Indian cos credit quality improving: Crisil

“Companies have easier access to funds,as a result of the government’s fiscal and monetary easing,and positive stock market conditions; in addition,lower commodity prices have led to lower working capital requirements,” Crisil said.

However,the recovery in credit quality will be gradual,and not necessarily be smooth,adds Crisil.

“There are signs that both the monetary and fiscal easing and the lower commodity prices are temporary. Additionally,unlike in the late 1990s,we see no prospect of a sudden and sustained upturn in economic conditions to lift corporate performance,” Crisil Senior Director Raman Uberoi said.

The government is looking to reverse its “present supportive stance” of low interest rates and liberal monetary policies,the agency said.

The timing and extent of these measures is likely to have a significant bearing on the pace and extent of economic recovery after the current phase of stabilisation,it added.

“The Reserve Bank of India’s window for restructuring of bank assets helped many companies avoid distress over the last 12 months. Looking ahead,we see a long and bumpy road for recovery in corporate credit quality,” Crisil Ratings Director Ajay Dwivedi said.

On currency fluctuations he said,”Large exchange rate movements can hit export-dependent sectors hard,and domestic demand can be affected by rising prices in general and food prices in particular.”