Highlights

During Pandemic and Nationwide lockdown the Finance Ministry announced that the V-shaped recovery of Indian Economy grow significantly. the V-shaped recovery is a type of economic recession and recovery that resembles the shape of alphabet V in charting. V-shaped recovery involves a sharp revival of the economy to the previous peak after a sharp decline. The Finance Ministry’s latest Monthly Economic Review report revealed that the Indian Economy is witnessing a V-shaped recovery as the decline in the GDP has narrowed to 7.5 per cent in the second quarter of FY 2020-21 from 23.9 per cent in April-June quarter.

Points To Note

  • The “V Shaped Recovery” is derived from the shape of the graph representing recession and revival of an countrie’s economy, which resembles the alphabet V.
  • The V Shaped Recovery involves a deep recession in economy, followed by a sharp rise back.
  • Such recoveries are resultant of an economic stimulus offered by the Government and easy money policy perused by the countries Central Bank.
  • The recovery curve witnesses improved production levels and strong consumer demand.
  • The recovery is said to be one of the best-case scenarios, since an economic depression is immediately followed by quick recovery in major parameters of macroeconomic performance.

Other Recovery Shapes of Economy

The other Recovery shapes of countries economy are

  • Z-shaped recovery
  • U-shaped recovery
  • W-shaped recovery
  • L-shaped recovery
  • U-shaped recovery

The main difference between these Recovery shapes of economy is the time taken for the economic activity to normalize. The other aspects include kind of policy response taken by the Central Government, effect of the pandemic on jobs and household incomes.

The Z-shape recovery is the most optimistic recovery as the economic raises very quickly after the crash.

To help the country recover at faster rate, Reserve Bank of India has kept its repo and reverse repo rates unchanged during its recent RBI Monetary Policy Committee meeting. The repo rate was maintained at 4 per cent and reverse repo rate at 3.35 per cent.