NEW DELHI: The Sensex’s meteoric rise for five straight days to a new record intra-day high does not seem to recognise the macro-economic realities of either a slowing economy or of falling revenues of India Inc.
Two recent reports show up India Inc.’s predicament. A Crisil report released earlier this month showed that corporate revenues actually declined in the second quarter of fiscal 2019-2020 for the first time in 14 quarters. Corporate revenues of all firms, other than those in banking, financial services, insurance and oil, fell, by 3 per cent as against a growth of 11-12 per cent in the previous four quarters.
Aggregate revenues of listed automobile players were estimated to have dropped by 25 per cent in the second quarter. At the same time, another rating agency ICRA downgraded the ratings of 266 companies reflecting an annualised downgrade rate of 14.6 per cent which was significantly higher than the past five-year average of 8.8 per cent.
The overall macro picture mirrors the corporate story. India’s slowing economy has already seen GDP growth rate slowing down to just 5 per cent for the first quarter of the fiscal year. The Index of Industrial Production (IIP) for the month of August contracted by 1.1 per cent, a seven-year low.
To compound matters, the core sector which comprises key sectors such as electricity generation, mining, petroleum, cement and steel among others contracted sharply by 5.2 per cent in September.