The%20%u2018V%27%20stands%20for%20vaccine.%20In%20its%20latest%20monthly%20bulletin%2C%20the%20Reserve%20Bank%20of%20India%20%28RBI%29%20has%20said%20that%20India%20will%20witness%20a%20%u2018V%u2019%20shaped%20economic%20recovery%20%u2013%20the%20shape%20of%20the%20letter%20indicating%20a%20sharp%20rebound.%20The%20worst%20of%20the%20economic%20pain%20is%20behind%20us%20and%20the%20central%20bank%20has%20said%20that%20we%20can%20look%20forward%20to%20a%20%u201Cglorious%u201D%20summer.%20All%20these%20projections%2C%20of%20course%2C%20hinge%20on%20the%20assumption%20that%20no%20second%20wave%20of%20COVID-19%20infections%20sweeps%20the%20country.%20Also%2C%20the%20optimism%20visible%20in%20the%20RBI%u2019s%20latest%20bulletin%20has%20not%20yet%20found%20an%20echo%20with%20other%20forecasting%20agencies%2C%20which%20continue%20to%20predict%20a%20much%20sharper%20overall%20contraction%20in%20India%u2019s%20economic%20output%20for%202020-21.

In%20the%20latest%20bulletin%2C%20the%20central%20bank%20has%20referred%20to%20the%20data%20released%20earlier%20this%20month%20by%20the%20Central%20Statistical%20Organisation%20%28CSO%29%2C%20which%20predicted%20that%20the%20economic%20contraction%20this%20year%20would%20be%20only%207.7%25.%20Of%20course%2C%20the%20start%20of%20the%20mega%20vaccination%20drive%20and%20improving%20macro-economic%20indicators%20are%20the%20other%20factors%20in%20the%20central%20bank%u2019s%20optimistic%20forecast.

%u201CWhat%20will%202021%20look%20like%3F%20The%20shape%20of%20the%20recovery%20will%20be%20V-shaped%20after%20all%20and%20the%20%u2018v%u2019%20stands%20for%20vaccine%2C%u201D%20the%20RBI%20said%20in%20its%20January%20bulletin.%20With%20the%20recent%20shift%20in%20the%20macroeconomic%20landscape%20brightening%20the%20outlook%2C%20the%20central%20bank%20went%20on%20to%20add%20that%20%u201Cwith%20GDP%20in%20striking%20distance%20of%20attaining%20positive%20territory%20and%20inflation%20easing%20closer%20to%20the%20target%u2026policy%20space%20could%20open%20up%20to%20further%20support%20the%20recovery%u201D.

%3Cstrong%3ERead%20more%3A%3C/strong%3E%20%3Ca%20target%3D%22_blank%22%20rel%3D%22noopener%20noreferrer%22%20href%3D%22https%3A//opoyi.com/sensex-at-50k-rally-here-to-stay-say-analysts%22%3ESensex%20at%2050k%3A%20Rally%20here%20to%20stay%2C%20say%20analysts%3C/a%3E

And%20while%20the%20CSO%u2019s%20projection%20of%20a%207.7%25%20GDP%20decline%20in%202020-21%20will%20still%20mean%20a%20record%20shrinking%20of%20the%20economy%2C%20the%20shrinkage%20would%20be%20far%20less%20than%20anticipated%20at%20the%20beginning%20of%20the%20fiscal%20year.%20GDP%20contraction%20in%20the%20June%20quarter%20%28April-June%29%20was%20the%20worst%20ever%20at%20-23.9%25%20but%20eased%20significantly%20by%20the%20next%20quarter%20to%20just%20-7.5%25%20%28July-September%29.%20Now%2C%20the%20RBI%20has%20estimated%20real%20GDP%20growth%20will%20return%20to%20the%20positive%20territory%20for%20the%20first%20time%20in%20the%20current%20quarter%20%28January-March%29%20at%200.1%25%20growth.

