"The fact about markets is, markets became euphoric, and were well ahead of reality... reality is better than it was one year go, but expectations of one year ago have to be tempered to the fact that they were sky high," Kotak Mahindra Bank's executive vice chairman and managing director told PTI.
Mr Kotak, however, exuded confidence that the economy was "on the right track", unlike some sections of India Inc which have begun to talk about disillusionment with the government.
Quite a few industry leaders, including eminent banker Deepak Parekh, have voiced their concern in the recent past that nothing much has changed on the ground.
Alluding to recent correction in indices, Mr Kotak said the "expectations are getting more in tune with the reality as (it) is".
"Gap between too high expectations versus a steadily better reality is getting bridged... The real economy will continue to show a growth but the gradient will be gradual but more sustainable and markets have to adjust this fact," he said.
The stock market benchmark Sensex breached the 30,000 mark in March this year, surging more than 7,700 points since the Modi government assumed office in May last year.
However, some hiccups in the recent past, especially emanating from the taxation concerns among foreign investors, have led to a correction in the stocks and the index currently stands at near 27,000 points.
Mr Kotak said the Modi government's 'minimum government and maximum governance' and work on ease of doing business makes him optimistic about the country and its economy.
"These are two wonderful philosophies and if we sustain this over long period of time, we will see progress in the country," he added.
However, success on this front depends strongly on the execution on the ground, he warned and assured that if it happens, there will be "significant progress".
India slipped to 142 among 189 countries in World Bank's ease of doing business and the Modi government has been repeatedly communicating the need to improve on the same.
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