Moody’s stated on Tuesday that owing to its young workforce, growing urbanization, and increased government spending on infrastructure, India is set to maintain its position as the fastest growing economy among the G20 countries for the next few years.
In a positive assessment of India’s growth trajectory, the American credit rating agency estimated that India’s Gross Domestic Product surpassed the USD 3.5 trillion milestone in 2022.
Moody’s cautioned that the country’s economy faces several concerns, as bureaucratic hurdles could impede business establishment processes and hinder economic growth.
According to Moody’s, a sluggish bureaucracy might lead foreign investors to explore alternative Asian markets such as Indonesia and Vietnam.
Moody’s Investors Service stated, “India’s decision-making process involving higher bureaucracy will diminish its appeal as a foreign direct investment destination, particularly when compared to other developing economies in the region.”
The credit rating agency further emphasized that restricted progress in liberalizing business regulations could also pose a threat to India’s growth potential.
The credit rating agency pointed out that the absence of clear timelines for obtaining approvals for land acquisition, regulatory clearances, license procurement, and business setup can significantly extend the duration of projects.
Nevertheless, the agency acknowledged the reforms implemented by the Indian government, which include introducing flexibility in labor laws, enhancing efficiency in the agricultural sector, increasing investment in infrastructure, incentivizing manufacturing investment, and strengthening the financial sector.