This%20estimate%2C%20of%20a%20return%20to%20growth%2C%20should%20bring%20some%20cheer%20to%20the%20%u2018aam%20aadmi.%u2019%20If%20growth%20is%20indeed%20back%20in%20the%20economy%2C%20it%20could%20signal%20a%20return%20to%20job%20creation%20in%20both%2C%20the%20organised%20and%20the%20informal%20sector.%20Mahesh%20Vyas%2C%20MD%20and%20CEO%20of%20the%20Centre%20for%20Monitoring%20the%20Indian%20Economy%20has%20pointed%20out%20that%20barring%20some%20sectors%20like%20education%2C%20recovery%20in%20jobs%20in%20most%20service%20industries%20had%20already%20been%20completed%20by%20December%202020%20as%20the%20economy%20continued%20to%20improve.%20The%20worry%20is%20over%20the%20job%20scene%20in%20the%20manufacturing%20sector%3B%20agriculture%20has%20anyway%20added%20millions%20of%20workers%20as%20people%20found%20livelihood%20in%20the%20sector%20after%20losing%20jobs%20in%20other%20sectors.%20Given%20this%20assessment%2C%20a%20recovery%20in%20the%20economy%20could%20well%20improve%20the%20outlook%20in%20the%20manufacturing%20sector%20employment%20opportunities%20too%2C%20going%20forward.

%3Cstrong%3EAlso%20read%3A%3C/strong%3E%20%3Ca%20target%3D%22_blank%22%20rel%3D%22noopener%20noreferrer%22%20href%3D%22https%3A//opoyi.com/overheated-markets-rbi-also-warns-of-divergence-between-economy-and-bourses%22%3EOverheated%20markets%3A%20RBI%20warns%20of%20divergence%20between%20economy%20and%20bourses%3C/a%3E

The%20second%20factor%20which%20will%20help%20the%20%u2018aam%20aadmi%u2019%20is%20the%20continued%20low%20interest%20rate%20regime.%20Ever%20since%20the%20pandemic%20struck%20Indian%20shores%2C%20the%20RBI%20has%20been%20slashing%20lending%20rates%20to%20infuse%20increased%20liquidity%20into%20the%20system.%20Consequently%2C%20interest%20rates%20on%20home%20loans%2C%20auto%20loans%20etc%20are%20already%20at%20historic%20lows.%20Though%20the%20central%20bank%20has%20now%20paused%20the%20cuts%20due%20to%20concerns%20over%20inflation%2C%20analysts%20agree%20that%20any%20rate%20hike%20may%20be%20seen%20only%20by%20the%20end%20of%20the%20next%20fiscal%20or%20by%20the%20January-March%20quarter%20of%202022.

The%20third%20factor%20which%20could%20cheer%20the%20%u2018aam%20aadmi%u2019%20is%20the%20record%20high%20seen%20on%20the%20bourses%20these%20last%20few%20months.%20Though%20market%20experts%20and%20even%20the%20RBI%20have%20warned%20investors%20about%20such%20dizzying%20heights%20of%20the%20stock%20markets%20and%20called%20them%20%u201Coverheated%u201D%2C%20smart%20investors%20have%20made%20substantial%20gains%20through%20equities%20in%20the%20last%20few%20months.%20And%20market%20pundits%20predict%20that%20the%2050%2C000%20historic%20level%20seen%20by%20the%20Sensex%20on%20Wednesday%20could%20even%20be%20improved%20upon%20in%20the%20coming%20days.%20Several%20factors%20are%20being%20cited%20for%20the%20markets%u2019%20euphoria%3A%20Better-than-expected%20third%20quarter%20%28September-December%29%20corporate%20earnings%2C%20start%20of%20the%20nationwide%20vaccination%20drive%2C%20a%20surge%20in%20global%20indices%20as%20Joe%20Biden%20was%20inaugurated%20as%20the%20new%20US%20President%20and%20expectations%20of%20a%20growth%20oriented%20Union%20Budget.

