Is India's Economy heading toward
a V shape or a W shape recovery?

The National Statistics Office's first advance estimates of India's national income for 2022-23 showed that the growth of gross domestic product (GDP) has slowed by 1.7 percentage points to 7%. However, the Experts ignore this downshift and argue that this is not only an admirable economic performance compared to the global downturn but is amongst the best ones globally. And refer to the last IMF economic outlook report, where Saudi Arabia was reported as the Fastest Growing and India was listed as the 2nd Fastest growing significant economy for the 2022 - 23 financial year.

However, notably, the 7% growth in 2022-23 is mainly because of the 9.7% pickup in the year's first 6 months. It suggests that growth is predicted to slow down by more than half to 4.5% in the year's second half. This is a notable setback because it shows that the so-called V-shaped recovery after the pandemic has lost steam relatively quickly.

The economy can now head towards a W-shaped healing or double-dip growth. India's rally was somewhat muffled, with the real per capita income in 2022-23 remaining stuck at `96,522, which is just 2.4% higher than the per capita income of `94,270 in 2019-20, the pre-pandemic year or when the pandemic started affecting.

On the other side, the chances of another such quick, noteworthy recovery in the upcoming period are narrow, given the continued deterioration in the outer scenario, the Russia - Ukraine war, the energy crisis, and the decline in India's merchandise exports in recent months.

Besides, the services sector, which has been the direct driver of GDP growth, has seen a different trend, with the numbers accelerating to 9.1% in 2022-23, the highest in recent years. The best part is that trade, hotels, communication, and transport, which were the poorest hit by the pandemic, have led the recovery robust.

The other segments of the services sector, namely financial, real estate, public administration, professional services, defense, and other services, reported opposing trends, with growth picking up in the former and skating down in the latter. Thus, the recent series of layoffs in Indian and Global companies hints the situation is likely to worsen before it gets fixed. So, a little tough time ahead seems to arise, reflecting a "W" shaped recovery rather than a "V" shaped.