India’s recovery is likely to be predominantly a three-speed recovery, with individual sectors showing varying paces depending on sector-specific realities, according to Reserve Bank of India Governor Shaktikanta Das.
“There is currently an animated debate about the shape of the recovery — will it be V, U, L or W shaped? More recently, there has also been talk of a K-shaped recovery.
“In my view, it is likely to be predominantly a three-speed recovery, with individual sectors showing varying paces depending on sector-specific realities,” said Das in his bi-monthly monetary policy address.
RBI’s growth projections suggest that GDP growth may break out of contraction and turn positive by Q4FY2021. Its projections also indicate that inflation would ease closer to the target by Q4FY2021.
The Governor said that for the year 2020-21 as a whole, 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.
“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 labour-intensive,” the Governor said.
Agriculture & allied activities, fast-moving consumer goods, two-wheelers, passenger vehicles and tractors, drugs & pharmaceuticals, and electricity generation (especially renewable) are some of the sectors in this category.
“The second category of sectors to strike form would comprise sectors where activity is normalising gradually. The third category of sectors would include the ones which face the slog overs but they can certainly rescue the innings. These are sectors that are most severely affected by social distancing and are contact intensive,” Das said.