Amid%20all%20these%20euphoric%20predictions%20of%20economic%20growth%2C%20however%2C%20words%20of%20caution%20are%20also%20being%20spoken.%20A%20large%20brokerage%20has%20pointed%20towards%20large%20Indian%20companies%20%u2013%20the%20formal%20sector%20%u2013%20having%20gained%20market%20share%20in%20most%20sectors%20from%20the%20informal%20sector%20since%20March.%20This%20means%20the%20so-called%20economic%20recovery%20in%20corporate%20profits%20and%20sales%20in%20some%20sectors%20is%20an%20%u201Cunequal%20recovery%u201D%2C%20with%20smaller%20companies%20continuing%20to%20suffer.%20And%20since%20the%20official%20data%20collection%20will%20show%20the%20extent%20of%20suffering%20of%20these%20informal%20sector%20companies%20with%20a%20significant%20lag%2C%20the%20true%20picture%20on%20economic%20recovery%20could%20still%20be%20months%20away.

%3Cstrong%3EAlso%20read%3A%3C/strong%3E%20%3Ca%20target%3D%22_blank%22%20rel%3D%22noopener%20noreferrer%22%20href%3D%22https%3A//opoyi.com/economic-pain-may-persist-next-fiscal-govt-needs-to-open-up-purse-strings%22%3EEconomic%20pain%20may%20persist%20next%20fiscal%2C%20govt%20needs%20to%20open%20up%20purse%20strings%3C/a%3E

This%20could%20also%20impact%20job%20creation.%20In%20India%2C%20a%20vast%20majority%20of%20employment%20%28four%20in%20five%20people%20work%20in%20the%20informal%20sector%29%20and%20production%20happens%20in%20the%20informal%20sector%20but%20official%20data%20does%20not%20cover%20the%20entirety%20of%20the%20informal%20sector%20activity%20and%20whatever%20is%20covered%20is%20done%20through%20proxies%2C%20with%20a%20lag.%20In%20other%20words%2C%20data%20on%20factory%20production%2C%20employment%20etc%20which%20have%20shown%20an%20uptick%20in%20recent%20months%20reflect%20the%20resurgence%20of%20large%20companies%2C%20without%20taking%20into%20account%20the%20devastation%20happening%20across%20the%20informal%20sector.

No%20wonder%20then%20that%20all%20eyes%20are%20now%20on%20the%20Union%20Budget%2C%20scheduled%20for%20February%201%2C%20for%20a%20roadmap%20on%20government%20spending%20and%20additional%20measures%20to%20spur%20growth%20in%20FY22.%20The%20RBI%20is%20also%20looking%20forward%20to%20the%20Budget%20and%20its%20role%20in%20getting%20the%20economy%20back%20on%20track.%20The%20Central%20bank%20has%20been%20forthright%20in%20adding%20that%20it%20will%20still%20take%20years%20for%20the%20%u201Ceconomy%20to%20mend%20and%20heal%2C%20but%20innovative%20approaches%20can%20convert%20the%20pandemic%20into%20opportunities.%20Will%20the%20Union%20Budget%202021-22%20be%20the%20game-changer%3F%u201D

%3Ca%20class%3D%22mention%22%20data-mention%3D%22%23RBI%22%20data-user-id%3D%22mmhRjdCmZCj0%22%20href%3D%22/topic/rbi%22%3E%23RBI%3C/a%3E%20%3Ca%20class%3D%22mention%22%20data-mention%3D%22%23GDP%22%20data-user-id%3D%22sdLvX0aD0qHh%22%20href%3D%22/topic/gdp%22%3E%23GDP%3C/a%3E%20%3Ca%20class%3D%22mention%22%20data-mention%3D%22%23Economy%22%20data-user-id%3D%225VhOB45vqxj9%22%20href%3D%22/topic/economy%22%3E%23Economy%3C/a%3E%20%3Ca%20class%3D%22mention%22%20data-mention%3D%22%23India%22%20data-user-id%3D%22Bq4MmUPrXF8p%22%20href%3D%22/topic/india%22%3E%23India%3C/a%3E%26nbsp%3B