Modi government has delivered on macro front, but further reforms needed: Standard Chartered

European investment bank Standard Chartered said that the Narendra Modi government in its first year has taken important steps to reduce India’s macroeconomic vulnerabilities and improve the ease of doing business. It, however, added that further structural reforms are needed.

The investment bank said the government has met the markets’ high expectations in select areas, which include reducing corruption and maintaining a ‘clean’ govermment image, liberalising FDI rules in sectors such as railways, defence, pensions, insurance and construction. The reforms include overhauling the bureaucracy to hasten decision-making, and improve the ease of doing business. Policies also include deregulating diesel prices to reduce fuel subsidies, providing clearances to stalled projects, and reviving road projects.

Standard Chartered said “a lack of big-bang reforms and slow progress on land acquisition, GST implementation and reducing tax uncertainty have been disappointing.”

The investment bank expects progress on the land acquisition law and GST implementation in the next year to restore investor confidence. Faster progress on agricultural pricing, bank recapitalisation and the ‘Make in India’ initiative would positively surprise people, it said.

It said “progress on reforms will likely lead to a sovereign rating upgrade in the next 12-18 months. We have a Positive outlook on Indian Government Bonds, and a medium-term overweight weighting on the Indian rupee.”