You are here: Home » Economy & Policy » News
Business Standard

Truck operators revenue could be hit as economy slows down: Moody's

The losses to asset-backed securities (ABS) will also rise as the economy slows, said Moody's

Moody's report | Moody's Rating | Economic slowdown

Press Trust of India  |  Mumbai 

Truckers are neutralising this fall in dispatches through higher loading of agricultural produce, with early harvesting in this rabi season. Agricultural goods are exempt from GST and do not require generation of e-way bills
Representative Image

The ongoing economic growth slowdown may hurt trucking fleet operators' revenues and ability to repay loans, global ratings agency Moody's Investors Service warned on Thursday.

The losses to asset-backed securities (ABS) will also rise as the economy slows, it said.

GDP growth slipped to a six-year low of 5 per cent for the June quarter, leading many to worry about what will be sectoral impact of such a development.

"Soft consumption and weak services activity in India will constrain demand for freight transport by commercial vehicle operators, in turn, reducing operators' revenue and weakening their ability to repay loans," its analyst Dipanshu Rustagi said.

The agency said that most Indian auto ABS are backed by commercial vehicle loans, and past episodes of slowing economic growth such as during the 2012-14 financial years

have witnessed an increase in auto ABS loss rates.

It made it clear that ABS delinquencies have not "increased significantly" in the present slowdown.

However, slowdown, the performance of commercial vehicle loans backing ABS deals could deteriorate significantly if "economic conditions remain subdued for a prolonged period", Rastogi said.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, September 05 2019. 15:20 IST