Economy may recover late this year: RBI

Mumbai: Reserve Bank said Indian economy is likely to recover from the impact of the financial meltdown later this year as stability gets restored in world markets.

"As the monetary and fiscal steps takes way through, and the calm restored in the global markets, we can see an economic turnaround later this year," Reserve Bank Governor D Subbarao said at a financial management summit in Mumbai.

India's less dependence on merchandise exports and its smooth functioning financial system, comfortable forex reserves and modest inflation will help for a swift recovery from the slow down, Subbarao said.

Cautioning the policy makers about "challenges" in the domestic economy to manage the recovery, Subbarao said, the "unwinding" of measures taken during crisis time will be less painful for India than in other countries.

"While risks from global markets persist, there are challenges in the domestic market (as to) how we manage the recovery in the next six-to-nine-months," Subbarao said.

The central bank was confident of achieving a six per cent real GDP growth in 2009-10 as it had projected earlier.

Subbarao said that if global factors favour an early recovery in the domestic market and the already-taken stimulus measures yield results, then it could lessen the need for further stimulus measures.