Rating agency Moody’s Investors Service has said that implementation of the Goods and Services Tax (GST) and bridging large infrastructure deficit are a difficult task before the Indian government. However, Moody’s is positive that easing of constraints on investment coupled with RBI’s inflation targeting and ongoing efforts to clean up bank balance sheets could propel growth.
Moody’s Investors Service in its report stated that “Our positive outlook on India’s rating is based on our expectation of continued but gradual policy efforts to reduce the sovereign risks posed by high fiscal deficits, volatile inflation and weak bank balance sheets”. Moody’s Investors Service has further said that a history of double-digit inflation, elevated government debt, weak infrastructure and a complex regulatory regime have constrained India’s credit profile.
Indirect tax reform GST is currently stuck in the Rajya Sabha where the ruling NDA does not enjoy a majority. A single rate GST will replace central excise, state VAT, entertainment tax, octroi, entry tax, luxury tax and purchase tax on goods and services to ensure seamless transfer of goods and services.
Besides, the government is working on steps to modernise India’s infrastructure and is looking for avenues to fund development. It has set up a maiden sovereign wealth fund, NIIF, and is scouting for investors to buy 51 per cent stake in it. The government holds 49 per cent in NIIF.