NDA regime’s continuity augers well for industry: ICRA

New Delhi: Though macro fundamentals of the economy”>Indian economy have taken an unfavourable turn in the past few quarters, the continuity of National Democratic Alliance (NDA) led by Prime Minister Narendra Modi after the general elections augers well for key sectors of the economy, investment information and credit rating agency ICRA said.

Overall, the government will have to boost infrastructure investment and private consumption while maintaining fiscal discipline, it said in a research-based analysis.

Port sector will certainly benefit from the new NDA regime and will be credit positive. Sustainability of major initiatives can be expected like Sagar Mala, reforms on the tariff side for major ports, new model concession agreement and several trade facilitation measures like the direct port delivery model and simplification of customs procedures.

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Fertiliser sector is grappling with severe liquidity crisis due to delayed subsidy payments, consequently higher working capital borrowings and slim bottom lines. Poor collections have further aggravated the situation. So rapid clearance of subsidy payments will be a key thing for the sector’s profitability and credit matrix.

The credit profiles of oil and gas companies are getting strained. Thus initiatives like reinvigorating the exploration and production sector, deeper penetration of natural gas through the aggressive rollout of city gas distribution infrastructure in new cities and new LPG connections should help the companies in the sector going forward.

Over the past five years, there has been a massive push towards infrastructure with projects like Bharatmala, Sagarmala, inland waterways, housing for all, AMRUT, smart cities, metro rails and railways. With the continuity in government, the total budgetary allocation is estimated to grow. Debottlenecking execution impediments will need to be continued.

With large scale capital infusion of Rs 2.46 lakh crore in public sector banks (PSBs) during the previous NDA regime and strengthening of balance sheets, PSBs should be relatively better placed in the current NDA regime to support the credit demand of the economy.

Resolution of stressed assets has remained slow and needs to be fastened to put the capital for better use, while the financial sector bankruptcy laws need to be enacted.

The government is expected to continue policy focus on augmentation of renewable energy based capacities, mainly wind and solar. However, improvement in the transmission infrastructure will remain critical.

The project awards by the central nodal agencies and state distribution are expected to increase the share of renewable energy in an all-India generation to about 10 per cent by the current financial year 2019-20, as per ICRA’s estimate.

However, serious efforts are required by the utilities towards improving the operating efficiencies. This coupled with timely subsidy support, tariff revisions remain extremely critical going forward.


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