In Q1, India's GDP shrank by a staggering 24 per cent year-on-year amid the imposition of one of the most stringent global nationwide lockdowns.
Global ratings agency, Fitch Ratings, said the 180 days past due (dpd) two-wheeler loans (loans where EMIs are overdue for over 90 days) have reached as high as 6 per cent of original principal outstanding in some pools.
The Reserve Bank on Wednesday retained the GDP growth forecast at 9.5 per cent for the current fiscal but cautioned that the economic recovery is not yet strong enough to be self-sustaining and durable.
Moody's Investors Service on Tuesday slashed India's growth forecast for the current financial year to 9.3 per cent saying that the second wave of coronavirus infections hampers economic recovery and increases risk of longer-term scarring. Moody's, which has a 'Baa3' rating on India with a negative outlook, said obstacles to economic growth, high debt and weak financial system contrain sovereign credit profile. The US-based rating agency had in February forecast a 13.7 per cent economic growth for the current fiscal (April 2021-March 2022).
Sitharaman's Budget missed deficit target for the third year in a row, pushing shortfall to 3.8 per cent of GDP in the current fiscal as compared to 3.3 per cent previously planned.
Bharti's ratings headroom is likely to improve with an equity infusion, planned asset sales and growing EBITDA from Africa.
According to Fitch, the scheme could open a window for banks to build capital buffers while putting off full recognition of COVID-19 pandemic's impact on loan portfolios, but is reminiscent of a strategy adopted over 2010-2016 that delayed and exacerbated problems for banks.
There are various estimates of India's debt to GDP ratio, but the consensus is that that it would be over 80 per cent at the end of the current fiscal year.
Fitch Ratings on Monday said it expects a moderately worse sector outlook for Indian banks for the next fiscal beginning April 1 based on muted expectations for new business and revenue generation, and deteriorating asset quality. Fitch believes that the disproportionate shock to India's informal economy and small businesses, coupled with high unemployment and declining private consumption, have yet to fully manifest on bank balance sheets. The rating agency said the impact of the COVID-19 pandemic is likely to pose challenges to Indian banks' improving financial performance once asset-quality risks manifest in the financial year ending March 2022.
Fitch Ratings on Monday said uncertainty over the bidder consortiums and process complexity, including valuation, may lead to potential delays in privatisation of India's second-largest fuel retailer, Bharat Petroleum Corporation Ltd (BPCL). Affirming BPCL's rating at 'BBB-' with a negative outlook, Fitch said it continues to treat the potential divestment of the company by the Indian government as an event risk. "Bidders are conducting due diligence, but uncertainty over the bidder consortiums and process complexity, including valuation, may lead to potential delays.
On government's last week's announcement of revamping of PSU banks, Fitch Ratings said the move is "credit positive, but risks remain".
Capital needs are likely to increase substantially each year.
The Indian economy remains on track to regain its position as the world's fastest-growing major economy after official estimates on Friday put the expansion at a tempered 9.2 per cent this fiscal amid concerns over the impact of a resurgent virus on the fragile recovery. The growth in the gross domestic product (GDP) of 9.2 per cent in April 2021 to March 2022 fiscal (FY 2021-22) given by the National Statistical Office (NSO) in its first advance estimate compares with 9.5 per cent expansion forecast by the Reserve Bank of India (RBI) last month. The economy had contracted by 7.3 per cent in the previous financial year.
In its latest monetary policy report released recently, RBI had said credit growth is likely to remain modest, reflecting weak demand and risk aversion due to the disruptions caused by the coronavirus pandemic.
Finance Minister Arun Jaitley said government would continue reforms by taking executive actions.
Taking note of the government's efforts to contain fiscal deficit, Fitch Ratings revised India's Outlook to Stable from Negative and affirmed 'BBB-' rating.
The comments come a day after Fitch Ratings had warned the setback for the Congress party in recent state elections could imperil the fiscal deficit target by tempting the government to have less restraint on spending.
The safest banks are those that have shown their strength in times of turbulence.
Higher food prices can accelerate broader inflation by pushing up wages, while negatively impacting the government finances and reducing monetary policy flexibility, Moody's said in a report.
Govt needs to stick with its stated agenda and consolidate public finances.
