Under four years of Modi government, public sector companies, led by banks, have suffered the most. The Nifty PSU Bank index is undoubtedly the biggest loser with negative returns of 24 per cent over the last four years, thanks to lack of meaningful resolution of non-performing assets (NPAs). Analysts have pointed out that the government’s inability to solve the NPA issue has been one of the biggest misses despite the bankruptcy code and recapitalisation.

According to Crisil, the share of gross NPAs in total advances almost tripled to 7.95 per cent between fiscals 2015 and 2018 from an average 2.96 per cent between fiscals 2010 and 2014.

However, it went on to add that the current high level of NPAs are also the result of aggressive investments made during 2010 and 2011 in expectation of continuation of the high-growth scenario and regulatory tightening by the Reserve Bank of India. Of course, it is also a fact that policy logjam followed the growth scenario and consequently belied the expectations of investors.

Power, related sectors dip

Besides PSU banks, many government-owned companies from the power and related sectors such as Rural Electrification Corporation, Power Finance Corporation, Coal India and Bharat Heavy Electricals have seen massive erosion in their value (30-60 per cent) due to lack of uptick in the power sector following slower GDP growth.



Lower oil prices (except this year) under the Modi regime also led to price erosion in shares (30-40 per cent) of oil exploration companies ONGC and Oil India. “From an average 5.2 per cent of GDP between fiscals 2010 and 2014, the fiscal deficit came down to 3.8 per cent between fiscals 2014 and 2018, helped by fortuitous winds from lower crude oil prices which reduced the oil subsidy burden and hike in excise duties on petrol and diesel,” Crisil pointed out. “The Modi government has been lucky in oil (except recently), monsoon and hence, retail inflation,” added an economist.

Slower capex

While the Nifty PSE index is marginally down, the Nifty CPSE index is down 12 per cent. Besides PSU companies, the infrastructure theme also failed to pick up, thanks to slower capex and no meaningful uptick in activity by the private sector due to excess/underutilised capacity and focus on repairing their balance sheets. While the metals sector has been an underperformer (down 11 per cent) due to global/company-specific issues, real estate was hit due to implementation of RERA and demonetisation, but recovered since the second half of 2017 (now with a positive gain of 21 per cent).

On the other hand, a relatively resilient domestic consumption story (led by the urban market) helped private banks, non-banking finance entities (boom in affordable housing demand), automobiles, fast-moving consumer goods and media companies clock gains of 60-98 per cent in the last four years and outperform the Nifty’s gain of 43 per cent significantly.

Private banks have been the star performers with the Nifty Private Bank index gaining 98 per cent, not only due to lower NPAs but also due to robust retail demand.

Information technology and pharmaceutical sectors have been excluded from the analysis as these are more driven by the global macro economy.