'COMPANIES CONTROLLED COSTS IN FY25'

Bank of Baroda Chief Economist Madan Sabnavis on why the impact of RBI's rate cuts will depend on demand across specific industries in FY26

- RAHUL OBEROI

IN AN INTERACTION with Business Today, Madan Sabnavis, Chief Economist, Bank of Baroda, talks about the factors behind India Inc's perfromance and why forex volatility is a persistent concern for Indian companies, especially since Donald Trump became the US President. Edited excerpts:

How do you assess the overall financial health of India Inc?

The financial health of India Inc has improved significantly in recent years. One of the key indicators of this is the interest coverage ratio, which has remained steady at six-seven times. That's a strong signal that corporates are comfortably meeting their interest obligations, despite operating in a high-interest rate environment, especially with the repo rate being at elevated levels over the last couple of years. While corporate profitability hasn’t been uniformly strong—owing to sector-specific demand challenges—the overall improvement in the interest coverage ratio reflects financial resilience.

This trend is further supported by the low levels of nonperforming assets (NPAs) in the banking system, which indicates that the repayment capacity has remained robust.

Are Indian companies better equipped to handle global shocks?