Implementation: UPA's Big Reforms Challenged

With the world keeping a close watch on India, the S&P’s was of the opinion that the coalition has become the minority in both the upper and lower Houses of Parliament. Their report titled ‘Asia-Pacific Sovereigns: A Bit Of Stability In The Sea Of Uncertainty’, foresees a one-in-three likelihood of a downgrade of the sovereign rating on India within the next 24 months. The agency forecasts a grim outlook despite the reform measures.  Standard & Poor’s had revised India’s credit rating from stable to negative in  April 2012 amid concerns of inflation ,political instability , economic slowdown and mounting debt. The IMF too, expressing similar sentiments slashed India’s growth rate to 4.9 percent. This could fuel negative foreign investment sentiment in an economy clamoring for new projects.

There have been some positive reactions to the reforms. The US Treasury Secretary, Timothy Geithner, lauding India’s initiatives said, "The reforms outlined by the government of India offer a very promising path to improving growth outcomes for the Indian economy."The Finance Minister P. Chidambaram while addressing concerns at the Economic Editor’s Conference promised further fiscal consolidation.

 Chidambaram, during interactions with U.S. Treasury Secretary ,Timothy Geithner , had expressed his concerns over the impact of the QE3 on commodity prices, as that will have a direct bearing on the government's and the RBI's efforts at controlling inflation and boosting growth.