Behind the recovery

Policymakers should not lose sight of economic distortions

Economic activity continues to recover from the Covid-induced shutdown and, according to the Reserve Bank of India (RBI), the economy is expected to break out of contraction in the current quarter. The latest advance tax collection numbers also indicate a rebound. Although it is encouraging that the economy is recovering at a pace faster than expected, it is important for policymakers not to lose sight of the nature of the recovery. Several areas need greater policy attention.

For instance, despite a decline in revenues, listed companies posted operating profit growth of over 25 per cent in the second quarter of the