Global giant Moody’s has expressed concern over what it called the risks of policy stagnation and the pace of reforms under the government headed by Narendra Modi at the centre.
This comes after Moody’s earlier forcast that Indian economy would grow by 7.5 percent at the end of current fiscal.
News agency PTI reports that the results of the latest polls conducted by Moody’s had showed “some disappointment” as far as the pace of reform and increasing concerns about the risk of policy stagnation under the administration of PM Modi was concerned. Specifically, almost half of the poll respondents identified sluggish reform momentum as the greatest risk to India’s macroeconomic story.”
Moody’s also said that it expected India’s weakened rural economy to remain subdued through the fiscal year ending March 2016, especially if the risk of below-average monsoon rainfall materialises.
“A sustained soft patch for India’s rural economy would weigh on private consumption and non-performing assets in the agricultural sector, (which is) a credit negative for the sovereign and banks,” Moody’s Vice President and Senior Research Analyst Rahul Ghosh was quoted by the news agency as saying.
Moody’s, however, stated that the recent policy changes were slowly taking effect and the positive impact of growth -enhancing reforms such as Make in India campaign, increased FDI limits in railways infrastructure, defence and insurance was only likely to take full effect over a multiyear horizon.
It further added, “The government’s recent policy agenda – including diesel price deregulation, lifting of the iron ore mining ban, the Coal Mines Special Provisions Bill and the Mines and Minerals Development and Regulation Bill – will benefit refining, metals, steel and power companies.”