Inflation is a key risk to India's V-shaped economic recovery

As we parse through the data, we think that the underlying growth momentum suggests a broadening of the recovery, with domestic demand indicators improving

India has the second highest number of Covid-19 cases in the world and its economy shrank by around 24 per cent year-on-year in Q2-20 – one of the sharpest declines in economic output amongst the G20 nations. With the initial slower opening up of the economy, the consensus has been extrapolating this weaker growth dynamic into the future and continues to downgrade India’s growth outlook.

In contrast, we have been more positive on India’s growth prospects. At the outset, what has been missed by the consensus is that the current recession is more akin to a natural disaster than one