India's economy contracted for a second straight quarter, pushing the country into an unprecedented recession, according to a team of economists at the Reserve Bank of India (RBI).
The country's GDP contracted 8.6 per cent in the quarter ended September, the central bank showed in its first-ever published 'nowcast,' an estimate based on high-frequency data.
The economy had contracted about 24 per cent in April to June.
"India has entered a technical recession in the first half of 2020-21 for the first time in its history," the authors wrote.
The team of authors used a range of indicators from vehicle sales to flush banking liquidity to signal improving prospects for October.
"If this upturn is sustained, the Indian economy will return to growth in the October-December quarter, earlier than projected by Governor Shaktikanta Das last month, when he pledged to keep monetary policy accommodative," the authors said.
However, "there is a grave risk of generalization of price pressures, unanchoring of inflation expectations feeding into a loss of credibility in policy interventions," the team of economists wrote in the RBI's bulletin.
The economists also pointed at risks to global growth from thesecond wave of coronavirus infections.
"Lurking around the corner is the third major risk -- stress intensifying among households and corporations that have been delayed but not mitigated, and could spill over into the financial sector," the economists concluded, adding, "We live in challenging times."
"The trend of higher than usual household financial savings can persist for some time till the pandemic recedes and consumption levels get normalized," the RBI's Sanjay Kumar Hansda, Anupam Prakash and Anand Prakash Ekka wrote.
The COVID-induced lockdowns had resulted in a steep contraction of 23.9 per cent in GDP for the April-June quarter as compared to the same period a year ago. The RBI has estimated that the economy will contract by 9.5 per cent for the full fiscal year.
Meanwhile, Congress leader Rahul Gandhi attacked Prime Minister Narendra Modi over the RBI's first 'nowcast' report.