According to the global financial services firm, FY16 would be a notable year for India with gradual improvement in economic growth and declining inflationary pressures amid falling global commodity prices and policy initiatives.
"We believe the Indian economy is moving on the right track towards a cyclical and structural upturn and policymakers have been taking the right steps to improve productivity," Macquarie said in a research note.
"Overall, we expect GDP growth to pick up from 5.4 per cent in FY15 to 6.5 per cent in FY16 and further to 7 per cent in FY17," it added.
The pick-up in real economic activity is likely to be supported by a step-up in investments, faster implementation of reforms and addressing the supply side issues.
"We remain optimistic about the ability of the government to undertake structural reforms and improve the productivity dynamics that will help India move to a higher growth path in the medium term," Macquarie said.
Over the last week of December 2014, the Cabinet approved promulgation of the ordinance for FDI in insurance, allocation of coal blocks and amendments to the Land Acquisition Act.
"While using ordinance might be a temporary solution, it reflects the government's commitment towards reforms," the research note said, adding that "the government should work towards building a consensus with the opposition through multi-party dialogues so that critical bills like GST and land acquisition bill could be passed quickly".
Macquarie noted that the government's reform momentum is improving.
"The government has been taking the right policy steps to implement long pending reforms including energy sector reforms, mainly diesel price deregulation and gas price hike, changes in important labour laws, liberalised FDI in defence and other sectors," it added.