A lot of revisions of Indian GDP growth rates downwards have hit the news recently. One of the ways to counter this trend and In order to ensure a durable and sustainable economic recovery, India needs strong and decisive action. Something similar to the Troubled Asset Relief Program (TARP) of the US in ’08 or Pengurusan Danaharta Nasional Berhad of Malaysia in ’98, we need an Indian version of a debt restructuring and recapitalisation program. India needs to create a US$25 billion fund with the Government of India as its anchor investor and the remaining sum coming from other long term investors like sovereign funds, distressed assets funds, buyout and pension funds. In an environment where USD 14 trillion is parked in assets yielding negative yields globally, and Softbank’s Vision Fund(s) raising 100s of billion USD, the sovereign guarantee of a USD 2.8 trillion economy should suffice.

However, there should be a few conditions to be met:

 – the Fund should be managed by the professional managers who have managed distressed assets globally

-the asset acquisition should be done on merit and at reasonable prices with a view to make capped returns

-leading national/international operators should be involved in operating the assets with a call option after 5-7 years

– Government of India should ensure adequate regulatory support (to avoid frivolous litigations)  necessary to restart these assets and create employment opportunities

The existing players in the country would be keen on such an arrangement as it would be capacity expansion for them at reasonable prices, with most of the associated headaches of such expansion cleared by a supportive administration.

As Steve Schwarzman says “Down cycles are not fun. But they form the basis for enormous future profitability”

Every accomplishment starts with the decision to TRY…

#TARP #Danaharta #IndiaEconomy #India #DistressAssets #IndiaGDP #Creditcycle #Buyout