India's growth potential could rise to 7.5 percent from the current 7 percent if the government allows its recent reforms such as goods and services tax, Insolvency and Bankruptcy Code and digital payment push to get more traction, said Pranjul Bhandari, chief India economist, HSBC.

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However, the good news could end there because there are three main drivers of potential growth – labour, capital and total factor productivity (TFP), noted Bhandari, adding that the reforms in the last five years were more in terms of raising the TFP but that alone cannot take us far unless labour and capital are augmented. This means if you don’t increase the investment cycle or if you don’t increase the quality and quantity of job, said Bhandari.

So the focus of the government in this term has to be on labour and capital if potential growth needs to be increased or maintained at 7.5 percent levels, she said. Therefore, fiscal revenue and land reforms will be the key for raising capital stock, she added.

GST and IBC have imperfections but are important and we are moving in the right direction by trying to improve them every single quarter. So there will be growth pay back, she said.

According to her, the tax revenues have been a bit disappointing but there is not too much space on the fiscal front to stimulate the economy and to arrest current growth slowdown. However, in second half of 2019 there are important levers that could increase growth on its own even without fiscal help. Growth generally slows before elections and pick up later, she said.

Moreover, banking sector liquidity historically has risen in June, July, August and September. The RBI may also cut rates once again- all this would help growth inch back from 6 percent range to 7 percent rage in H2 of 2019.

The house expects a 25 basis points rate cut from the RBI in the June Monetary Policy.