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Tariff hike must for Discoms health
Mar 4, 2016

The poor financial health of the State Electricity Board (SEBs) is a looming concern for the power sector. Among the various things, these entities continue to reel under losses for years now. And the SEB's losses have rendered them incapable of buying more power from power producers.

The big challenge for the Dragon nation is to tackle its industrial overcapacity. While overcapacities are not new in China, but in various sectors the overproduction has surpassed threshold limits. These overcapacities threaten the Chinese economy as they have led to empty factories and companies overloaded with debt!

An article in Wall Street Journal highlights that the Chinese leaders have outlined plan to cut around 150 million tonnes of unutilised production capacity by 2020. Further it will also cut down the head count of approximately 1.8 m steel and coal workers. The government will spend approx. US$ 15 Bn towards this restructuring exercise.

However, such a production clampdown will be fraught with economic and social risks. One, absorbing the mammoth excess capacity is not going to be an easy task. Two, laying off millions of Chinese workers is going to be challenging. China has traditionally looked down on worker protests. With the deteriorating of economic conditions, the worker protests have intensified. Thus China's manufacturing sector will go through a lot of pain in the coming months.

As India tries to make a success out of its own 'Make In India' plan, there are several learnings to take.ndia' plan, there are several learnings to take.

This Chart Of The Day was published in The 5 Minute WrapUp - What If It Rains Dividends in March? Here Come the Dividend Multibaggers...

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