In the April-September period, India Inc’s credit quality showed improvement, with the ratio of upgrades to downgrades inching higher. According to a statement issued by Crisil Rating, the credit ratio’s improvement to 5.52 in the first half of the Financial Year 2023 against 5.04 in the second half of the financial year 2022 is driven by leaner balance sheets led by healthy positive cash flows and muted investments.

However, the agency clarified that the data might not be wholly reliable and representative as many small-scale businesses with outstanding ratings have turned non-cooperative in sharing data continuously, which can be driven by adverse financial health.

Gurpreet Chhatwal, managing director of India Inc, said that India Inc had emerged stronger post-pandemic, exuding confidence that corporate India can weather the current storm caused by global events like monetary tightening and higher inflation will impact India’s exports.

Further, he said Export-oriented sectors such as pharmaceuticals, textiles and information technology would witness moderation in cash flows owing to a slow down in end-user markets, adding that dairy, agrochemicals, and education services are about to witness moderation in their performance due to elevated costs and inability to fully pass them on.

Arvid Rao, head of the credit policy group, said that despite deteriorating macroeconomic conditions, the strong rating upgrade momentum continued in the first half, with 159 upgrades and 40 downgrades, says India Ratings & Research Private Ltd. Further, he added a healthy financial profile, improving business performance, and availability of liquidity has helped the rating. In the H1 FY23, ICRA Rating reported sawing 250 upgrades and 76 downgrades.