As we bid good-bye to 2021, a roller coaster of a year, we at India Ratings and Research (Ind-Ra) want to run you through some of our most read articles. The focus areas of these articles include the impact of COVID-19 on the economy, GDP prediction, and the growth opportunities and challenges various sectors might face this year. So, let us revisit the year that went by:

 

1.       Vaccinating Everyone Above 18 years to Cost Just 0.36% of GDP

As the second wave of COVID-19 sweeps the country with alarming speed and severity, the union government has announced a liberalised and accelerated Phase 3 strategy of COVID-19 vaccination.

2.       Second Covid Wave to Impact Rural Loan Collections in Securitised Pools

Ind-Ra witnessed a drop in April 2021 collections (May 2021 pay-outs) in the rated securitisation transactions across asset classes. As per early signals, the second wave of COVID-19 is expected to significantly affect May 2021 loan pool collections (June 2021 payouts) due to borrowers’ stretched liquidity and lenders’ collection disruptions.

3.       Despite Record Agricultural Produce, Rural Demand to Remain Muted in FY22 Due to Second Covid Wave

The second covid wave has brought back another round of lockdowns and its associated consequences. In fact, it has hit the country with such severity that both case load and fatality per day have reached a new high. Yet, COVID 2.0 has been less disruptive for carrying out economic activities than COVID 1.0.

4.       Vehicle Financers Facing Risks Amid Borrowers’ Falling Fleet Utilisation & Cash Flows

Ind-Ra opines the second covid wave will have a material impact on vehicle financers’ asset quality as borrowers are grappling with reduced capacity utilisation and increased operating costs due to a rising fuel cost, which would reduce their ability to service debt.

5.       State Dashboard – Profiling the Status and Vulnerability of Indian States

Due to informational asymmetries and significant performance variations across states on various parameters, developing a meaningful, comprehensive and comparative understanding about Indian states is often an arduous task. To fill this gap, Ind-Ra has prepared a ‘State Dashboard’ which profiles the status and vulnerability of Indian sates. The dashboard covers all states including the erstwhile state of Jammu and Kashmir and depicts/captures their performance on various parameters such as economic, fiscal, social and physical infrastructure using maps and graphs. The period covered in this report is FY11 to FY20.

6.       Electric Bus Concession Model Similar to HAM; Counterparty Risk Evaluation Critical

Ind-Ra opines the public private partnership model (gross contract model) for running electric buses to gradually gain momentum among state transport undertakings. The central government’s push through the Faster Adoption and Manufacturing of Electric Vehicles in India policy and incentives through fund allocations has led to at least 4,580 electric four-wheeler vehicles (including electric buses) operating during FY21.

7.       India Ratings Revises FY22 GDP Growth to 9.4%

Ind-Ra in its last forecast had articulated that economic recovery would depend on the progress of the vaccination drive. If India is able to vaccinate its entire adult (18+) population by 31 December 2021, then the GDP growth is expected to come in at 9.6% yoy in FY22, otherwise it may slip to 9.1%. Going by the pace of vaccination, it is now almost certain that India will not be able to vaccinate its entire adult population by 31 December 2021.

8.       Worrying-but-mixed Signals for Commercial Realty

Ind-Ra notes worrying signals from the commercial real estate market and reiterates its Negative Outlook on under construction office space providers.

9.       Sequential Challenging Year Stares at Microfinance Sector

Ind-Ra estimates collections for microfinance institutions (MFIs) and small finance banks to have declined 3%-5% in April 2021 and additional 5%-7% in May 2021 (first fortnight of the month), both on a month-on-month basis. The agency expects the overall microfinance sector to witness a shortfall of 10%-15% in collections on a consolidated basis in May 2021. That being said, the variation among MFIs could be wider, depending on their level of concentration in regions where lifting of restrictions could be slow.

10.   Solar PLI Scheme to Benefit 8%-13% of Incremental Panels Demand till FY30; Consolidation in the Offing

Ind-Ra estimates the allocation of INR45 billion towards the solar modules manufacturing industry by the Ministry of New and Renewable Energy can benefit the sales of 20GW from the capacity developed under the under production linked incentive scheme across the five-year implementation period, assuming 100% localisation (up to 30GW in case of 65% localisation).

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    Ankur Dahiya

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