Note4Students
From UPSC perspective, the following things are important :
Prelims level: K-Shape Recovery and its Features.
Why in the News?
India is experiencing a K-shaped recovery, with uneven growth patterns. This recovery is causing divergent inflation trends, with food and rural prices rising faster than other goods and services, and urban inflation.
What is K-Shaped Recovery?
- A K-shaped recovery is an economic scenario in which different sectors, industries, or groups within an economy recover from a recession at markedly different rates.
- This results in a divergent economic recovery pattern, with some parts of the economy experiencing robust growth and others continuing to struggle or even decline.
Features of K-Shaped Recovery
- Divergent Recovery Rates: Certain sectors, such as technology and finance, may recover quickly and strongly. Other sectors, like hospitality and retail, may continue to struggle or recover much more slowly.
- Income Inequality: High-income individuals and businesses may see significant improvements in their financial situations. Low-income individuals and small businesses may face prolonged financial hardships.
- Sectoral Disparities: Industries that can adapt to remote work or have online business models (e.g., tech, e-commerce) thrive.
Indian Context: Consumption Patterns Post-Pandemic
- High-End Goods Demand: Post-pandemic recovery is driven by increased demand for higher-end goods and services.
- Mass Consumption Items: Lower-income households’ consumption of mass-market items remains relatively subdued.
Contrast Inflation Rate:
- Rural vs. Urban Inflation: Rural inflation is outpacing urban inflation.
- Food Prices vs. Other Goods: Food price inflation is higher compared to inflation in other goods and services.
- Goods vs. Services Inflation: Goods inflation is higher than services inflation.
- Input vs. Output Prices: Input prices are rising faster than output prices.
Policy Implications
- Sensitive Policymaking: Government policies need to be sensitive to the impact on different groups affected by supply-side shocks.
- Careful Planning: Reforms should be carefully explained and planned to mitigate adverse impacts.
PYQ:[2021] Do you agree that the Indian economy has recently experienced V-shaped recovery? Give reasons in support of your answer. |
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