From Moody’s to OECD, global agencies hail Narendra Modi's reform drive; but all is not well with economy
Narendra Modi's massive crackdown on black money and counterfeiting through demonetisation has drawn praise from global agencies
Mumbai: For over past few months, it’s been raining good news for the Narendra Modi government ahead of crucial state assembly elections. The latest pat on Modi’s back for his sweeping economic policy reforms comes from none other than Organisation for Economic Cooperation and Development, OECD.
Third most trusted government in the world
The Paris-based agency says Modi leads world’s third most trusted government. The study that based its finding on such factors as sate of the economy claims three out of four Indians repose confidence in the Modi government, according to a report on news18.com.
Modi’s strict stand against corruption, his massive crackdown on black money and counterfeiting through demonetisation drive and swift action on many policy fronts have boosted peoples’ faith in his government.
OECD is not the only global agency that has lauded prime minister Narendra Modi’s quick policy decisions that promise an economic turnaround in long term.
Sovereign rating upgrade
Moody’s, the US based rating agency, in its latest findings which were unveiled on 17 November raised India’s sovereign credit rating by a notch from Baa3 to Baa2. The rating upgrade in foreign currency issuer rate comes after a gap of 13 long years which was last enhanced back in 2004.
The rating upgrade means, going forward, the country can offer a business friendly environment for foreign investors. It also means country can provide a safe business haven for overseas investors. With the upgrade, Moody’s changed the outlook on rating from positive to stable which is another shot in the arm for Modi government.
Ease of doing business
The World Bank, another global agency, has also hailed the present government’s policy initiatives in its ease of doing business study that evaluated 190 economies on various parameters. According to the WB, India has jumped 30 ranks in ease of doing business index from 130th position to 100th. One-off policy events like demonetisation last year and roll-out of the Goods and Services Tax from 1 July, boosted confidence in the government.
Most popular leader in India
The Pew Research Centre is not far behind when it comes to saying yes to prime minister Narendra Modi’s efforts for making India a growth engine. Pew in its study has found nine out of ten people in India support Modi as prime minister. Pew identified a group of 2,464 people and asked them about Modi’s leadership qualities. “Since 2015, Modi’s popularity is relatively unchanged in the north, has risen in the west and the south and is down slightly in the east," Pew Research said in its report.
But, all is not well
Despite all these accolades, there are some factors that bear testimony to the fact that all is not well with the Indian economy. Huge amount of bad loans has caused damage to the investment activities. It has particularly hammered banks’ ability to lend due to which there are funding, particularly for small and medium enterprises, at record low levels.
The much needed reforms like demonetisation and the Goods and Services Tax have slowed down the pace of economic growth. In June quarter this year, the GDP came in at a three-year low of 5.7 percent. The roll-out of the new indirect tax regime GST affected government’s tax collections.
The low tax collection level was partly the result of technical glitches in online filing of GST returns. However, the government collected taxes under the new regime in the range of Rs 90,000 crore to Rs 94,000 crore for each of the first four months of GST roll-out.
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Goods and Services Tax collection in July 2020 was Rs 87,422 crore. Sequentially, it slipped below Rs 1 lakh crore mark to Rs 92,849 crore in June 2021