With economic activities gaining momentum, India is poised to recover fast and may reach the pre-Covid levels of economic parameters by the current financial year's (FY21) end, according to a report by the Department of Economic Affairs.

The Monthly Economic Review for October, however, noted that the recovery may get impacted if the second wave of novel coronavirus infection gets triggered.

"India stands poised to recover at a fast pace and reach pre-Covid levels by the end of the year - barring the incidence of a second wave that may be triggered by the fatigue with social distancing. The continuous improvement in forward looking RBI indices of consumption and business sentiment for the next year augurs hope of a strong economic rebound," it said.

It noted that that the growth prospect for the Indian economy is also corroborated by the International Monetary Fund's (IMF) October 2020 projection of 8.8 per cent real GDP growth of India in FY 2021-22, highest among its global counterparts.

The report noted that a steady contraction of active Covid-19 cases and a low case fatality rate has instilled measured optimism in India that the worst is behind now.

At the same time, a second wave of the pandemic in advanced nations is a grim reminder of how reality hits back when caution is compromised, it added.

Movement of high frequency indicators in October clearly point towards broad based resurgence of economic activity, notably in healthy kharif output, power consumption, rail freight, auto sales, vehicle registrations, highway toll collections, e-way bills, rebound in GST collections and record digital transactions.

Rural consumption has stayed strong, in part helped by sustained MSP procurement of food grains by government at higher prices. Manufacturing Purchasing Managers' Index rose from 56.8 in September to 58.9 in October, pointing to the strongest improvement in the health of the sector in over a decade.

PMI Services index also rose to 54.1 in October, ending the seven-month sequence of contraction, signalling improved market conditions. With the onset of the festive season, overall consumption is expected to see further uptick in the coming months enhancing prospects of faster economic normalisation.