RTTNews | Nov 12, 2020 01:25AM EST

01:25 Thursday, November 12, 2020 (RTTNews.com) - India's economy is likely to have entered a technical recession in the first half of the financial year 2020-21 for the first time in its history, the central bank said Wednesday.

In the monthly bulletin, the Reserve Bank of India said the economy contracted 8.6 percent in the quarter ended September. With the second consecutive fall in gross domestic product, the economy entered a technical recession in the September quarter. Ahead of the official release of quarterly accounts, based on 'nowcast' method, RBI researchers said the economy rebounded sharply in June with the reopening of the economy, with industry normalizing faster than contact-intensive service sectors, pointing to a short-lived contraction. According to the preliminary estimates, household financial savings jumped to 21.4 percent of GDP in the June quarter due to the reduction in discretionary expenditure and the surge in precautionary savings.

Researchers said incoming data for the month of October have brightened the near-term outlook for the Indian economy and stirred up consumer and business confidence. However, there are formidable downside risks that confront the path of recovery.

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