Page 394 - ES 2020-21_Volume-1-2 [28-01-21]

State of the Economy 2020-21: A Macro View 21

INDIAN ECONOMY ON THE PATH OF A RESILIENT V-SHAPED
TRAJECTORY

1.24 The Indian economy, after subdued growth in 2019, had begun to regain momentum January
2020 onwards, only to be stalled by the once-in-a-century black swan COVID-19 outbreak. The
economy witnessed a sharp contraction of 23.9 per cent in Q1: FY 2020-21 and 7.5 per cent in
Q2: FY 2020-21 due to the stringent lockdown imposed during March-April, 2020. Since then,
several high frequency indicators have demonstrated a V-shaped recovery. The fundamentals of
the economy remain strong as gradual scaling back of lockdowns along with the astute support
of Atmanirbhar Bharat Mission have placed the economy firmly on the path of revival.
1.25 There has been rapid recovery in India’s economic activity from the COVID-19 pandemic
induced unprecedented lows of the first quarter of FY 2020-21 on the back of extraordinary
fiscal and monetary support provided by the Government and RBI. Overall movement of
high frequency indicators over Q1, Q2 and Q3 indicated speedy pickup in Q2 and growing
convergence to pre-pandemic levels in Q3 (Figure 21). As India’s mobility and pandemic trends
aligned and improved concomitantly, indicators like E-way bills, rail freight, GST collections and
power consumption not only reached pre-pandemic levels but also surpassed previous year levels.
Figure 21: Movement of High Frequency Indicators

Source: Compiled from various sources
Note: Red colour indicates negative YoY and QoQ growth; Brown colour indicates positive YoY or QoQ growth
and Green colour indicates positive YoY and QoQ growth. For indicators like CPI and G-Sec yield decline is
considered as positive, i.e., green and vice versa.