K-Shaped Recovery Narrative Flawed And Prejudiced: SBI Report

The repeated argument that India witnessed a K-shaped recovery post-pandemic is "flawed, prejudiced, and ill-concocted", said a research report by SBI on Monday.

According to the report, post-pandemic, households are reconfiguring their savings towards physical assets, including real estate, it said.

"The oft-repeated conundrum debating a K-shaped recovery post-pandemic seems at best flawed, prejudiced, ill-concocted and fanning interests of select quarters to whom India's remarkable ascendance, signalling more the renaissance of the new global south, is quite unpalatable," the report said.

K-shaped recovery reflects uneven recovery where certain sectors of the economy thrives while other sectors continue to decline or struggle to recover.

It further said post-pandemic, there has been two-way shift between savings channelised into physical assets from financial assets in consonance with the global trend to take advantage of lower interest rates.

However, it said, recent data shows that there is a shift towards financial assets since 2023 onwards.

"Gini coefficient estimated using ITR data of taxable income of individuals shows that individual income inequality has significantly declined from 0.472 to 0.402 during FY14-FY22," it said.

There is a change in income pattern of MSMEs, too, reflecting the changing contours of industry/services as formalisation drive brings more entities into the net.

Around 19.5 per cent of majorly micro-sized firms have been able to shift their income upwards, to classify them into small, medium and large-sized firms, it said.

Of these, it said, 4.8 per cent firms have transitioned themselves into small firms, around 6.1 per cent firms transitioned into medium-sized firms, and around 9.3 per cent firms are transitioned into large-sized firms.

This clearly indicates MSME units are getting bigger and getting integrated into larger value chains with initiatives like Production Linked Incentive (PLI), it added.