Though a more economic size may be achieved by building new capacities green-field or brown-field where possible, mergers and acquisitions represent more efficient methods. Both green-field and brown-field projects often lead to the duplication of economic efforts creating a situation of excess capacities. This leads to cut-throat competition resulting in closure of several productive entities. Mergers prove to be efficient as they help to reduce the wastage of national resources, at the same time creating world-scale businesses. Sensible mergers and acquisitions, therefore need to be encouraged by the state'sfinancing mechanism. At the same time however, acquisitions that create a monopolistic situation or lead to the creation of less efficient giants need to be discouraged.

FIs that are both part-owners and debt-providers to India Cements and Raasi Cement have proved themselves extraordinarily indecisive. Had the FIs construed the acquisition as one that would create a more efficient organisation they should have gone all out to support the same. As they were a common thread between both the companies, they could have facilitated the deal which would have concluded much sooner. If they thought that the acquisition was not in the best interests of stakeholders, they should have opposed the move strongly. FIs must shake themselves off their indecisiveness for they represent not only their individual interests but the interest of the nation as a whole.