After absorbing one of the gravest financial crises of recent times, India is gradually recovering from the jolt , with GDP figures slowly crawling back to the pre-crises level. But if the ratings by various agencies are anything to go by, the emerging economy has still some road left to cover with the number of downgrades still continuing to outweigh the upgrades.
DR Dogra, managing director & chief executive officer of Credit Analysis & Research (CARE), said there were 101 downgrades during December 2009 by his agency in December. This number is much higher than 37 upgrades during the same period.
More downgrades have been observed in sectors like small & medium enterprises, jems & jewellery, steel and textiles, said Dogra. Out of 1,000 companies that CARE has rated, majority belong to the SME sector.
?It is surprising as the latest number shows the difference between the downgrades and upgrades has broken all the past trends and records. While there were eight upgrades against 10 downgrades in 2007-08, there were 9 upgrades and 47 downgrades in 2008-09.
?Despite the fact that we are getting good IIP numbers as the industrial production has improved in the country, we have seen more downgrades than upgrades during the current fiscal so far,? Dogra said.
It may be due to this reason that banks may not be much interested in providing funds to to the companies, he added.
However, Dogra was hopeful that the rate of downgrades would certainly go down now . If not upgrades, then the economy will have stable kind of outlook as the it was growing much better now.
Recently, a number of companies, including Shriram Transport, Sterlite Technologies, TCS, Gail India, Jaiprakash Associates, Infosys and Wipro, were upgraded by various rating agencies like Angel Broking, Kotak Institutional Equities and Kim Eng Securities India Pvt Ltd. So, India is gradually making its grip tighter and heading towards a more stable economy.
