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This major lender sees India growth at 8% in 5 years

India's battered economy could return to its glory days of growth above 8 percent, the chief financial officer of HDFC, one of India's largest lenders, told CNBC.

"I really honestly believe that if the elections go well, in five years' time, I see no reason why India cannot get back to 8 percent plus GDP (gross domestic product) numbers," HDFC's vice chairman & chief executive officer Keki Mistry told CNBC.

Economic growth in Asia's third-largest economy has been stuck below 5 percent for the past seven quarters, a far cry from the days of over 9 percent enjoyed in the three fiscal years prior to the global financial crisis.

(Read more: India to kickoff world's biggest election on April 7)

Policy makers have battled with a difficult combination of high inflation, falling growth and ongoing political uncertainty and corruption issues.

Mistry highlighted the stagnation in India's investment cycle as one of the core reasons the country has underperformed in recent years, and said political certainty would be the key to kick starting it again.

"If the elections go well, if we have a strong party at the center and we have a strong government at the center, it will improve sentiment. If it improves sentiment, the investment cycle will start picking up," he said, adding that this would in turn create jobs, increase consumption and eventually boost production levels.

(Read more: Indian elections: What to expect)

India's parliamentary elections which will pit Hindu nationalist leader Narenda Modi against the unpopular Nehru-Gandhi's ruling Congress party are scheduled to finish on May 16.

Vehicles sit in traffic at the Begum Bazaar in Hyderabad, India
Dhiraj Singh I Bloomberg via Getty Images
Vehicles sit in traffic at the Begum Bazaar in Hyderabad, India

India's economic woes were underscored last year when its currency became one of the world's worst performers amid the fallout over expectations that the Federal Reserve would soon taper its asset-purchase program. The rupee plunged 24 percent from the start of May to the end of August last year, touching record lows of near 70 to the dollar. It has since shored up losses to trade at roughly 62 per dollar.

Mistry said he was not worried about a rupee fallout from Fed tapering this year given that Fed Chair Janet Yellen this week suggested a rate hike could come as early as spring 2015.

"I would expect the rupee to withstand this Fed tapering and the rise in interest rates in the U.S.," he said.

(Read more: India becomes biggest foreign buyer of US weapons)

However, he added that one key risk for the rupee would be adapting to the inflation differential between India and U.S. If inflation in India continues to rise, it could have an adverse impact on the country's current account deficit as exports become less competitive.

"In that sense some depreciation will happen, but it will be a very slow, very gradual and a very stable set of a process," he added.

(Read more: Poll indicates landslide victory by India's BJP Party)

Furthermore, Mistry told CNBC he saw India's central bank moving to cut interest rates in either June or July.

"This is on the caveat that we don't see any uncertainties suddenly coming up in the western world which causes spike in oil prices," he added.

The Reserve Bank of India lifted its policy repo rate in January by 25 basis points to 8 percent.

By CNBC's Katie Holliday: Follow her on Twitter @hollidaykatie

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