What will be shape of Indian economic recovery: Speed will matter

Mumbai, Oct 9 (IANS) As the Indian economy unlocks and gradually picks up pace the debate has shifted from sustenance to shape of economic recover.
There is currently an animated debate whether India would witness a V-shaped recovery or U-shaped, L or W. More recently, there has also been talk of a K-shaped recovery.
But in view of the RBI Governor Shaktikanta Das more than shape, it is speed of recovery that would count. He gave the analogy of a cricket match to establish the fate of winning team under a three speed process.
So, the first to drive Indian economy on the recovery path would be openers in the form of labor intensive sectors that have shown resilience in the face of pandemic. The next would be set sectors that are ‘striking form’ and gradually recovering and contributing to growth and lastly the ‘slog over’ sectors that are most impacted by the pandemic but have the pot ential to bring about big change and ‘rescue an innings’.
Presenting the outcome of the monetary Policy Committee meeting on Friday, Das said, in his view, India will get predominantly a three- speed recovery, with individual sectors showing varying paces, depending on sector-specific realities.
“Sectors that would ‘open their accounts’ the earliest are expected to be those that have shown resilience in the face of the pandemic and are also labor-intensive,” Das said.
Agriculture and allied activities; fast moving consumer goods; two wheelers, passenger vehicles and tractors; drugs and pharmaceuticals; and electricity generation, especially renewables, are some of the sectors in this category .
In several of these areas, reforms such as in agricultural marketing and value chains encompassing cold storage, transport and processing; changes in labor laws; and creation of capacity for production and distribution of vaccines have already opened up new vistas for fresh investment to step in.
The second category of sectors, according to Das, to ‘strike form’ would comprise sectors where activity is normalising gradually. While the third category of sectors would include the ones which face the ‘slog overs’, but they can rescue the innings. These are sectors that are most severely affected by social distancing and are contact-intensive.
According to the RBI, the economy is on recovery path and growth could become visible from the fourth quarter period. Irrespective of the shape of recovery, restoring the health of economy and sectors would be closely watched.
For the year 2020-21 as a whole, therefore, real GDP is expected to decline by 9.5 per cent, with risks tilted to the downside. If, however, the current momentum of upturn gains ground, a faster and stronger rebound is eminently feasible, the RBI said.

- Advertisement -