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State Of The Nation
Economy . Sectors . Companies
September 13, 2013
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 Wide coverage spanning more
than 70 sectors.
 Strong on-the-ground inputs
through primary sourcing
from over 4000 contacts
 Ability to leverage upon cross-
sectoral linkages
CRISIL’s unique analysis combining macro and micro
 Sound macroeconomic
research and forecasting
capabilities
 Team of economists with
decades of experience in
bridging economics and real
world
 Comprehensive study of 2481
firms (rated ‘BBB-’ or higher)
accounting for
32% of banking credit to
corporates
82% of CRISIL-rated debt
Two out of three sectors
will experience lower
revenue growth
Demand slowdown, the biggest source of vulnerability,
impacts nearly a fourth of 2481 firms
Industry projected to
grow at 1% in 2013-14
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Agriculture bounty
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Boost for exports
 Weak currency, pick up in advanced economies
 IT-ITES, pharmaceuticals, textiles and leather likely to benefit
 Helps in paring the trade and current account deficit
Forex vulnerability is the least of the stress factors
 Impacts only 6% of the 2,481 firms analysed
 A caveat is in order: the universe of CRISIL-rated firms does not include many of the major
debt-laden corporate groups
The Good
 Timely, well-distributed monsoons
 Farm GDP growth to accelerate to 4.5% from last year's 1.9%
 Check food inflation
 Boost rural consumption
 Stimulate demand for tractors and two-wheelers

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 Heavy burden of oil subsidies and declining growth in tax revenues will lead to slippages
 Fiscal deficit likely to bloat to 5.2% of GDP, higher than budgeted 4.8%
Inflation rising
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 Surging crude oil prices and weaker rupee to push WPI inflation beyond 6%
 Rate cuts by RBI difficult
 Stress in leveraged sectors such as infrastructure and real estate
Services segment weak
 Spill-over of slower industry growth due to increased linkages between industry and services
 Services growth of 6.5% in 2013-14, compared to 10% in the last decade
Firms stretched for liquidity
 Liquidity pressures are a source of stress for 16% of the 2,481 companies analysed.
 Large firms are impacted more acutely (27% of firms with operating income > Rs. 1000 crores
affected)
The Bad
No scope for stimulus

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Demand slowdown hurts the most
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 Two out of three sectors will experience lower revenue growth
 Vulnerability to demand slowdown remains the most important source of stress for 25% of
2481 firms analysed
 Larger firms more challenged: higher indebtedness and stress on interest cover
Industrial growth stays anemic
 Industry will grow at a two-decade low of 1%
 Investment climate weak
 Infrastructure, capital goods, real estate, automobiles and transport operators likely to be the
worst hit
Current account deficit (CAD) will keep rupee weak
 Rupee could rebound to 60/$ by March 2014, as CAD declines to 3.9%,
 Currency to remain significantly depreciated compared with last fiscal
– Upward pressure on inflation, fiscal deficit and input costs for corporates.
The Ugly

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GDP growth at decadal low of 4.8%
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 If India gets lucky, and agriculture growth surges 6%, overall GDP could be a much better 5.2%
 This happened in 2010-11 when, after a good monsoon, it had rocketed to 7.9%
Economy will stay in an L-Shaped trajectory
 Economy will stay in an L-Shaped trajectory through this fiscal unlike the V-shaped recovery
seen after the Lehman crisis in 2008
What does this add up to

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