Workers sanitize the doors of shops at a market in Agartala, the capital city of India's northeastern state of Tripura, Oct. 18, 2020. (Str/Xinhua)

India has entered into a technical recession in the first half of 2020-21 fiscal year (April 2020-March 2021) for the first time in its history, according to a report by the country's central bank.

According to the report released late Wednesday by a team led by Michael Patra, a deputy governor at the Reserve Bank of India (RBI), Asia's third-largest economy has probably shrunk for the second straight quarter (July-September) pushing the country into an unprecedented recession.

As per the report, India's gross domestic product is set to contract by 8.6 percent in July-September after having slumped by around 23.9 percent in April-June though the official statistics will be released later this month on Nov. 27.

Stating about living in challenging times, the report said, "Lurking around the corner is the third major risk -- stress intensifying among households and corporations that has been delayed but not mitigated, and could spill over into the financial sector."

Cautioning about downside risks and inflation, in particular, following by COVID-19, the report said, "The foremost (risk) is the unrelenting pressure of inflation, with no signs of waning in spite of supply management measures such as the imposition of stock limits on onion traders, imports of potatoes and onions (without fumigation) and a temporary reduction in import duties on pulses."

The second wave of COVID-19 to the global economy could impact the recent recovery in exports as external demand threatens to collapse as commodity prices indicate, the report said.

However, on an optimistic note, the RBI report said that the Indian economy will break out of contraction of the six months gone by and return to positive growth in the October-December quarter of 2020-21. Incoming data for the month of October 2020 have brightened prospects and stirred up consumer and business confidence, it said.