S&P said its views of April, when it downgraded India's outlook to negative, and of June, when it used strong words for actions by policy- makers to avoid a downgrade to junk status, remain unchanged
Mumbai: Ratings agency Standard & Poor's (S&P), which in June had threatened to downgrade India's sovereign ratings to junk status, on Monday welcomed big-ticket reform measures by the Government over the weekend, saying the steps would serve as a medium-to-long term positive for the macroeconomic conditions, reports PTI.
"If the measures proposed by the Government are implemented, we would expect a medium-to-long-term positive impact on the macro-economy," Takahira Ogawa, Director for sovereign ratings at S&P said in a note.
The agency, however, maintained that its views of April, when it downgraded the country's outlook to negative, and June, when it used strong words for actions by policy- makers to avoid a downgrade to junk status, remain unchanged.
In a string of bold initiatives, the Government, accused of a "policy paralysis", first announced a steep 12%, or Rs5 per litre, increase in the regulated diesel prices on Thursday and a cap on subsided cooking gas usage.
The next day, it followed this up with a liberalisation of foreign holding caps in the aviation, multi- brand retail, non-news broadcast media and power exchanges. It also announced a plan to divest its stake in five companies.
In the note, Ogawa raised questions over the efficacy of these measures. "We believe that the Government's recent announcement on foreign direct investments is an encouraging development, but at this stage it is still uncertain whether these measures can be implemented or nor."
He specifically pointed out to the liberty given to a particular state whether it wishes to adopt the changes in the multi-brand retail FDI or not.
"Hence, the actual impact from this measure might be less than expected," he said on FDI in multi-brand retail.
Similarly, the proposed divestment of PSUs, he said, "depends on the actual implementation of the plan."