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FDI reform measures a major macroeconomic reform: Fitch Ratings

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Chennai: Citing the liberalisation of foreign direct investment (FDI) rules by the central government on November 11, credit rating agency Fitch Ratings termed it a significant structural macroeconomic reform.

In a statement issued on Thursday, Fitch Ratings said: “This, together with an earlier announced plan to restore the financial viability of the country’s power distribution companies (discoms), indicates that India’s reform momentum remains intact.”

According to Fitch Ratings, the key changes in the FDI regime announced by the central government include upping the limit for FDI approvals from the Foreign Investment Promotion Board (FIPB) to Rs.50 billion from Rs.30 billion; increasing foreign-investor limits in several sectors including private banks, defence and non-news entertainment media; and allowing property developers to sell completed projects to foreign investors without lock-in periods.

As per the package for the power discoms, Fitch Ratings said the state owned power distribution utilities that opt for the package will see 76 percent of their debt transferred to states.

The balance 25 percent will be issued as state-guaranteed discom bonds.

This would happen after an agreement is singed between the power companies, the union ministry of power and the state governments.

“This could lead to higher general government debt of up to two percent of GDP (gross domestic product) but this is not sufficiently significant to have an effect on India’s ratings, especially with the potential positive longer-term effects of the reforms,” Fitch Ratings said.

“Importantly, the reforms create an incentive structure for state governments to reduce losses at discoms by requiring the state governments to assume a certain share of losses at these entities,” the agency said.

According to Fitch Ratings, these changes align with the government’s broad-based reform agenda and should support investment and real GDP growth over the long term.

“We forecast Indian real GDP growth to come in at 7.5 percent this year and accelerate to 8.0 percent in 2016 and 2017,” Fitch Ratings said.

However, other big reforms such as the implementation of a national value added tax, will require a two-thirds approval in the legislature and face stiffer political obstacles, Fitch Ratings said.

According to it, the passage of goods and service tax bill is important for the Indian economy as it would diminish the inter-state trade barriers.

(IANS)

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Now India is One of The Most Open Countries for FDI: Narendra Modi

Modi had conceptualised the summit as Gujarat Chief Minister in 2003 to position the state as an ideal investment destination after the 2002 riots.

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Prime Minister Narendra Modi on Friday said that his government had made doing business in India easier, cheaper, faster and smarter with his term accounting for almost 45 per cent of the Foreign Direct Investment (FDI) that the country received in the last 18 years.

Speaking at the inaugural function of the Vibrant Gujarat Global Summit 2019 here, he said India was now one of the most open countries for FDI with over 90 per cent approvals put on the automatic route.

“In the last four years, we have received FDI worth $263 billion. This is 45 per cent of the FDI received in last 18 years,” Modi told the gathering.

He said India was among the top 10 FDI destinations.

FDI
PM Speaks on FDI www.news.civilserviceindia.com

Modi, who is on a three-day visit to his home state to throw open his pet biennial Vibrant Gujarat Global Summit, said the India of today was a land of “immense opportunities” being the only place that offered democracy, demography and demand.

“Fifty cities in India are ready to build metro rail systems. We have to build 50 million houses. The requirement of road, rail and waterways is enormous. We want world class technologies to achieve our goal in a faster and cleaner way. India is thus, a land of immense opportunities.” he said.

The Prime Minister said the challenge for India, as in most emerging economies, was to grow horizontally as well as vertically to ensure that the benefits of development spread to regions and communities that have lagged behind while also meeting enhanced expectations in terms of quality of life, quality of services and quality of infrastructure.

“We are well aware that our achievements, here in India, will directly impact one sixth of humanity.”

Modi said his government had removed the barriers which were preventing India from achieving its full potential and now it was ready for business like never before.

The government has made doing business easier. cheaper, faster and smarter, he said.

“In the last four years, we have jumped 65 places in the global ranking of World Bank’s Doing Business Report. From 142 in 2014 to 77 now, but we are still not satisfied. I have asked my team to work harder so that India is in the top 50 next year.

“We have also made doing business cheaper. The historic implementation of Goods and Services Tax and other measures of simplification and consolidation of taxes have reduced transaction costs and made processes efficient.

“We have also made doing business faster through digital processes, online transactions and single point inter-faces,” he said.

According to LocalCircles, each person who voted in the survey is registered with the portal with their detailed information and in many cases they shared their residential address.
Doing business in India now easier, cheaper, faster, smarter: Modi

He said his government had made doing business smarter by insisting on IT based transactions and digital payments including direct transfer of government benefits.

Modi added that he understood that being a young nation, India needs to create job opportunities and better infrastructure, which are both linked with investments.

“Therefore, in recent years, there has been unprecedented focus on manufacturing and infrastructure,” he said.

Listing the achievements of his government, he said for the first time, India had become a net exporter of electricity, had installed transmission lines at an unprecedented pace and had doubled the speed of road construction with rural road connectivity now at 90 per cent.

Also Read: PM Narendra Modi to Unveil National Film Museum in Mumbai

“At 7.3 per cent, the average GDP growth, over the entire term of our government, has been the highest of any Indian government since 1991. At the same time,the rate of inflation at 4.6 per cent is the lowest for any Indian government since 1991, when India began its process of liberalisation,” he said.

Modi had conceptualised the summit as Gujarat Chief Minister in 2003 to position the state as an ideal investment destination after the 2002 riots. (IANS)