Reserve Bank of India Governor Shaktikanta Das on Thursday said the country’s economy has recovered stronger than expected from the initial impact of the coronavirus pandemic, , but there is a need to be watchful of demand sustainability after the end of festivities.
“After witnessing a sharp contraction in GDP [Gross Domestic Product] by 23.9% in first quarter and a multi-speed normalisation of activity in second, the Indian economy has exhibited stronger than expected pick up in momentum of recovery,” the central bank governor said.
Speaking at the annual day event of Foreign Exchange Dealers’ Association of India, Das said there are downside risks to growth across the world and also in India.
“We need to be watchful about the sustainability of demand after the festivals and a possible reassessment of market expectations surrounding the vaccine,” he said.
He further said that regulatory reforms have moved the financial markets to a new trajectory amid the pandemic and affirmed the central bank’s commitment to ensure an orderly conduct in the markets.
Earlier this month, the Reserve Bank of India said in a bulletin that India’s economy is likely to enter a phase of recession for the first time ever in the second quarter (July-September) of the current financial year. The central bank predicted the economy to contract by 8.6% in the second quarter, after recording an unprecedented negative growth of 23.9% in the first three months of the current financial year. Technically, a country’s economy is said to hit recession when its GDP growth is negative for two consecutive quarters or more.