'This growth on a sequential basis - from 5.8 percent in the fourth quarter of 2008-09 to 6.1 percent in the first quarter in 2009-10 - is an indication of a turnaround in the economy,' Singhania said in a statement.

'The economy will gradually bounce back on higher growth path as cement, steel and even real estate has started picking up. Likewise, core infrastructure will also restore its growth pace,' added the Associated Chambers of Commerce and Industry (Assocham).

The research arm of global rating agency Moody's, however, warned that although the growth of the Indian economy during the first quarter of this fiscal was on predictable lines, the downside risks remained.

'Although global economic conditions have finally stabilized, as reflected in the GDP numbers recently released around the world, India's battle against downside risks is far from over,' said Moody' Economy.com.

'The drag from exports and foreign investment may have moderated or even ended, but the drought has emerged as a new major challenge in India,' it said, adding that farm output was especially expected to take a tumble this year.

'As primary industry is hurt, the rest of the production chain will experience flow-on effects. For instance, a sharp decline in farm output is expected to reduce demand for transport and storage services, and the supply for exports could also plummet.'