What is a K-shaped economic recovery, and what are its implications?

As per Sajjid Chinoy, an economic expert, India and other countries of the world are taking a K-shaped economic recovery.
Let us understand what K-shaped recovery is and also delve into its implications.

A K-shaped recovery occurs when, following a recession, different parts of the economy recover at different rates, times, or magnitudes.
This is in contrast to an even, uniform recovery across sectors, industries, or groups of people.
A K-shaped recovery leads to changes in the structure of the economy or the broader society as economic outcomes and relations are fundamentally changed before and after the recession.

Many upper-Income households presently are spending their SAVINGS to fulfil their consumption. Statistically the top 10 percent of India’s households are responsible for 25-30 percent of total consumption. This has caused a Sugar Rush (temporary increase in the consumption). Economists say that it is a one time effect.
On the other hand, due to COVID-19, bottom-income households had experienced a permanent loss of income in the forms of jobs and wage cuts.
Though COVID-19 is triggering transfer of incomes from rich to poor, the poor have higher marginal propensity to consume (i.e. they tend to spend (instead of saving) a much higher proportion of their income). This negatively affects demand in the long run.

Further continuance of the second factor will cause recurring drag on demand, if the labour market is not healed fast.
If not handled properly, developing countries will see reduced growth rates by hurting productivity and tightening political economy constraints.

An effective policy needs to be developed after a close watch on these factors and also anticipate what would happen after the sugar rush.

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