The Hindu Business Line : `Indian roads shield industrial economy'

INDIAN roads may mean a bumpy ride for motorists. But for the country's industrial economy, the road sector has become a protective shield against possible threat of a downturn as an upshot of Gulf War II.

Indeed, going by the latest Crisil ratings, the investments in the infrastructure sector, especially roads, has been providing the much-needed traction to the Indian industrial economy. "Though the current war situation in Iraq has introduced a new uncertainty in the economic environment, it is likely that the continuing investments in the infrastructure sector will provide traction to the Indian industrial economy during the next two years,'' says Ms Roopa Kudva, Crisil's executive director and chief rating officer.

According to the latest Crisil ratings during the 12-month period ending March 2003, the rating agency's portfolio of manufacturing companies saw upgrades outnumber downgrades for the first time since 1996. The robust improvement in the credit trajectory in the manufacturing sector was led by core sectors such as steel and key industrial sectors such as automobiles.

But what actually felled this upturn in these sectors? "In a significant measure, the upturn was aided by the positive economic impact of the increased investments in the road sector that was seen during this year,'' according to Ms Kudva.

Crisil's long-term ratings during the last 12 months reflected a sharp reduction in the number of downgrades to 19 from 38 in 2001-02 and an increase in the number of upgrades to 14 from 4. What is interesting is that this trend was recorded despite the sluggish trends experienced by the agricultural sector in the aftermath of drought this year

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