US private equity firm General Atlantic decides to quadruple its annual investment in India
Growth-equity investor General Atlantic’s announcement that it would invest up to $1 billion in new investments in India annually for the next few years is a big fillip to economic policy. “We are tracking big policy changes announced by the Government that will accelerate creation of digital infrastructure for services and products,” General Atlantic managing director and India head Shantanu Rastogi told a news agency. “Affordable supply, affordable infrastructure for financial inclusion, affordable data are big themes for us.” The New York-based private equity firm, which manages about $71 billion of assets globally, has deployed $4.6 billion in India over more than two decades. From an average of $230 per year to $1 billion per year would be quite a quantum jump. The Walmart-owned digital payments app, PhonePe Pvt., is one of the firms General Atlantic has backed in India. The PE’s India operations have evolved from funding companies providing export-oriented services to focusing on investments targeting India’s rising domestic consumption. Its focus areas have been enterprise software, healthcare and financial services companies. Against the backdrop of a dip in foreign direct investment, General Atlantic’s announcement is especially heartening. In the first three quarters of 2022-23, equity FDI stood at $36.7 billion, which was 15 per cent lower than $43.2 billion in the corresponding period in 2021-22.
The Narendra Modi Government has received a lot of criticism regarding its ability, or lack of it, to attract investment and generate employment. The situation seems somewhat incongruous: here is a regime which is committed to fiscal discipline (even the debilitating pandemic and the resultant disruptions didn’t result in profligacy), capital expenditure, and lately reforms; and yet it is not able to attract FDI. Perhaps, it was because in its first term the Modi Government was focused on welfare schemes, not bothering too much about augmenting the scale and scope of liberalisation. An illustration: it took the Government more than seven years to privatise Air India which was beyond redemption as a public sector undertaking (PSU). In the last few years, however, the Government has shown a greater inclination to expedite economic reforms, the boldest manifestation of which is privatisation. It not only sold off Air India but also tried to exit big PSUs like BPCL and Shipping Corporation; it has not been able to do so, but that is primarily because of the lack of buyers. Similarly, the Government never fell prey to the pernicious counsel of many people, including economists, to go on a spending spree on this pretext or the other. And then there is the massive spending on infrastructure. All this seems to have impressed global business, investors and financiers that India is a good place to put their money. Hence Apple’s newfound interest in the country, and General Atlantic’s announcement.
