After global rating agency Moody’s Investors Service upgraded India’s local and foreign currency issuer ratings, Deepak Parekh of HDFC credited Prime Minister Narendra Modi’s efforts in carrying out transformational reforms in the country. In an interview to ET Now, Deepak Parekh, the veteran Chairman of HDFC said that the upgrade indicates that the seriousness of the government to carry through big transformational reforms has been noticed. In fact Moody’s observed in its report, “Moody’s believes that those (reforms) implemented to date will advance the government’s objective of improving the business climate, enhancing productivity, stimulating foreign and domestic investment, and ultimately fostering strong and sustainable growth. The reform program will thus complement the existing shock-absorbance capacity provided by India’s strong growth potential and improving global competitiveness.”
Deepak Parekh lauded Prime Minister Narendra Modi’s efforts for implementing GST. Terming GST as a complex tax system, Deepak Parekh said that Modi was able to push through the reform. Moody’s too acknowledged the efforts surrounding the newly introduced indirect tax regime. Moody’s said that implementation of GST has undermined growth over the near term, adding that it expects real GDP growth to moderate to 6.7% in the fiscal year ending in March 2018 (FY2017).
Moody’s says that GST will “promote productivity by removing barriers to interstate trade.” Further, Moody’s said, “Most of these measures will take time for their impact to be seen, and some, such as the GST and demonetization, have undermined growth over the near term.” Apart from GST, Moody’s report also points towards the government’s efforts regarding PSU bank recapitalisation. After the Narendra Modi-led government announced a mega plan of Rs 2.11 lakh crore to recapitalise the stressed public sector banks last month, Moody’s recognised that “measures to address the overhang of nonperforming loans (NPLs) in the banking system,” saying it will advance the government’s objective of improving the business climate.
In an interview to Livemint, Deepak Parekh, Chairman of HDFC had said last month, “This is an Indian TARP (Troubled Assets Relief Programme) and it has done well because this Rs 2.11 trillion is a two-year thing. So the government has taken care of not just current NPAs but 5-10% that may come up.This is a big bang reform. The equity they put in will increase value for them.”