As the government failed to pass the Goods and Services Tax Bill in 2015, Moody’s Investors Service on Wednesday said that failure to implement reforms will hamper investments.
“Indian authorities have faced difficulties implementing high profile policy changes, such as the goods and services tax … A failure to implement reforms could hamper investment against the backdrop of weak global growth,” said Moody’s and its Indian affiliate ICRA Limited, in a joint statement.
Moody’s also said that India will remain among the world’s fastest growing major economies in 2016. It however, said that the market trends this year will depend on whether inflation remains under control and corporate profits revive.
“India enters 2016 on the cusp of a cyclical growth recovery, with inflation under control and the economy benefiting from lower commodity prices,” said Atsi Sheth, Moody’s associate managing director.
Sheth said these trends place India at an advantage relative to many similarly rated emerging market peers. “However, we believe that these advantages will only yield sustainable growth acceleration once Indian corporate and bank balance sheets are repaired, and if the private sector remains internationally competitive,” Sheth said.
Moody’s and ICRA pointed that non-financial corporates in India will benefit from a healthy domestic growth and accommodative monetary policy.
According to the statement, Moody’s expects upstream oil and gas firms to benefit from a lower fuel subsidy burden although low crude and domestic natural gas prices will continue to hurt profitability.
‘Credit metrics will stabilise’
Mumbai: Moody’s Inves-tors Service and its Indian affiliate ICRA said gradually improving operating environment for banks will lead to slower additions to problem loans over the next 12 to 18 months. As a result, banks’ credit metrics will stabilise, they said. “While non-performing loans may continue to rise, the pace of new impaired loan formation in the current fiscal will be lower than the levels seen in the past four years,” says Srikanth Vadlamani, VP and Senior Credit Officer, Moody’s. ENS