Resistance from opposition parties has not altered Modi government’s outlook for reforms: Moody’s

MUMBAI: Prime Minister Narendra Modi government’s reform agenda is on track despite some loud opposition on certain policies, Moody’s said in its research report.

Much of the public appears to be generally supportive or tolerant of the government’s policy decision, despite the initial inconvenience. Meanwhile, resistance from opposition parties has not materially altered the outlook for reforms the report said.

This despite the fact that there is an economic uncertainty and demonetisation has raised some resentment against the government. “In addition to economic uncertainty, demonetization raised questions about prospects for future reforms, due to the potential for popular discontent and resistance from opposition parties in parliament,” the report said.

According to the report GST could be one of the biggest game changer for the Indian government and the government seems to have managed it quite well.

“Recent progress on the pending Goods and Services Tax (GST) reform and Finance Minister Arun Jaitley’s 1 February 2017 budget peech to parliament both underscore the government’s commitment to reform in the wake of demonetization. Despite initial opposition from some states that cited demonetization as a basis for indefinitely postponing implementation of the GST, in January 2017 the central government and states reached agreement on a revised target implementation date of 1 July 2017,” the report added.

Meanwhile, despite calls from some economists and politicians to significantly increase government spending to offset the temporary rag on growth from demonetization, the budget emphasized prudence and continued gradual fiscal consolidation it added.

“We view the budget as consistent with the government's ongoing commitment to fiscal consolidation and balanced growth, a credit positive for the sovereign,” said the report.