Covid crisis hit on India Inc minimal to moderate: India Ratings & Research

The partial-to-full lockdowns imposed by various states to contain the second wave of the pandemic are likely to have a muted impact on the overall business environment, given strong export demand and improved balance sheets in the past six months, according to India Ratings & Research report.

Though supply chain disruptions could play out, the overall impact on corporates is expected to be moderate to minimal. But, small businesses and retail borrowers are likely to see stresses, India Ratings said in a report on Monday. It added that retail borrowers and small businesses will see stress, leading to a buildup of potential asset quality issues in the unsecured lending books of lenders and an increase in softer delinquencies in the MFI segment.

The assessment will change if there were a stringent national lockdown or a protracted normalisation of activities due to the pandemic, the agency warned and cautioned that the economy, in general, will have a bumpy road to recovery. The second wave of the pandemic infections will be less disruptive than the first wave for overall businesses, despite the daily caseload reaching more than four times the peak level seen during the first wave.

This is because the administrative response is likely to be confined to the regional/local lockdowns and containment zones. The agency believes the first-order impact on corporates will be minimal to modest depending on the industry and size of entities, as it believes that companies are better prepared to operate under localised lockdown conditions while adhering to various guidelines.

 

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