Presently india faces a multi-billion-dollar hit to its economy and a tarnished reputation as a place for multinationals to invest unless it can keep vodafone idea in business. vodafone idea, a joint venture between Britain's vodafone Group Plc and India's idea Cellular, is the most vulnerable of the mobile carriers ordered on friday to immediately pay billions in unpaid government dues and interest following a supreme court ruling.
It has said it cannot immediately pay the $3.9 billion it owes and its ability to survive was contingent on the government agreeing a flexible payment schedule. "A default of such a large scale could increase India's fiscal deficit by about 40 basis points," Aliasgar Shakir, a research analyst at Motilal oswal, said.
A 40 basis point increase in fiscal deficit roughly translates to a revenue loss of about 1 trillion rupees ($14.01 billion) for prime minister narendra Modi's government, when it is facing the country's first fall in direct taxes in decades.