They have been doing well in ODIs, but Ganguly doesn't think that India's Test team is on the decline either.
"You need to give them some time and as I said, they have played overseas and at home in the past 10-11 years. Yes, we have had a hiccup in Australia and England but we have an opportunity this season in South Africa, New Zealand, England and Australia to improve our performance and I don't agree with the tag," Ganguly said.
"Yes, They are a very good limited overs side but in Test matches too they have given results," he added.
Ahead of what is going to be a gruelling tour of South Africa, Ganguly had a piece of advice for Mahendra Singh Dhoni and his men.
"He (Dhoni) has been to South Africa before and he knows how tough it is. It is not going to be just a one-day combination as Test matches are a different ball game. South Africa have got a great attack, they are a very good side at home. India have to play really really well.
"India have been a good touring team in the past 10-11 years apart from the hiccups in England and Australia. So, I can suggest that play positive and realise that it is a hard tour. It will be a tour that will challenge a lot of players and you have to raise your game," he said.
As discussion turned to his long-time teammate Sachin Tendulkar, Ganguly said the decision of retirement from Test cricket should be left to the Mumbaikar himself.
Asked if Tendulkar should retire after the South Africa tour, Ganguly said, "It's his decision. He has done a lot for world cricket and let him decide the time as he deserves it.
On Tendulkar becoming a Rajya Sabha member, the Kolkatan said: "I asked Sachin what is he doing in Rajya Sabha? Obviously he was nominated by the President of India, I hope he does well in what ever he does as I have a tremendous respect for him for what he has achieved for Indian cricket.
"I have seen him closely when he was at his best, I have got terrific admiration for him. For whatever he does, he does it well and he makes his family and his country proud.
He also hoped Tendulkar gets the Bharat Ratna. "He is India's Bharat Ratna!" Ganguly said.
Ganguly did not rule out the possibility of currently out-of-favoured players like Virender Sehwag, Yuvraj Singh, Zaheer Khan and Harbhajan Singh making a comeback to the Indian team.
"Yuvraj Singh has been India's great ODI player, Virender Sehwag is probably the best opening batsman I have seen after Sunil Gavaskar, his records speak about his ability. Sehwag is 32-33, you can't write them off. Will they make a comeback, only time will tell because it depends on how they play and how many runs they get."
Ganguly said he was not interested in joining politics. "I don't want to be in politics, I want to be involved in the game as it gives me a lot of happiness and will find out more opportunities and make the most of it."
Talking about controversial pacer S Sreesanth, who was jailed on charges of spot-fixing in this year's IPL, Ganguly said it will be a complete waste of talent if the allegations against him are proved.
"He has done well as a Test bowler but had been a bit inconsistent which was something to do with his temperament. But if things (allegations of spot-fixing in IPL) are proved, then it is a complete waste of talent," Ganguly said.