This refers to the report "Team FM says only public investment can spur GDP" (December 20). The current signs of slowdown in gross domestic product (GDP) growth are not attributable to the lack of resources but to the inefficient deployment of the same. The competition is not qualitative and faulty management of investment is eroding capital resources of the industrial segment, either shutting them down completely or increasing the frequency of mergers and acquisitions. Exposure to new and hitherto unknown areas of operations without trained expertise is not competition but foolhardiness, as it leads to the erosion of existing capital.
Increased instances of mergers and acquisitions are also not a good indication for GDP growth. Economic dormancy in one segment of the economy swiftly percolates to another, leading to total stagnancy. Financial institutions, including banks and insurance companies, will also defer from lending in such conditions. The public sector is more supportive in such a situation because it will have better access to funds both by way of bank finance and by way of market borrowings by the government.
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Increased instances of mergers and acquisitions are also not a good indication for GDP growth. Economic dormancy in one segment of the economy swiftly percolates to another, leading to total stagnancy. Financial institutions, including banks and insurance companies, will also defer from lending in such conditions. The public sector is more supportive in such a situation because it will have better access to funds both by way of bank finance and by way of market borrowings by the government.
C Gopinath Nair Bengaluru
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
E-mail: letters@bsmail.in
All letters must have a postal address and telephone number