The Indian economy, which bounced back smartly from below-5 per cent growth for two straight fiscals, grew at the fastest clip in more than two years as GDP expanded by 5.7 per cent in the April-June 2014 quarter.
"Corporate India's credit quality is showing early signs of recovery...upgrades exceeded downgrades in H1 - 741 upgrades compared to 451 downgrades," Crisil said in a report.
Care ratings said that rating upgrades for corporate India doubled in the July-September period of 2014 from the same period a year ago.
However, Crisil reckoned that an improvement in credit quality may take some time, depending on a sustained revival of investment demand.
"Credit quality buoyancy in the overall economy is still some time away, and for that to happen, investment demand, which depends on the extent to which the Central government pushes big ticket policy reforms, needs to increase substantially,", Crisil said.
Export-driven and consumer discretionary sectors such as traders, packaged food, pharmaceuticals, textiles and farm products are witnessing rating upgrades, Crisil said.