V Shaped recovery is a type of economic recovery. The name V Shaped Recovery is derived from the shape of the graph representing recession and revival of an economy, which resembles the alphabet V.
Key Points
- This particular 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 Central Bank.
- The recovery in V shaped curve witnesses improved production levels and strong consumer demand.
- V Shaped 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.
- Best examples of V-shaped recovery are- Depression of 1920-21 and Recession of 1953.
- In the 1953 recession of United States, the time period of recession was less and mild. It stated in the Q3 of 1953 and ended by Q4 of 1954.
- Other types of economic recovery and recession are- U-shaped, W-shaped, L-shaped, and J-shaped.
India towards V-Shaped Recovery
As per the Ministry of Finance, India is advancing towards the V-shaped recovery after a collapse in the 1st quarter (Q1). A further improvement is expected now in Q3. However, risks of the second wave of COVID-19 are still there. As per the ministry, GDP growth of has shown a quarter-on-quarter increase of 23 per cent in the July-September quarter this year. The decrease in the GDP has narrowed by 7.5% in Q2. As per Department of Economic Affairs, consumer price inflation will decrease gradually. Agriculture sector which has grown at 3.4% in the first half of 2020-21 will continue to improve further. The ministry has credited the timely tranche of Atmanirbhar Bharat package 3.0 for this recovery.
