Moody's irked over pace of reforms under Modi govt

Global rating agency Moody’s on Tuesday flagged off concerns over the pace of reforms under the Prime Minister Narendra Modi government, saying there have been “some disappointment” over it.

In its latest edition of Inside India, a quarterly publication that looks at major credit trends in India, Moody’s Investors Service said that it expected India’s weak rural economy to remain subdued through the fiscal year ending March 2016, particularly if the risk of below-average monsoon rainfall materialises.

“A sustained soft patch for India’s rural economy would weigh on private consumption and non-performing assets in the agricultural sector, a credit negative for the sovereign and banks,” said Rahul Ghosh, Moody’s vice president and senior research analyst.

Rural income growth in India has been stuck in the mid-to-low single digits in 2015 to date, well off the 20 per cent plus rates clocked in 2011.

The slower rural income growth is partly the result of increased fiscal restraint by the central government, which Moody’s believes is unlikely to change in the coming quarters.