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Government's false power sector claims
Jul 25, 2015

Today's edition of the Business Standard has thrown up some interesting points related to the power sector and the current government's claim of playing a strong role towards achieving the same. The Modi government has made various claims about how the sector has prospered well under its rule as compared to the previous year; and that some of the ‘all time highs' feats were achieved after it came into power.

One of which is highlighted in today's chart of the day. According to the power ministry, 22,566 MW of power was added in FY15 and was termed as the "highest ever growth in a single year". However, as the business daily has mentioned, the highest ever "growth" was in fact achieved in FY12, when over 8.3 GW of capacity was added. In comparison, only over 4.7 GW was added in FY15.

What however is strange here that these aspects should not be something to be very proud about considering that India has hardly ever achieved the original targets that were set out over longer periods in the first place.

Also, we find it funny that the government is taking the credit for power capacity addition in the current year. Fact of the matter is that power projects generally take anywhere between three to five years to construct and commission. How can the current government have anything to do with the projects being commissioned in the year gone by when it was not in power three to five years ago.

On an overall basis, one should not pay too much heed to such claims by governments. Broader look at the regulatory factors and the trends would be a better way to gauge the prospects (such as the fact that India has very low per capita power consumption as compared to other emerging markets) and opportunity in the sector.

This Chart Of The Day was published in The 5 Minute WrapUp - Why you should learn how to lose money in stocks?

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