In its January Bulletin released on Wednesday, the Reserve Bank of India (RBI) said that the Indian economy is getting stronger and that the worst may be over, except for another wave of COVID-19.
"Recent shifts in the macroeconomic landscape have brightened the outlook, with GDP in striking distance of attaining positive territory and inflation easing closer to the target," RBI said adding that "barring the visitation of another wave, the worst is behind us."
"If these movements sustain, policy space could open up to further support the recovery," it added.
"Recent high-frequency indicators suggest that the recovery is getting stronger in its traction and soon the winter of our discontent will be made glorious summer," RBI said quoting William Shakespeare to describe the state of the economy in its bulletin.
The RBI slashed interest rates early last year to support the Indian economy as it deals with the shock from the coronavirus crisis but has left rates unchanged in recent months, cautious of rising inflation.
The central bank is expected to contract by 7.5% in the current fiscal year to March.
Growth will be mostly consumption-driven, the RBI said. The need to kickstart investment is growing more urgent to secure a durable turnaround and a sustainable growth trajectory, it added.