Prime Minister Narendra Modi
Prime Minister Narendra ModiReuters

Given the disruptions seen in the first two weeks of Parliament's Monsoon Session, chances of passing of key reform bills by the Modi government this year look slim, according to the research arm of a leading global rating agency.

"Key reforms such as the land acquisition bill, flexible labour laws and the goods and services tax (GST) have failed to pass Parliament. And given the political see-saw, these are unlikely to be delivered until later this year or even 2016," Moody's Analytics said in a report.

In the previous session of Parliament, the Modi government was forced to delay the landmark GST Bill until at least July, after facing strong opposition in the Rajya Sabha, where it does not have a majority.

"Without a majority in the upper house, the ruling Bharatiya Janata Party's power has been nullified and the Opposition has blocked proposed reforms," the report titled - India's Outlook: Waiting for Reforms to Fuel Growth- said.

The Assembly elections scheduled in States such as Bihar, West Bengal and Tamil Nadu in the coming months are crucial for the National Democratic Alliance (NDA) government to increase its numbers in the Rajya Sabha.

The government's inability to pass these key reforms is expected to weigh on the prospects of Indian economy in a medium-to-long-term period. Moody's Analytics said the political infighting in the country is hampering the business confidence and could result in lower growth "if the government continues to over-promise and not deliver."

Passing of the land acquisition bill is crucial for the economy, as it expected to boost the investment in the country, the report said. "The land acquisition bill is a catalyst to investment. Passing the bill will improve India's business environment by speeding up the conversion of land for infrastructure use."

However, the firm said "India's true potential gross domestic product (GDP) growth lies somewhere near 10 percent, even though 7.5 percent GDP growth appears high."

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