India Ratings

Savings and investment rates in the financial year (FY) 2021-22 were 30.2 per cent and 29.6 per cent, respectively

Pencilling in just 4 per cent GDP growth for the fourth quarter, a rating agency report has said the final growth numbers for the full year will be lower than the second advance estimate of 7 per cent. The economy grew at 13.2 per cent in the first quarter and 6.3 per cent in the second three-month period due to base effect and much lower than the consensus expectation of 4.4 per cent in the third quarter. To close the full fiscal with a 7 per cent growth, the GDP should deliver at least a 4.1 per cent uptick. India Ratings analyst Paras Jasrai in a report said the agency expects GDP to print in at around 4 per cent in Q4, which would mean GDP growth for FY23 could be lower than 7 per cent but did not quantify the same. The National Statistical Office, in its second advanced estimate, has retained GDP growth at 7 per cent for the full year, which factors in a growth of 5.1 per cent. However, the agency sees many downside risks to this estimate, such as the pent-up demand, which had

Flags interest rate risks, uncertainty on cash flow mismatches

The Uttar Pradesh government is likely to miss the budgeted revenue surplus of 2.8 per cent by a wide margin, even though it may meet the fiscal deficit target of 3.5 per cent next fiscal, says a report by India Ratings. Noting that the UP budget presented earlier this week made many over-the-top assumptions regarding nominal GSDP growth and own revenue, India Ratings said while the fiscal deficit target of 3.5 per cent of gross state domestic product (GSDP) for FY24 is achievable, the revenue surplus is expected to be half of what has been budgeted. While the state has budgeted a revenue surplus of 2.8 per cent of the GSDP, the agency expects it to be at just about 1.4 per cent in FY24. Barring FY21, UP has maintained its revenue surplus position since FY06. The Centre allows states to borrow 3 per cent of their GSDP or as fiscal deficit, and an additional 50 basis points if they meet certain reforms in the power distribution and certain areas. According to the revised estimates

Microfinance players have already come out of the massive hit they took during the pandemic and are likely to report lower credit cost by the end of this fiscal, as growth momentum is on an upswing, says a report. India Ratings has revised the outlook on the microfinance sector to 'improving' from 'neutral' and has also maintained the 'stable' rating outlook for FY24. It expects the sector to notch up high double-digit growth of 20-30 per cent, on improved collections and disbursals. It sees the credit cost to improve to 1-3 per cent from 1.5-5 per cent this fiscal. Microfinance institutions have already absorbed the impact of the pandemic by the December quarter, India Ratings said in a note on Wednesday. It expects the growth momentum to continue in FY24, as disbursements are picking up, which in turn will lead to higher growth. According to India Ratings, there are two key risks for the microfinance sector over the next 12-18 months -- inflation and elections. These may impact

The many rising headwinds, both domestic as well as external, will more than halve the GDP growth to 4-4.5 per cent in the second half of FY2023, shaving off the better numbers in the first half, says a report. In the first half of the current fiscal, the economy has grown at 9.7 per cent -- 6.3 per cent in the September quarter and 13.5 per cent in the previous three months, and forecasts for the full year vary from a low of 6.6 per cent to 7 per cent. According to India Ratings, the economic recovery in H1FY23 was resilient and encouraging, but challenges such as high inflation and weak demand (both domestic as well as external) are expected to pull down the economic growth to 4-4.5 per cent in H2FY23 from 9.7 per cent in the first half of the fiscal. The agency however did not offer a full-year forecast.September quarter data indicate that despite the geopolitical uncertainty and fear of a global slowdown, the domestic economy has shown resilience. In fact, the Q2 growth print ..

