Indian economy heading towards V-shaped recovery in 2021: Assocham

Context

• India's economy is showing decisive signs of a 'V-shaped' recovery in 2021 with the return of consumer confidence and robust financial markets.

What is V – Shaped Economic recovery?

• V-shaped recovery represents the shape of a chart of economic measures economists create when examining recessions and recoveries. A V-shaped recovery involves a sharp rise back to a previous peak after a sharp decline in these metrics.

• 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. Because of the rapid adjustment of the economy and the quick recovery in major aggregate metrics of macroeconomic performance, a V-shaped recovery can be thought of as a kind of best-case scenario once an economy has hit a recession. 

What are the plausible reasons behind the recovery?

• Return of consumer confidence
• Robust financial markets
• Revival of demand
• Uptick in manufacturing
• Exporter promotion
• Vaccination programme
• Sectors such as hospitality, transportation, entertainment etc.
• Budget Expectations in healthcare, agriculture