S038;P cut wake-up call for govt: India Inc

Samp;P's lowering of outlook is wake-up call for govt on reforms,especially FDI: India Inc.

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India Inc today said Samp;P8217;s lowering of India8217;s rating outlook to negative is a 8220;wake-up call8221; and asked the government give a thrust to reforms,especially on FDI and tax fronts.

8220;Government should take measures to push for reforms especially in the areas of FDI,GST and DTC,8221; Confederation of Indian Industry CII said in a statement.

Also,further opening up of sectors like aviation and insurance to FDI would help in improving foreign capital inflows and also improve investors8217; sentiment,it added.

Samp;P has lowered India8217;s rating outlook from stable BBB to negative BBB-. The agency has warned of a downgrade if there is no improvement in the fiscal situation and political climate.

Another industry body Assocham said the government should keep its political compulsions away and demonstrate that the reforms process is well on track.

8220;Clarity must emerge soon on policy frameworks and key legislations like the DTC and GST besides norms for FDI in key sectors like multi-brand retail and pensions,8221; it said.

Assocham also said that fiscal consolidation is 8220;must8221; to reverse economic indicators.

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8220;This will include removing subsidies for fuel,fertilisers and social schemes,8221; it added.

Research firm Edelweiss said the lowering of outlook is a warning of increasing vulnerabilities and it could impact rupee and may raise external borrowing cost for some of the corporates.

The company said that the Samp;P8217;s action could exert pressure on the government to act on fiscal front like raising diesel prices.

Chief economist with Bank of Baroda Rupa Rege-Nisture said the lowering of outlook 8220;is a wake up call,but not very alarming. Government should focus on fiscal consolidation programme and bring down the subsidy bill.8221;

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Reacting to the Samp;P action,Finance Minister Pranab Mukherjee today said that it is a 8220;timely warning8221;,but there is no need to panic as the government is committed to economic reforms.