Tuesday, February 21, 2017

Start-up Fund- Another Modi Jhumla?

Speaking of Startup fever, Government of India made big-bang announcement in the Budget and development agenda earlier. In July 2014, the Government announced a Rs 100 bn Start Up India fund. 

The fund was expected to generate employment for 18 lakh persons on full deployment... and aimed to catalyse Rs 600 bn of equity investment and twice as much debt investment. 

As reported in an article in Firstpost, almost a year and a half down the line, there is no clarity on disbursement and beneficiaries. Both the VC investors and startup founders are clueless. 

Meanwhile, India's rank in ease of doing business remains poor and almost unchanged. 

As the Government takes drastic measures in the name of accountability and transparency and expects the common man to cooperate, we believe it's an exercise that needs to begin at home.

It's been almost three months since the Government banned high currency notes. It is yet to give some hard evidence of why and how the move made sense. Meanwhile, the casualty statistics continue to go up. Economic slowdown, unemployment, the trouble the common man took to withdraw his hard earned money and now fake notes back in circulation...nothing supports notebandi. 

The latest dissent to the move has come from Rajiv Bajaj, MD, Bajaj Auto. He not only blames the execution, but the entire idea of demonetisation. The move has impacted company's two wheeler sales. Now you might be tempted to write that off as someone crying foul due to temporary loss in sales. But an interesting thing to note is that two wheelers mainly cater to the middle class and rural demand. And hence, it is good indicator to gauge the real impact of notebandi on the Indian economy. As Vivek Kaul highlights, what is further interesting to note is that car sales have recovered more quickly than the two wheeler sales

It tells us very clearly that rural India was impacted much more by demonetisation. It tells us that the not so well off have been more impacted much more by demonetisation than the well off. 

"In all this, the rich got away... You see a reflection of this in automobile sales. They have plummeted for two-wheelers and three-wheelers, but SUV sales are steady. The rich got away." 

And that is something worth thinking about.

The above is from the mail I receive from Equitymaster.

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