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Title:Reforms delay may hit investment: Moody's

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NEW DELHI: A failure to implement reforms could hamper investment in India amid weak global growth, global ratings agency Moody's Investors Services cautioned on Wednesday.

It is highly unlikely that major reforms would be enacted in the upper house of Parliament where the ruling coalition is in a minority, Moody's said, adding that despite overall supportive domestic conditions for the country's companies, potential headwinds loom from a loss of reform momentum. The Modi administration so far this year has been unable to enact legislation on key reforms, including a unified Goods and Services Tax (GST) and the Land Acquisition Bill, it said. The government hopes to get the GST Constitution Amendment bill approved in Parliament and is keen to push the legislative business. It has reached out to the opposition parties to forge a consensus and ensure the passage of the crucial GST bill. The government has identified implementation of GST as a key reform initiative.

Moody's Investors Service says that most non-financial corporates in India (Baa3 positive) will benefit from strong domestic growth and accommodative monetary policy, although weak global growth and a potential US rate hike will weigh on businesses. "Healthy 7.5% GDP growth for FY17 and a pick-up in manufacturing activity will be broadly supportive of business growth," says Vikas Halan, a vice president and senior credit officer at Moody's. "However, the corporates remain vulnerable to the volatile Indian rupee as against the US dollar and to low commodity prices, which has in turn led to a sharp decline in external trade," said Halan, while releasing the agency's 2016 outlook presentation for Indian non-financial corporates.



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