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Moody's Investors Service has said that India's rising vaccination rate, stabilizing consumer confidence, low interest rates and higher public spending underpin positive credit fundamentals for the corporate sector. It also expects India's economic growth would rebound strongly with GDP expanding 9.3 per cent in the current fiscal ending March 2022 and 7.9 per cent in 2023. It noted that credit fundamentals are favorable for India's companies on a sustained economic recovery and earnings of rated companies' will rise on strong consumer demand and high commodity prices.

According to the report, India's steady progress on inoculation against the coronavirus will support a sustained recovery in economic activity. Consumer demand, spending and manufacturing activity are recovering following the easing of pandemic restrictions. These trends, including high commodity prices, will propel significant growth in rated companies' EBITDA (earnings before interest, taxes, depreciation, and amortization) over the next 12-18 months. Growing government spending on infrastructure will support demand for steel and cement.

However, the report said if new waves of infections were to occur, it could trigger fresh lockdowns and erode consumer sentiment. It said such a scenario will dampen economic activity and consumer demand, potentially leading to subdued EBITDA growth of less than 15-20 percent for Indian companies over the next 12-18 months. In addition, it said delays in government spending, energy shortages that lower industrial production or softening commodity prices could curtail companies' earnings.