Given the tightening liquidity conditions and higher cost of borrowings, corporates with a weak credit profile are likely to tap a loan against shares facility to meet their funding requirements

Orders it to wind down operations in six months

Domestic rating agency India Ratings on Tuesday upgraded its outlook on the non-bank lenders to "neutral" from "improving" on better collection efficiencies and asset growth in the sector. It, however, said that liability management is key for managing margins and loan growth for non-bank finance companies (NBFCs) and housing finance companies (HFCs). The agency said that with the onset of normalcy in lending, the on-balance sheet liquidity would also normalise, negating the impact of the rising cost of funds, thereby protecting margins to a certain extent. In the mid-year outlook on the sector, it said that a lower credit cost for 2HFY23 would aid profitability during the fiscal. Higher inflationary pressure on borrowers and interest rates may deter demand normalisation in the near term but the festive season demand could support the baseline credit offtake, it said. On the securitisation front, a major source of balance sheet management for lenders, the agency said it has witnes

The pressure on hiking interest rates on deposits is likely to intensify. However, the decline in credit could offset an increase in deposit costs

India Ratings expects the current account deficit to hit a 36-quarter high of 3.4 per cent of GDP or USD 28.4 billion in the June quarter, against a 0.9 per cent surplus a year ago. In the March 2022 quarter, the deficit was a moderate 1.5 per cent or USD 13.4 billion, while in Q1FY22 the current account surplus was USD 6.6 billion or 0.9 per cent of GDP when the country was hit by the second wave of the pandemic, according to the agency. As a share of GDP, the current account deficit is expected to jump to a 36-quarter high after the 1QFY14 when it was 4.7 per cent. In absolute terms, it will be at a 38-quarter high after 3QFY13 when the deficit was USD 31.8 billion, India Ratings said in a note on Monday. Although merchandise exports touched a record high of USD 121.2 billion in Q1FY23, outward shipments are likely to slow down and come in at USD104.2 billion in Q2FY23, growing by a meagre 1.4 per cent in Q2 due to global headwinds. The International Monetary Fund in July slashed

India Ratings projects GDP growth of 7.2 percent in July-September FY23 quarter, 4 percent in October-December and 4.1 percent in February-March

Even as the economic recovery gains momentum, dwindling wage growth is emerging as a bigger worry as this leads to tepid demand and resultant under-utilisation of capacity, further elongating the already-large output gap, according to a report. The households, which account for 44-45 per cent of the GVA, have witnessed their nominal wage growth declining to 5.7 per cent during FY17-FY21 from a high of 8.2 per cent during FY12-16. This means wage growth in real terms is close to just about 1 per cent, India Ratings said in a note on Thursday. This is in spite of the overall economy growing at 13.5 per cent, much lower than consensus estimates, in the first quarter of the current fiscal. Even the recent trend in wage growth at the rural and urban levels alludes to an erosion of the purchasing power of households. At the nominal level, wage growth in urban and rural areas was 2.8 per cent and 5.5 per cent year-on-year, respectively, but in real terms, which means adjusted for inflation

Says credit profile reflects strengths like large and diversified economy, but warns that country is highly exposed to climate change events

The bonds will have a call option from the fifth year onwards and are rated AA+ by CRISIL, CARE and India Ratings, sources said

The public sector contributes only 20 per cent to the national income, but accounts for nearly 40 per cent of the total wages, a report by a domestic ratings agency said on Monday. The average share of the public sector in gross value addition for the ten years ending FY21 is 19.2 per cent but the share in wages is 39.2 per cent, India Ratings and Research said in an analysis based on gross value added (GVA) data released by the National Statistical Office. The share of the private sector in GVA and wages is "more evenly balanced", the agency said, pointing out that it accounts for 35.2 per cent of the wages while its contribution to GVA is 36.3 per cent for the same period. It can be noted that those pressing for a lesser role of the state in the economy, often point out to the lack of efficiency in the public sector. The agency's report said nominal wages grew at a compounded annual growth rate (CAGR) of 10.4 per cent, while return on capital grew at a CAGR of 8.8 per cent during

Action follows upgrade in outlook on India's Sovereign rating

From June this year, the Centre will stop giving states any compensation for tax collection shortfall.

India Ratings said the market rates had already been moving higher before the move

Capex revival could get delayed as companies await clarity on the macroeconomic front, says agency.