Cutting corporate debt

Banks will struggle to grow in the coming quarters

Indian companies are deleveraging and the trend is likely to continue in the foreseeable future. As a recent report in this newspaper showed, in 2020-21, the debt-to-equity ratio of listed firms dropped to a six-year low of 0.59, compared to 0.73 in the previous year. Given the state of credit flow and economic activity, in general, it is likely that the process is continuing. This is in sharp contrast to the high-growth years, both before and after the global financial crisis, when Indian companies were accumulating debt to increase investment. A large proportion of that debt did not help firms