There is a one-in-two chance of achieving 6.5% average GDP growth over the next five fiscals and India can no way achieve above 9% as it did in the past, a Crisil study released on Sunday said.

The study paints a gloomy picture of the economy in the days to come and rules out the 9% levels the country achieved between 2004 and 2011 on account of a surge in investments and improvement in efficiency.

"For a country with 269 million people living below poverty line, which needs to provide jobs to its exploding labour force and where the per-person income is below $4 a day (or $1,500 annually), 6.5% is just not enough. By not doing enough to accelerate growth and thus job creation, India risks setting off a vicious cycle of lower household income, consumption and investment spending that would be so much harder to shake off – not to mention the utter loss of the demographic dividend," said the study.

But the scope for further upside is limited and caused due to the policy and regulatory environment in the country – the business climate in which private firms operate.

It said uncertainty about economic policies, cost of credit and slowing consumer demand eroded the productivity of existing capital and halted new investments.

"Not only does this environment determine increases in factor inputs – labour and capital – but also influences the efficiency with which the two are combined in the production process, resulting in growth or a lack thereof."

The country's economic growth has been below 5% for two years largely due to inefficient use of factor inputs, especially capital. Slower investments led to a sharper fall in productivity, it said.There is a 50% chance that 6.5% growth could be achieved, provided the country gets a decisive mandate in the ensuing general polls, Crisil said.

A decisive mandate will create an environment for speedy resolution of policy bottlenecks, hasten reforms and crank up investment efficiency.

Demand for new homes in the 10 major cities has fallen around 6% annually over the past couple of years, mainly due to higher interest rates and reduced affordability. The participation of investors in residential house purchases has dropped, too, and in cities like the National Capital Region (NCR) and Ahmedabad, investor exits have put capital values under pressure. For a pointer, new home sales during 2013 was down 29% compared with the peak seen in 2007.

"We see demand reviving in key cities such as Pune and Bengaluru over the medium term, led by end-users. But the feel-good of the high-growth years is unlikely to return anytime soon."Crisil estimates a good 1.13 million units to be sold in 10 major cities over the next five years if India manages to log 9% GDP growth and just over 1.03 million units at 6.5%.

"Election outcomes don't impact the economy beyond improving sentiment. What matters are the policies that follow," Crisil said.

An improvement in investment efficiency, which has fallen drastically over the last two years, is expected to kick in with faster project clearances, implementation of stalled infrastructure projects and resumption of mining activities.

This, in turn, will support investment growth, especially when demand – both domestic and global – begins to rebound, improving capacity utilisation, thus laying the foundation for India's entry into a phase of healthier growth.

So the task before the new government is laid out clearly – the focus has to be on improving the efficiency of the economy by debottlenecking it.