Rein in hot heads: Moody’s

This is first comment by an international agency on the recent beef and other political controversies in the country. The Modi government is already facing protests from a segment of writers, historians, artists and scientists over alleged “growing intolerance” in the country.

Moody’s Analytics, the economic research and analysis division of Moody’s Corporation said that the BJP-led NDA government does not have a majority in the upper house to pass crucial reforms and has been met with an obstructionist opposition.

“But in recent times, the government also hasn’t helped itself, with controversial comments from various BJP members. While Modi has largely distanced himself from the nationalist gibes, the belligerent provocation of various Indian minorities has raised ethnic tensions,” said Moody’s Analytics in a report titled India Outlook: Searching for Potential.

It noted that along with a possible increase in violence, the government will face stiffer opposition in the upper house as debate turns away from economic policy. “Modi must keep his members in check or risk losing domestic and global credibility,” said Moody’s.

Moody’s Analytics is different from Moody’s Investors Service Inc, the credit ratings agency which is also a subsidiary of Moody’s Corporation.

Moody’s Analytics said that state election in Bihar could prove pivotal to Mr Modi’s leadership.

“Overall, it’s unclear whether India can deliver the promised reforms and hit its growth potential. Undoubtedly, numerous political outcomes will dictate the extent of success,” it said.

The report said that “consistent failure to deliver key economic reforms has faded the optimism. While global market sentiment has been down, Indian equities have also suffered from a loss in domestic sentiment,” said Moody’s Analytics.