Overview of the Indian Corporate Sector: 1989-2002

Author/Editor:

Petia Topalova

Publication Date:

April 1, 2004

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper uses firm-level data to examine the performance of India's nonfinancial corporate sector since 1989 and evaluate its financial vulnerabilities. While promising trends in liquidity, profitability, and leverage of the sector emerged in the early 1990s, they experienced a reversal after 1996. Nonetheless, most indicators were still at comfortable levels, and there is evidence of improvement in 2002, the last year in our sample. However, a number of firms still face problems servicing their debt obligations, posing a risk to lenders. In particular, the aggregate interest coverage of the corporate sector indicates that potential nonperforming loans of the corporate sector remain high. This underscores the need for close monitoring of the corporate sector in the future.

Series:

Working Paper No. 2004/064

Subject:

Commercial banks Corporate governance Corporate sector Economic sectors Financial institutions Financial markets Nonperforming loans Stock markets

English

Publication Date:

April 1, 2004

ISBN/ISSN:

9781451848595/1018-5941

Stock No:

WPIEA0642004

Pages:

41

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