The comments from Fitch sovereign analyst Art Woo sent the rupee lower, reinforcing worries that India is still at risk of losing its investment-grade rating from the credit agency.
Fitch Ratings has revised India's GDP growth estimate to 12.8 per cent for the fiscal year beginning April 1 from its previous estimate of 11 per cent, saying its recovery from the depths of the lockdown-induced recession has been swifter than expected. In its latest Global Economic Outlook (GEO), Fitch said revision is on the back of "a stronger carryover effect, a looser fiscal stance and better virus containment." "India's second half of 2020 rebound also took GDP back above its pre-pandemic level and we have revised up our 2021-2022 forecast to 12.8 per cent from 11.0 per cent," it said. "Nevertheless, we expect the level of Indian GDP to remain well below our pre-pandemic forecast trajectory."
Demand for passenger vehicles, which has been on a downhill so far this year, will continue to remain sluggish through the first half of 2014 due to high interest rates which has weakened consumer sentiment, says a Fitch Ratings report.
Prime Minister Shinzo Abe has made reviving the economy his government's top priority, but his spending promises have raised concerns that Japan's public debt burden, already the worst among major economies, could deteriorate further.
S&P Global Ratings has forecast India's economy to shrink by 5 per cent in the current fiscal. It, however, has projected GDP growth to be 8.5 per cent in 2021-22 and 6.5 per cent in 2022-23.
The proposed reorganisation plan by Reliance Industries Ltd to transfer its refining, marketing and petrochemical (oil-to-chemicals) businesses to a wholly-owned subsidiary is a step towards facilitating participation by strategic investors in the unit, Fitch Ratings said on Tuesday. The reorganisation of the business in Reliance O2C Limited (O2C) "will have a neutral impact on RIL's credit metrics and rating," it said in a statement. The transfer will be on a "slump sale basis", subject to attaining the requisite approvals.
US private equity firm I Squared Capital is dropping out of the race to buy India's second-largest state oil firm, Bharat Petroleum Corporation Ltd (BPCL) owing to a complex deal structure and lack of financial backers for the transaction, sources said. I Squared Capital through its Indian arm, Think Gas was among the three suitors that had evinced interest in buying the government's near 53 per cent shareholding in BPCL. "The company has made a decision not to participate in the financial bidding," a source with direct knowledge of the development said.
Rates India 'BBB-' with a negative outlook.
Global agency Fitch on Monday lowered the rating outlook of public sector companies including NTPC, SAIL and IOC to negative but said the downgrade of India's credit outlook to negative would not impact the rating of Reliance Industries.
Fitch Ratings said with GDP growth of 6.5% and WPI-based inflation of 8.8%, India may have entered into a stagflation period in 2011-12.
Ratings firm Fitch on Wednesday assigned a stable outlook to the Indian auto components sector in 2012 and said it is expected to perform well on the back of demand from original equipment manufacturers for localised content.
Fitch Ratings on Monday said the plan to privatise two state-owned banks in the current financial year ending March 2022 could face delays amid renewed challenges for the Indian banking sector due to the second wave of Covid-19. The government in the Budget announced plans to privatise two public-sector banks. NITI Aayog has been entrusted with the task of selecting the banks and one general insurance company for the privatisation.
Fitch says possibility of downgrading India's sovereign rating is more than 50 per cent.
Responding to what is widely felt by the political establishment in Europe to be the "destabilising" role played by credit ratings agencies in the ongoing euro zone crisis, the European Commission unveiled measures to curb their power.
Bombay Dyeing & Manufacturing Co Ltd said Fitch Rating India Pvt Ltd affirmed F1 + (Ind) rating to its short-term debt program.
Online travel portals and airlines say the demand from companies is being led by essential services sectors like pharmaceutical, oil and gas, and power.
Bank stability is an ever-more pressing concern for the world's corporations and investors says Global Finance, while announcing the half-yearly update of its ranking of the world's 50 safest banks.
Continued demand for generics from the US market will ensure stable outlook for Indian Generics Pharmaceuticals in 2011, global rating agency Fitch Ratings said on Monday.
The move was not good for companies which have capital expenditure plans laid out.
State-owned oil firms have decided to "wait-and-watch" the international scenario and the rupee-dollar rate before deciding to cut petrol prices.
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