The chief of India's apex bank, the Reserve Bank of India (RBI), on Thursday said the country's economy is showing signs of recovery.
"After seeing a sharp GDP contraction in the first quarter, the Indian economy has exhibited a stronger than expected momentum in activity", RBI Governor Shaktikanta Das said while addressing an event.
He cautioned, however, that even as the growth outlook has improved, downside risks continue to persist as COVID-19 infections are still surging.
Das hinted that to prevent the "downside", sustainability of demand and "calibrated" opening of the economy are the key factors.
“We need to be watchful about the sustainability of demand after festivals and a possible reassessment of market expectations surrounding", Das added.
India witnessed a growth contraction of 23.9 percent in April-June this year owing to the impact of the pandemic. In January-March this year, the country's economy witnessed growth of 3.1 percent.
Earlier, global agencies predicted negative growth in the Indian economy. The World Bank has forecast a contraction of 9.6% in the current financial year (April 2020 – March 2021). Goldman Sachs said India's economy would shrink by 10.3 percent, while India Ratings maintained that the economy would contract 11.80 percent.
The RBI in its assessment has said that the Indian economy will witness a growth contraction of 9.5 percent in the current financial year.
