nearly halted all economic activities.

Important points:

  • The first quarter’s high growth rate, has come despite a brutal second wave of the pandemic which peaked in April-May 2021.
  • The sharp increases were largely due to the low base (-24.4%) of the first quarter of 2020-21.
  • This growth reaffirms the government’s prediction of an imminent V-shaped recovery made last year.
  • However, despite phenomenal economic recovery, the GDP in the first quarter is still 9.2% lower than the GDP in the same period during the pre-Covid year 2019-20.
  • Amongst sectors, manufacturing and construction imparted a significant push to the economy in April-June, growing 49.63% and 68.3% respectively, over April-June 2020.
  • However, the services sector continued to lag.
  • Sectors including ‘agriculture, forestry and fishing’ and ‘electricity, gas, water supply and other utility services’ are above the levels of the pre-Covid year of 2019-20.

V-shaped Economic Recovery:

  • A V-shaped recovery is characterized by a quick and sustained recovery in measures of economic performance after a sharp economic decline.
  • Such recoveries are generally spurred by a significant shift in economic activity caused by rapid readjustment of consumer demand and business investment spending.

SOURCE: THE HINDU,THE ECONOMIC TIMES,MINT

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