Equity markets, in particular, have recovered exuberantly from the panic that set in when COVID-19 was declared a pandemic in March 2020, the report said.
In its annual report on Thursday, the Reserve Bank of India (RBI) said that India's growth prospects essentially depend on how fast India can arrest the second wave of COVID-19 pandemic. While the economy has not moderated to the extent during the first wave, the surrounding uncertainties can act as a deterrent in the immediate period.
''The prospects for the Indian economy though impacted by the second wave, remain resilient backed by the prospects of another bumper rabi crop, the gathering momentum of activity in several sectors of the economy till March, especially housing, road construction and services activity in construction, freight transportation and information technology (IT),'' it said in its annual report.
"The recovery of the economy from the COVID-19 will critically depend on the robust revival of private demand that may be led by the consumption in the short-run but will require acceleration of investment to sustain the recovery," the report added.
It also added that reform measures in various areas were likely to improve India's growth potential on a sustainable basis. Equity markets, in particular, have recovered exuberantly from the panic that set in when COVID-19 was declared a pandemic in March 2020.