Government unlikely to implement major economic reforms: EIU

New Delhi: The government is unlikely to implement major reforms despite "prolonged economic slowdown" in the country and may continue to focus on Hindu nationalist themes for political dividends to make up losses in recent state elections, according to the Economist Intelligence Unit.

The country's gross domestic product (GDP) growth in the first quarter was 5 per cent and 4.5 per cent in the subsequent three-months period.

According to the Economist Intelligence Unit, fiscal constraints and price pressures will preclude fiscal and monetary stimulus in the short-term.

Meanwhile, emboldened opposition-controlled state governments are likely to obstruct the progress of major projects backed by the central government, further undermining the country's growth potential, it added.

"Despite the prolonged economic slowdown (real GDP grew by just 4.5 per cent year on year in July-September), the government is unlikely to implement major economic reform.

"Instead of unpopular economic measures, the ruling Bharatiya Janata Party (BJP) is likely to maintain its focus on popular Hindu nationalist themes as it seeks to rebound from its poor performance in recent state elections," the EIU said in its report.

The government has reacted defensively to the drumbeat of poor economic data in recent months, lashing out at critics and questioning the basis of some official reports.

In response to criticism from prominent businesspeople over the state of the economy, Finance Minister Nirmala Sitharaman warned that such rhetoric could harm India's national interest.

She separately suggested in late November that India was incapable of experiencing a recession.

Officials recently scrapped a government survey that showed an unprecedented decline in consumer spending between 2011-12 and 2017-18, arguing that the methodology was flawed.

Rather than responding more robustly to the economic slowdown, Prime Minister Narendra Modi and the BJP are likely to remain focused on divisive social issues that they believe will pay political dividends, the EIU added.