By October 2020, official data confirmed that the Indian economy has entered a technical recession. But since then, gross domestic product (GDP) has been picking up. Therefore, in early 2021, India’s growth recovery is expected to begin to build momentum. At that time, concerns about Covid-19 also took a back seat. But the second wave of Covid disrupted all calculations.

Nevertheless, by the end of the 2021-22 fiscal year, India’s GDP is expected to return to its pre-Covid levels (see chart below). Given the severity of the second wave of Covid, this is a relief. However, the recovery has changed the shape and structure of the Indian economy. In technical terms, this is because of K-type resuscitation. Simply put, this means that although some sectors/sectors of the economy have achieved a very rapid recovery, many sectors are still struggling.

The entities that perform well are those companies that have entered the formal sector and have sufficient funds to survive repeated lockdowns and interruptions. In fact, during the Covid-19 pandemic, many large companies in the formal economy actually increased their market share at the expense of smaller and weaker companies, which are mainly located in the informal sector .

On the surface, this seems to be a small detail. But as far as India is concerned, this shift has had a huge impact. This is because almost 90% of employment in India takes place in the informal sector. When MSMEs lose out to their counterparts in the formal economy, they will produce the same GDP while reducing employment.

Complete News Source : The IndianEXPRESS