RBI Governor Shaktikanta Das on Thursday said India’s economy has recovered stronger than expected from the initial impact of the COVID-19 pandemic, but there is a need to be watchful of demand sustainability after the end of festivities.

Addressing at the annual day event of Foreign Exchange Dealers' Association of India (FEDAI),  Governor said there are downside risks to growth across the world and also in India.

Notably, the Indian economy contracted by 23.9 percent in the first quarter of the fiscal year, and the Central bank expects the economy to shrink by 9.5% in FY21. On the other hand, there has been recovery after the opening up of the lockdown restrictions, especially during the festive season. "After seeing a sharp contraction in the economy by 23.9% in Q1 and a multi-speed normalization of activity in Q2, the Indian economy has exhibited stronger than expected pick-up in momentum of recovery," Das said.

Das said regulatory reforms have moved the financial markets to the next trajectory amid the pandemic and affirmed RBI's commitment to ensure an orderly conduct in the markets and India will continue to approach capital account convertibility.

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