With general elections due next year, the UPA has drawn up plans to project itself as a business-friendly regime, as investors are side-stepping India following criticism that the government has been unable to push through enough reforms to revive a stalling economy.
A white paper on economic reforms, under preparation, lists out moves such as allowing FDI in multi-brand retail.
Last week, global ratings agency Standard & Poor’s (S&P) maintained a “negative” outlook on the Indian economy and cautioned that it could downgrade the country’s sovereign ratings if the next government does not appear capable of reversing the low economic growth.
India’s S&P rating of BBB- is just a notch above “junk”, which carries a higher risk of default by the government, but placed the onus squarely on the next government to turn the economy around.
S&P’s commentary came days after investment banking giant Goldman Sachs projected a bullish run in India’s stock markets aided by budding recovery signs such as better corporate profitability and also a probable return of a BJP-led National Democratic Alliance in the 2014 elections.
The white paper on reforms is aimed at blunting criticism that not much has been done on the reforms front.