Japanese brokerage firm Nomura is more bullish on India than the Modi government itself, saying the Indian economy is at initial the stages of recovery.
It said that the growth rate could rise to around 8 per cent this fiscal from the 7.3 per cent that the government has projected for the 2014-15 fiscal.
Nomura said it is possible to take either a bearish or a bullish view about GDP numbers, but it's in the "glass half-full camp" - that an economy coming out of a trough could recover further.
Nomura said the key risks to a faster growth are a bad monsoon and weak global demand.
"Despite the scepticism, we are optimistic and continue to believe that the Indian economy is at the initial stages of a business cycle recovery," Nomura said in a research note.
Nomura said a fall in inflation, easier financial conditions, policy efforts and rising profit margins of corporates are expected to back up a cyclical recovery.
On the Reserve Bank's policy rates, Nomura said, "We expect RBI to cut the repo rate by 25 basis points to 7.25 per cent on June 2, in line with the consensus, followed by a pause until end-2016."
The central bank has lowered its policy rate twice so far, mainly outside the policy cycle in 2015, but kept it unchanged at its last review on 7 April after it noted some volatility in price movements.
Provisional figures released by the Central Statistics Office (CSO) on Friday estimated the Indian economy has grown at 7.3 per cent in 2014-15, up from 6.9 per cent a year ago on the back of an improved performance by the manufacturing sector (See: India's 2014-15 GDP growth pegged lower at 7.3%).
The government's economic advisor Arvind Subramanian, meanwhile, said he expected the economy to do much better in the current fiscal and retained his 8.1-8.5 per cent forecast for the year.