And recoveries after crises have been led by private-sector consumer demand rather than private- sector investment demand. The impressive economic recovery from September 2020 was likely powered by a rebound in consumer spending. This column has noted on two occasions that the recent economic recovery has been powered by profits rather than wages (‘Will our economic recovery be led by profits or wages?’ on 18 August 2020 and ‘The Indian economic recovery seems to be led by profits, not wages’ on 1 December 2020). A very simple way of looking at the economic recovery before the second wave picked up momentum is to look at what has happened to wages and profits. The initial indications are that the Indian economic recovery in the second half of 2020-21 was led by profits rather than wages.

Source: Mint June 01, 2021 16:52 UTC