The United States released a report on Tuesday where it said that the Narendra Modi-led government has been “slow” in achieving its estimated growth of 7.5% and that the rate itself may be “overstated”. In the report, Investment Climate Statements for 2016, the US State Department said that such slow economic reforms may have cost the Bharatiya Janta Party government the support of many investors, reported PTI.
"Ostensibly, India is one of the fastest growing countries in the world, but this depressed investor sentiment suggests the approximately 7.5% growth rate may be overstated," said the report produced by the Bureau of Economic and Business Affairs of the State Department.
On the other hand, report recognised the role of Reserve Bank of India Governor Raghuram Rajan for steering the economy toward growth. "The monetary stewardship of Raghuram Rajan, the respected Governor General of the Reserve Bank of India, further boosted investor sentiment," the report said.
The report said that the Indian economy was restricted because of conflicting rules and a complex bureaucratic system. "India has a decentralised federal system of government in which states possess extensive regulatory powers. Regulatory decisions governing important issues such as zoning, land-use, and the environment vary between states. Opposition from labor unions and political constituencies slows the pace of land acquisition, environmental clearances, and investment policy," it said.
However, the US State Department showered praise on the government for streamlining bureaucracy and easing Foreign Direct Investment norms. Of the many economic reforms that have still not seen the light of day are the land acquisition Bill and the Goods and Services Tax Bill.