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Economy firmly on the path of a V-shaped recovery, says govt

Topics Covered: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Economy firmly on the path of a V-shaped recovery, says govt:


The Ministry of Finance recently said that:

  • India’s economy is firmly on the path of a V-shaped recovery after the collapse in the first quarter.
  • Further improvement is expected in the third quarter, ‘notwithstanding some moderation’ in November’s indicators.
  • The recovery is attributed to the unlocking process along with ‘astute’ stimulus measures.

What are the various Shapes of economic recovery?

  1. The Z-shaped recovery is the most-optimistic scenario in which the economy quickly rises like a phoenix after a crash. It more than makes up for lost ground (think revenge-buying after the lockdowns are lifted) before settling back to the normal trend-line, thus forming a Z-shaped chart.
  2. In V-shaped recovery the economy quickly recoups lost ground and gets back to the normal growth trend-line.
  3. A U-shaped recovery is a scenario in which the economy, after falling, struggles and muddles around a low growth rate for some time, before rising gradually to usual levels.
  4. A W-shaped recovery is a dangerous creature — growth falls and rises, but falls again before recovering yet again, thus forming a W-like chart.
  5. The L-shaped recovery is the worst-case scenario, in which growth after falling, stagnates at low levels and does not recover for a long, long time.
  6. The J-shaped recovery is a somewhat unrealistic scenario, in which growth rises sharply from the lows much higher than the trend-line and stays there.

Sources: the Hindu.