Skip to main content

Big Government Is Back!

The new UPA government's first policy statement - the presidential address (PA) to Parliament - gives Business Standard columnist and former Chief Economic Adviser Shankar Acharya a feeling that this government is set to unleash a host of programmes (read big budget "yojanas" like the NREGS).
The last five years of UPA rule witnessed an ambivalent mixture of trends. On the one hand, the government stopped privatisations and disinvestments, halted most reforms, strengthened price controls on petroleum products, fertilisers, food grains and selected interest rates and undertook major expansions of social programmes (notably the NREGP) and caste-based quotas in education and public employment. On the other hand, a potent combination of past reforms, successful fiscal consolidation (till spring 2008) and the liquidity-fuelled global boom propelled the biggest surge in private investment that India has ever seen, spurring economic growth to 9 per cent.

Now things seem set to change. The “ten broad areas of priority” outlined in the PA (including security, communal harmony, growth, infrastructure, social uplift, governance reform, etc) are mostly unexceptional...But the principal vehicle for achieving these goals will apparently be government programmes of one kind or another. These will include existing “flagship programmes” such as NREGA, the National Rural Health Mission, Sarva Shiksha Abhiyan, Bharat Nirman and Indira Awas Yojana. Ambitious new programmes are also promised, including a Madhyamik Shiksha Abhiyan for universalising secondary education, a Rajiv Awas Yojana for slum dwellers and a significant new National Food Security Act for guaranteeing 25 kg of food grain per month for every below-poverty-line family at Rs 3 per kg. (Never mind that the public distribution system hardly exists outside the four southern states, Bengal and a couple of metropolises and that the costs of the system compare very poorly with private distribution channels). Furthermore, although disinvestments from public sector undertakings (PSUs) will be resumed, government will retain majority ownership. So the present PSUs will continue indefinitely, even if they are in hotels and tourism. Even in banking, the minimum 51 per cent government ownership of PSU banks will be retained, with their need for fresh capital (for expansion) being met from the government budget.

...To end on a brighter note, there are a few green shoots of reform scattered through the PA. These include: reform of higher education along the lines recommended by the Knowledge Commission; a more investor-friendly approach to public-private partnerships in infrastructure; implementation of the roadmap for the Goods and Services Tax; “operationalising the provision of open access” in the power sector; reforms in the coal sector; a roadmap for judicial reform; and encouragement of foreign direct investment. But even if these green shoots all mature into full grown healthy plants, will it be enough to power the high levels of private investment necessary to recover and sustain rapid growth?

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at

Popular posts from this blog

VC Interview: Shailendra Singh of Sequoia Capital India

In a recent interview to Venture Intelligence, Shailendra Singh discussed some of the firm’s newer investments in the early stage segment including in the online payments space, the progress at a few existing portfolio companies and the active role the firm is playing in helping its portfolio companies scale and succeed in India and globally. Prior to joining the firm in 2006, Singh was a strategy consultant at Bain & Company in New York and before that, an entrepreneur in the digital media industry.

Venture Intelligence: How does Sequoia go about identifying potential early stage investments in India? Is there anything different you are doing today than, say, a couple of years back?

Shailendra Singh: There is a lot more focus on technology investing and early stage investing. In general, as you might remember a few years ago, we were doing primarily growth investing but in the past 18-odd months, we have had a very strong focus on early stage and that’s continuing. In terms of how…

Ambit tops League Table for Transaction Advisors to Private Equity deals in 2019

Ambit Corporate Finance topped theVenture Intelligence League Table for Transaction Advisor to Private Equity Transactions for the year 2019. Ambit advised PE deals worth $2.4 Billion (across 4 qualifying transactions) during the period. Citi ($1.1 Billion across 2 deals) and Avendus ($969 million across 12 deals) took the second and third spot. Edelweiss Financial Services ($758 million across 9 deals) and PwC ($708 million across 15 deals) completed the top five in 2019. 

The Venture Intelligence League Tables, the first such initiative exclusively tracking transactions involving India-based companies, are based on value of PE and M&A transactions advised by Financial and Legal Advisory firms.
Ambit Corporate Finance advised the $1.9 Billion buyout of Pipeline Infrastructure from Reliance Industriesby Brookfield Asset Management and the IFC and I Squared Capital-backedCube Highways' acquisition of Delhi-Agra Toll Road from Reliance Infrastructure (Reliance ADAG). Citi advise…

PE Investments down by 36% in Q1'20

Press Release
Private Equity-Venture Capital (PE-VC) firms invested $5.9 Billion (across 164 deals) during the quarter ended March 2020 - 36% lower than the $9.2 Billion (across 249 transactions) during the same period last year, according to data from Venture Intelligence, a research service focused on private company financials, transactions and their valuations. The Q1'20 investments were also 37% lower compared to the immediate previous quarter (which had witnessed $9.4 Billion being invested across 227 transactions). (Note: These figures include Venture Capital investments, but exclude PE investments in Real Estate).
The latest quarter witnessed 14 PE-VC investments worth $100 million or more, down from the 20 such transactions in the same period last year. The largest PE-VC investment announced during Q1’20 was the $567 million takeover of power generation company RattanIndia Power by Goldman Sachs and Varde Partners. The second largest investment was SoftBank Vision Fund…

Inventus, Sixth Sense, Blume & Norwest win Apex'20 Venture Capital Awards

Inventus Capital Partners, Sixth Sense Ventures, Blume Ventures and Norwest Venture Partners were voted the top Venture Capital investors in India during 2019. The Venture Intelligence “Awards for Private Equity Excellence” (APEX) is dedicated to celebrating the best that the Indian Private Equity & Venture Capital industry has to offer. Other 2019 winners in the VC segment included Axilor Ventures which was votedthe Accelerator of the Year for the second year running, 3one4 Capital (VC Fund Raise of the Year) and Innoven Capital (Venture Debt firm of the Year).
The APEX Awardees are selected based on both Self Nomination by the participating PE-VC firms as well as "crowd sourced" nominations and voting from the Limited Partner, PE-VC and advisory communities. (The main criteria are Exit Track Record, New Fund Raises & Follow-on Funding Rounds for Portfolio Companies).

"It is an honour to be recognised by entrepreneurs and investors as India's No 1 startup a…

PE investments in 2018 crosses $33-B to set new all-time high

Big Ticket investments in consumer apps Swiggy & Byju’s dominates year-end activity, even as investments in Core Sectors slow down
Private Equity (PE) investments in India rose to their highest ever figure of $33.1 billion in 2018 (across 720 transactions), according to data from Venture Intelligence (, a research service focused on private company financials, transactions and their valuations. While PE investments have already surpassed the previous high - $24.3 Billion across 734 deals in 2017 - in the first nine months of 2018, the mega investments in Consumer Internet & Mobile startups such as Swiggy and Byjus towards the year-end, helped the 2018 total vault by 36% year-on-year. (Note: These figures include Venture Capital investments, but exclude PE investments in Real Estate.) The year witnessed 81 PE investments worth $100 million or more (accounting for 77% of the total investment value during the period), compared to 47 such transac…