"Services sector did see an impact of demonetisation

with growth sliding to 6.8 per cent from 8.2 per cent in Q2 FY17. The decline in services growth is attributable to financial, real estate and professional services category," a note from the bank said.

The Central Statistics Office (CSO) put the growth rate for October-December 2016 period at 7 per cent, compared to 7.4 per cent in the second quarter and 7.2 per cent in the first quarter.

The government also pegged GDP growth for FY17 at a higher-than-expected 7.1 per cent for the current fiscal despite note ban with agriculture sector doing exceptionally well, helping India retain the tag of world's fastest growing major economy.

Analysts at BofAML said the Reserve Bank needs to cut rates for pushing the growth number.

"We continue to point out that lending rate cuts are needed for a cyclical recovery. While reforms could push up potential over, say, five years, the immediate challenge is to get back to current potential growth," it said.

(This article has not been edited by DNA's editorial team and is auto-generated from an agency feed.)