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NEW DELHI- India's economy probably returned to growth in its fiscal third quarter after a recession earlier in 2020, economists said, and the recovery is expected to gather pace as consumer demand and investments shake off the effects of the pandemic.

The median forecast from a survey of 58 economists this week predicted gross domestic product in Asia's third-largest economy grew 0.5% year-on-year in the December quarter, after shrinking 23.9% and 7.5% in the April-June and July-September periods, respectively.

The forecasts ranged from a contraction of 4.7% to growth of 2.6%. India is set to announce GDP data for the December period on Friday at 1200 GMT.

Economists have raised their forecasts for the current and next fiscal year, expecting a pick-up in government spending, consumer demand and resumption of most of economic activities were helping the economic recovery.

"Improving consumption, government reforms to boost domestic manufacturing and low interest rates will propel corporate India's post pandemic recovery," Moody's said in a statement on Thursday.

Moody's revised its forecast to a 7% contraction for the current fiscal year, ending in March, from an earlier estimate of a 10% contraction. It predicted 13.7% growth for next fiscal year, helped by resumption of economic activities.

Prime Minister Narendra Modi's government earlier this month rolled out plans to fund a huge vaccination drive, while outlining a slew of tax incentives to boost manufacturing.

The Reserve Bank of India (RBI), which has slashed its repo rate by a total of 115 basis points since March 2020 to cushion the shock from the pandemic, has projected growth of 10.5% for the fiscal year starting April.

"We will continue to support the recovery process through the provision of ample liquidity in the system," RBI Governor Shaktikanta Das told industrialists at an event on Thursday.

However, some analysts warn that a recent rise in crude oil prices and a surge of COVID-19 cases in parts of the country may pose risks to the nascent recovery. Moreover, some sectors, such as retail, airlines, hotels and hospitality, are still reeling from the impact of pandemic.

"Growth remains on an uptrend, although the recent rise in pandemic cases is a risk to monitor," Sonal Varma, chief economist at Nomura, said in a note on Thursday.