The government is business

Context: In case of India, the only avenue for revenue generation seems to be taxes. However, like other countries, for instance, Singapore and China, markets, wealth management and dividends are not explored.

If markets create wealth, why can’t the government create it and use it for creating prosperity for the public?

How are Singapore and China generating wealth via markets?


The Government of Singapore Investment Corporation (GIC) invests internationally in equities. It owned shares worth about ₹1.09 lakh crore at the end of March 2022 in India alone. Around the world, GIC investments amount to about ₹55 lakh crore. GIC is the eight largest wealth management fund in the world. This money is also used by the government for public welfare.

Another arm of the Singapore government, Temasek Holdings, has investments worth ₹22 lakh crore.

To get a perspective of things: the Indian government’s budget expenditure for 2022-23 is ₹39.45 lakh crore.


By 2017, Chinese government-owned companies had invested ₹67.5 lakh crore in overseas companies. This is about 27% of India’s GDP.

What is the situation of govt holdings in Indian companies?

The total market value of Indian government holdings is only ₹13 lakh crore, far less than China or even Singapore.

Overseas holdings through these companies is negligible.

The Navratna PSUs are performing well, but are being sold.

Why PSUs are being disinvested, and what should be the policy approach by India?

The prevailing ideology that the government has no business to be in business is used to justify disinvestment. The real reason is the growing government deficit. India uses a western ideology about government-owned companies, but forgets that what the West preaches is for others and what it practices is in national self-interest. The world’s list of top asset-holding PSUs includes the U.S., Israel and the European Union counties. But there are none from India.

Policy approach

Instead of being disinvested, the Navratna PSUs should invest overseas, increase their wealth, and create greater economic influence as China is doing.

The smaller and loss-making need to be disinvested, the profitable ones can be reformed by altering archaic rules and removing political interference.

There is excellent talent in the PSUs. Other talent from the private sector can also be brought in. Salaries for key top personnel should be in line with worldwide best practices, along with real accountability.

The success of enterprises and startups shows that there is abundant managerial talent, which needs to be harnessed in national interest.

Why India should learn from other countries, like Singapore?

National and public interest: The source of wealth has shifted from land to natural resources, to the industrial sector and now to the knowledge economy. Assets are largely in the financial markets today.

If the Indian government invests like Singapore, that will give it much more funds than disinvestment ever can. Meanwhile, ownership remains intact. A few caveats are required.

Singapore invests in long-term assets, and does not take risky decisions.

Another powerful reason is managing government finances. Other avenues of wealth generation, like markets, wealth management and dividends need to be explored.

India needs to look for talent from our financial markets rather than from the government only. There are well-known entrepreneurs and wealth managers in the stock markets. The government can surely use their talent for the greater public good.

The example from the 1980s in telecom, recent examples of Aadhaar, and the creation now of a government platform called ONDC to increase marketing power of ordinary kirana stores shows how private sector talent can be harnessed for public good.

Source: This post is based on the article “The government is business” published in The Hindu on 9th May 22.

Print Friendly and PDF