The bankrupt companies, which are facing insolvency, were the major booster for the M&A record this year.

The mergers and acquisition (M&A) in India hit an all-time high in 2018 with deals worth $125.2 billion taking place this year, breaking the previous record of $67.4 billion in 2007, according to Thomson Reuters Deals Intelligence. It's a positive indicator that underlines the future potential of the economy. In a healthy economy, when there is a spur in credit availability, coupled with positive changes in government policies, the number of deals spirals up as companies find it as an opportunity to consolidate their leadership positions. Another indication is a burst of innovations by startups. But the major deals materialised in India this year do not indicate any such changes on ground, except Walmart's $16 billion acquisition of Flipkart.

The bankrupt companies, which are facing insolvency, were the major booster for the M&A record this year. Four major bankrupt companies have been handed over to the new promoters -- Electrosteel Steels to Vedanta, Bhushan Steel to Tata Steel, Monnet Ispat to JSW Steel, and Amtek Auto to Liberty House -- after trying it under the Insolvency and Bankruptcy Code (IBC). Over 50 companies, including the smaller ones, have been sold so far. But these distress sales do not indicate the robustness of the present economy. The bigger companies find it as an opportunity to grab the cheaper assets for expansion.

If the troubled steel space has largely paved the foundation for the distress deals in the steel industry, the price and technology wars in telecom have triggered the distress sales and consolidations in the telecom space. The leading operators Vodafone and Idea merged their networks to fight the might of Mukesh Ambani's Reliance Jio. The leader of the pack, Bharti Airtel acquired sinking telecom operators Tata Teleservices and Telenor India in 2018. In April this year, the merger of Indus Towers (owned by Idea Cellular and Vodafone) with Bharti Infratel (owned by Bharti Airtel) was announced to create the largest mobile tower operator in the world outside China.

Another set of acquisitions were triggered to meet the disinvestment target of the government. ONGC bought government's entire 51.11 per cent stake in HPCL for Rs 36,915 crore earlier this year. In 2017, the oil producer was allegedly under pressure to bail out the debt-laden Gujarat State Petroleum Corporation (GSPC) as it bought the latter's gas block for Rs 7,800 crore. The government also plans to sell 149 oil and gas fields of ONGC and OIL India to private companies.

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The basis for the deals in retail sector was largely encouraged by a bullish discount-driven e-commerce market. The American retailer Walmart, which failed to make a footprint in India's brick and mortar space, spent $16 billion to buy 77 per cent stake in Flipkart in May. Walmart badly needed the deal to join the Indian retail bandwagon.

Positive GDP numbers usually help in activating M&A deals. But India's economic growth moderated to 7.1 per cent in the July-September quarter, dragged down by slower consumer spending and farm growth. Farm output grew 3.8 per cent year-on-year compared with 5.3 per cent the previous quarter. The construction sector, one of the biggest employers after agriculture, grew 7.8 per cent, slower than 8.7 per cent in the previous quarter.