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| Indian cos credit quality improving: Crisil |
| Press Trust of India / Mumbai Oct 15, 2009, 20:46 IST |
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The credit quality of Indian companies is now stabilising on the back of positive stock market movement and the government's monetary easing, a study by rating agency Crisil Ratings said.
Crisil's Modified Credit Ratio (MCR) increased to 0.88 for the first-half of 2009-10, after dropping to a nine-year low of 0.86 in 2008-09, the agency said in a report.
"Companies have easier access to funds, as a result of the government's fiscal and monetary easing, and positive stock market conditions; in addition, lower commodity prices have led to lower working capital requirements," Crisil said.
However, the recovery in credit quality will be gradual, and not necessarily be smooth, adds Crisil.
"There are signs that both the monetary and fiscal easing and the lower commodity prices are temporary. Additionally, unlike in the late 1990s, we see no prospect of a sudden and sustained upturn in economic conditions to lift corporate performance," Crisil Senior Director Raman Uberoi said.
The government is looking to reverse its "present supportive stance" of low interest rates and liberal monetary policies, the agency said.
The manufacturing sector's GDP is estimated to grow by 5.1 per cent in the quarter ended September. This is an improvement from the 3.4 per cent growth recorded in the first quarter of the current fiscal, CMIE said.
While, in third quarter growth is likely to accelerate to 6.1 per cent and further to 8.2 per cent in the fourth.
The upward revision in IIP will push up growth in GDP from the industrial sector to 6.5 per cent in 2009-10 from the 6 per cent projected earlier, it said.
On the agricultural sector, it said, "Agriculture and allied sector's GDP is projected to decline by 2.9 per cent in 2009-10. This is because of the failure of the southwest monsoon. This will the first fall in agricultural income in seven years."
Crop production in 2009-10 is projected to decline by 6.4 per cent. The sharp decline will be partially covered by a 4 per cent increase in income from livestock and fishing and 2 per cent from forestry and logging.
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