What is CMP in the Stock Market?
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When different communities recover from a recession at varying rates, this is known as a K-shaped recovery.
When different communities recover from a recession at varying rates, this is known as a K-shaped recovery. The phrase describes the appearance of this kind of recovery when plotted as a line graph. The higher area of the K reflects the segment of the population that heals fast, while the bottom portion shows the groups that recover more slowly. Economic recovery can take many forms, which is depicted using alphabetic notations. For example, a Z-shaped recovery, V-shaped recovery, U-shaped recovery, elongated U-shaped recovery, W-shaped recovery, L-shaped recovery and K-shaped recovery.
You might also hear "K-shaped recession" when you hear the phrase "K-shaped recovery." Every downturn in the past has been followed by an expansion of the economy. In reality, recessions are frequently short-lived, and recovery normally gets underway very fast.
But the appearance varies from time to time. Certain segments of the population recover more quickly than others in a K-shaped recovery.
Causes:
Typically, a recession that has various effects on different people and groups is what leads to a K-shaped recovery. It's also a result of differences that existed before a crisis, such as the wealth gap, which has only widened.
The K-shaped recovery follows a recession, which worsens wealth disparity. The financial health of people and businesses varies, with some doing well or making a profit while others are negatively impacted by layoffs, industry closures, or firm closures.
K-shaped recoveries frequently have a detrimental effect on minorities, low-income families, recent immigrants to the workforce, and sectors like tourism and hospitality.
In order to ease the suffering in the most distressed sectors of the economy, the government must invest where it is necessary right now.
Setting up an independent fiscal council to advise on the integrity of the budget and announcing a credible objective for the nation's consolidated debt over the next five years would be very helpful initiatives.
Asset sales, notably those of surplus government land and pieces of government corporations, can increase budgetary resources.
In the case of the COVID-19 pandemic in India, the K-shaped recovery refers to the uneven recovery of different sectors of the Indian economy.
While some sectors such as IT, e-commerce, and pharmaceuticals have shown resilience and even growth during the pandemic, other sectors such as hospitality, tourism, and retail have been hit hard and are struggling to recover. This has resulted in a K-shaped recovery, where some sectors are recovering quickly while others are lagging behind.
Furthermore, the K-shaped recovery has also had a disproportionate impact on different socio-economic groups. For example, white-collar workers have been able to work from home and maintain their incomes, while many blue-collar workers have lost their jobs or seen a reduction in their wages.
Overall, the K-shaped recovery in India highlights the need for targeted policies to support the sectors and groups that have been most affected by the pandemic.
The survey also reveals that the wealthiest 20% of families have increased both their individual and collective income over the past five years more than they have over any other five-year span since liberalisation.
In the first round of the survey, which took place between April and October 2021, 200,000 homes were included. In the second round, 42,000 households were included. It covered 100 districts and 800 villages scattered across 120 towns.
The hardest-hit industries during the COVID era were restaurants, the hotel industry, and the entertainment industries (including movies and others), although other industries prospered as businesses adapted to remote labour. Employees began using video conferencing solutions for meetings as a result of the explosive growth in the demand for electronic devices.
Conclusion:
When an economy has a "K" shaped economic recovery following a recession, performance across various sectors, industries, and groups within the economy varies greatly. This may occur for a variety of reasons connected to economic structural and technological change, as well as responses by politicians to a recession.
Data must be used to segment the economy into several sectors in order to completely comprehend what has occurred to particular areas of the economy and whether or not their fortunes have been improving since the recession started.
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