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A broad-based recovery is under way in the Indian industry, according to Crisil Ratings, which recently upgraded its credit quality outlook to 'positive' from the earlier 'cautiously optimistic'. The credit ratio, which illustrates the number of upgrades to downgrades, rose to over 2.5 times in the first four months of this fiscal compared to 1.33 times in the second half of fiscal 2020-21, it said.
The rating agency said in a statement that its study of 43 sectors (excluding the financial sector), which account for 75 per cent of the overall ₹36 lakh crore in outstanding debt, shows the current recovery is broad-based.
Twenty eight sectors are set to witness a recovery in demand back to pre-pandemic levels by the end of this fiscal, while for the remaining ones, it will be upwards of 85 per cent, it said.
The revision in outlook is driven by strong economic growth both domestically and globally and the estimate that domestic demand will be buoyant even if a third COVID-19 wave arrives, courtesy, localised containment measures, it added.
The financial sector is also better placed today than a year back, given less stringent lockdowns and the systems and processes put in place to manage collections amid the restrictions.
Besides regulatory relief measures, a secular deleveraging trend has provided India Inc with the balance sheet strength to cushion the impact on their credit profiles, its senior director Somasekhar Vemuri said.
The financial sector is also better placed today than a year back, given less stringent lockdowns and the systems and processes put in place to manage collections amid the restrictions. Support from the government and the Reserve bank of India through emergency credit lines, moratorium, and one-time debt restructuring for pandemic-affected companies have helped banks and non-banks curb a rise in non-performing assets, it said.
Higher capitalisation levels, better provisioning cover and increased access to liquidity have helped credit profiles in the financial sector, it said, flagging unsecured retail, and micro, small and medium enterprises as the loan segments that will witness higher stress.
Going ahead, the key monitorable from here would be a fat tail in the second wave, or an intense third wave, it said, adding rainfall distribution will also need to be observed.
Fibre2Fashion News Desk (DS)
A broad-based recovery is under way India's industry, said Crisil Ratings, which upgraded its credit quality outlook to 'positive' from 'cautiously optimistic'. The credit ratio, which illustrates the number of upgrades to downgrades, rose to over 2.5 times in the first four months of this fiscal compared to 1.33 times in the last fiscal's second half.