Archive · 1 Oct 2026
Crisil sees resilient India Inc despite monsoon and war risks
Crisil studied how Indian companies and banks might perform in difficult conditions.
It said companies could manage even if interest rates rise by 0.50 percentage points.
Crisil also said a weak monsoon may not greatly reduce spending in rural areas.
This is because farmers receive a significant share of their income from non-crop activities.
The agency said Indian companies’ credit quality improved in the first half of FY27.
However, diamond polishers, specialty chemical makers and polyester textile companies face risks from the Middle East war.
Banks may see a small increase in bad loans.
Crisil still expects credit growth to remain strong, especially for small businesses and retail borrowers.
Crisil said a possible 50-basis-point RBI rate hike this calendar year would be manageable for India Inc.
The agency expects weak El Niño-related monsoon conditions to have limited impact on rural demand because non-crop income exceeds 40% of farm output.
Crisil’s credit ratio rose to 2.18 times in H1 FY27 from 1.5 times in H2 FY26 across its 7,200-company portfolio.
Diamond polishers, specialty chemicals and polyester textiles remain exposed to Middle East war risks.
Banking-sector gross non-performing assets could rise to 1.9%-2% from 1.8%, while overall credit growth may reach 15.5%.
- Who
- CRISIL Limited, including Managing Director Subodh Rai and Chief Criteria Officer Somasekhar Vemuri, assessed Indian companies and banks.
- What
- The agency issued a stable outlook for corporate credit performance while identifying limited risks from higher interest rates, a weak monsoon and Middle East tensions.
- When
- The assessment was reported on Wednesday and covered H1 FY27, the remainder of the calendar year and the ongoing fiscal year.
- Where
- India, with geopolitical risks linked to the Middle East war.
- Why
- Crisil cited deleveraged corporate balance sheets and structural strengths, while monitoring possible effects on rural demand, banks and exposed industries.
Resilience assessment
Risk considerations
Interest rates and corporate credit
Resilience assessment
Crisil said a rate hike of up to 50 basis points would be largely manageable because of corporate India’s structural strengths and deleveraged balance sheets.
Risk considerations
Higher rates remain a factor that could affect borrowers, although the articles do not quantify a major deterioration in corporate credit from such a hike.
Weak monsoon and rural demand
Resilience assessment
Crisil said El Niño-related rainfall shortfalls are unlikely to dent rural demand because non-crop income makes up more than 40% of farm output.
Risk considerations
The agency said the monsoon remains a key monitorable because weakness could affect tractor manufacturers and microlenders.
Middle East war exposure
Resilience assessment
Crisil said geopolitical tensions have not prevented an improvement in its credit ratio and reduced the number of affected sectors from six to three.
Risk considerations
Diamond polishers, specialty chemicals and polyester textiles remain vulnerable to the war, while banks could see gross non-performing assets rise modestly.
- Possible rate increase
- Up to 0.50 percentage points during the remainder of the calendar year
- Credit ratio
- 2.18 times in H1 FY27, compared with 1.5 times in H2 FY26
- Companies covered
- About 7,200 companies in Crisil’s portfolio
- At-risk sectors
- Diamond polishing, specialty chemicals and polyester textiles
- Bank gross NPA forecast
- About 1.9%-2% by the end of the ongoing fiscal year, versus 1.8% a year earlier
- Projected banking credit growth
- Up to 15.5%, led by small-business and retail lending
- Rural-income factor
- Non-crop incomes account for more than 40% of farm output