India's GDP will reach $3.5 trillion in 2022, but bureaucracy in decision-making may make it less desirable as a location for FDI, according to Moody's

India's GDP will surpass USD 3.5 trillion in 2022, and it will be the G-20 economy with the fastest growth over the next several years, but reform and regulatory impediments may prevent investment, according to a report released on Tuesday by Moody's.
The US-based rating agency said in a study paper that bureaucracy might hinder the approval procedures for getting licenses and establishing enterprises, extending project gestation.
“India's higher bureaucracy in decision-making will reduce its attractiveness as a destination for foreign direct investment (FDI), especially when competing with other developing economies in the region, such as Indonesia and Vietnam,” stated Moody's Investors Service.
It was said that the need for houses, cement, and new automobiles would be fueled by a large, youthful, and educated workforce, growing nuclear families, and urbanization.
Government expenditure on infrastructure would support cement and steel while India's pledge to net-zero energy consumption will encourage investment in renewable energy, it said.
India's capacity will still behind China's by 2030, according to Moody's, even if demand in the industrial and infrastructure sectors would increase by 3–12% yearly over the next ten years.
The report said that despite the economy's promising future, there is a chance that the rate of investment in India's industrial and infrastructure sectors might decline due to a lack of economic liberalization or a more gradual application of policy.
Lack of confidence over the length of time required for regulatory clearances, getting licenses, and establishing companies may significantly extend project gestation. The limited multilateral liberalization of regional trade agreements in India would also affect foreign investments in the nation, it said.
Although there are rising dangers to their effectiveness, India's government's ongoing attempts to curb corruption, formalize economic activity, and strengthen tax collection and administration are positive.
According to Moody's, policies put in place over the past few years, including those introduced during the pandemic to make labor laws more flexible, increase agricultural sector efficiency, increase infrastructure investment, encourage manufacturing sector investment, and fortify the financial sector, would result in higher economic growth if they were carried out successfully.

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