Skip to main content

The Economic Version of the Ant and Grasshopper

Arjun Parthasarathy has this interesting take on this ancient fable (ironically by Greek author Aesop) via blog post at
The European nations who have been playing while the world was working are struggling to come to terms with the issues facing them. The normal way of life with state support, low number of working hours, extended summer holidays and assured jobs is a thing of the past and the normal European is having tough time adjusting to the new environment. Jobs are scarce, government is bankrupt and people find they have to work hard for their money. It is no wonder that the Greeks and the French are rejecting austerity and it is most likely to spread to Spain, Italy and Portugal as well. However, rejecting austerity will not help the Europeans in any way and it is a long hard grind to come back to normalcy.

...India is also a part of the ant and the grasshopper story. In India the ant is the people who work hard and save money for the future. The government on the other hand is the grasshopper that lives off the savings of the hard working Indian. The government spends money when the sun is shining, read when the economy was booming and taxes were growing at a fast clip in the mid 2000’s. The government also spends money in the winter by taking away the savings of the people read fiscal stimulus post 2008 crisis. The government never learnt to save money and the people are paying the price for it.

The average Indian saver is seeing his hard work go down the drain in the form of inflation and depreciation in value of financial assets from bonds to equities. The government by merrily spending its way into and out of trouble has made sure that the hard working Indian is suffering for the sins of hard work. Inflation touched double digit levels while equities values are down while interest rates are up leaving the saver a hugely disillusioned person...The Rupee is facing the consequences of a spendthrift government and has lost over 20% in value over the last one year. Unless macro economic policies benefit the Rupee, it is unlikely that the Rupee will regain some of its luster.
Venture Intelligence is 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.

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…

KPMG Tops League Table for Financial Advisor to Private Equity Transactions in H1 2018

The transaction advisory unit of KPMG claimed the top position in the Venture Intelligence League Table for Transaction Advisor to Private Equity deals in the first half of 2018, advising deals worth $1.7 Billion. KPMG acted as the financial advisor to NHAI in the $1.5 Billion investment by Macquarie to operate 9 highway projects under the toll-operate-transfer (TOT) model. Ernst &  Young (which advised the $730 million asset sale by Indiabulls Real Estate to Blackstone) and Kotak (which advised the Vishal Megamart - Partners Group deal) accounted for the second and third spots respectively.
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 Transaction and Legal Advisory firms.
Arpwood Capital (which advised the $760 million investment by Temasek in the $2.1 Billion Schneider Electric buyout of L&;T Electrical and Automation business) …

"Leveraged stock purchase led Arvind Rao to go astray": Forbes India

Forbes India has an article on the series of events leading to the recent controversial exit of Arvind Rao, Co-founder & CEO of listed Mobile VAS firm OnMobile.

On November 23, 2010, Arvind Rao, the 53-year-old co-founder and CEO of OnMobile, bought approximately 6 lakh shares of his company from the open market, representing a little over 1 percent of the company’s total shares....At Rs 277 a share, he had to pony up nearly Rs 16.5 crore to acquire them....So he went ahead and borrowed money to buy the shares, thinking nothing of the interest it entailed or the fact that he’d need to put up nearly half his existing shareholding as collateral...OnMobile’s shares continued to fall from those levels, while Rao’s interest payments ballooned.

...Motivated by OnMobile’s growth all these years, he had never paid much attention to his salary, most of which went towards the monthly rental on his sea-facing apartment in Mumbai and his BMW 7-Series, both paid directly by the company. He reque…