Moody’s Investor Services has again warned the government on sluggish economic reforms.
“The Modi administration so far this year has been unable to enact legislation on key reforms, including a unified goods and services tax and the Land Acquisition Bill,” Moody’s said in a research report released on Wednesday.
“But despite these overall supportive domestic conditions for the country’s corporates, potential headwinds loom from a loss of reform momentum.”
This came after Moody’s Analytics, a research arm of the global rating company, stirred up controversies on the government’s dealing with minorities affairs, which in turn, would be chocking the reform processes.
The rating company sees the government’s inability to get reforms approved as a major hurdle.
It seems highly unlikely that the major reforms will get enacted by the upper house of the Indian parliament where the ruling coalition is in minority, it said. “A failure to implement these reforms could hamper investment amid weak global growth.”
By sector, Moody’s expects upstream oil & gas companies to benefit from lower fuel subsidy burdens, although low crude and domestic natural gas prices will continue to hurt profitability.
In the real estate sector Moody’s expects demand to improve in 2016 on the back of lower interests rates, although approval delays could push back project launches for property developers.