Read More Modi win rouses hopes for India's sluggish economy
"If you look at India's potential growth rate, it should be close to 7-8 percent", Arup Raha, chief economist at CIMB said to CNBC on Friday.
Despite two years of slow growth, economic conditions in India are widely expected to improve following the election of the new prime minister, Narendra Modi. Campaigning on a ticket of more investments and less red tape, the leader of the Bharatiya Janata Party (BJP) has already earmarked infrastructure as his main priority.
"Political change" is the only missing element to boost India growth, Hans Redeker, global head of foreign exchange strategy at Morgan Stanley told CNBC on Friday, adding that the country already ticks "all three boxes for long-term growth potential" - comprising demographics, potential for a productivity uplift and the possibility to leverage up.
Furthermore, signs of coordinated action between the new government and the Reserve Bank of India (RBI) to rein in the country's persistently high inflation received market approval on Friday.
On a visit to Japan on Friday, Raghuram Rajan, governor of the RBI said he expected to join hands with the government to bring down inflation, prompting a fall in Indian bond yields. Yields fell by four basis points to 8.61 percent following his remarks.
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