India Ratings says the credit profiles of corporates are likely to remain under pressure as the economy grapples with a synchronised and prolonged economic slowdown. At least Rs 10.52 lakh crore of corporate debt is vulnerable to default over the next three years, according to the rating agency.

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Rakesh Valecha, senior director and head of corporates at India Ratings, said 16 percent of actual debt is vulnerable in some sense but out of that the rating agency expects about 25 percent of it actually will go into stress category.

"So that’s about $2.5 trillion, roughly about 4 percent of the overall system debt. So 10.5 percent is more a reflection of where the vulnerability exists even today assuming the kind of base case scenario that we have envisaged continues for the next 2-3 years. But the actual slippage would be in the region of about $2.5 trillion,” Valecha told CNBC-TV18.

He further said that power generation, renewables and telecom are showing signs of stress and pressure is also seen in the construction sector.

“We are concerned about telecom and that’s one of the sector which falls into our vulnerability bucket. However, when I say telecom as sector it doesn’t mean all the companies get included."

"Yes, there are certain pressure points in certain companies; don’t want to get into name specifics, but there is likelihood that some of these could potentially slip into whether its telecom or some other sector is difficult to say at this moment but based on our past analysis, the last 6 years this study has been conducted, we think 25 percent slippage is what we think could potentially happen.”

On GDP

He said, “Our in-house base case forecast for the GDP growth for FY21 is 5.5 percent and broadly above 6 percent is the growth rate that gets achieved over the next 3 years. So we remain at 5.5 percent level or maybe show some improvement.”

“We have commodity prices which shows some amount of increase but remain largely benign. So we have factored in about 4 percent of increase in commodity prices and marginal depreciation as far as currency is concerned," he further added.