India’s Power Sector is seeing massive investments with innumerable business groups setting up thermal power plants in the country spurred by the electricity deficit of more than 15% and the GDP growth of more than 8% expected in the next decade.India’s private power companies are competing with each other in setting up massive ultra mega thermal power plants of 4 GW capacity.However India’s pathetic state of electricity distribution may lead to huge losses for the investors in the power sector.The reason is that the electricity distribution is controlled by the state utilities which have cumulative losses of $13 billion which is expected to double to $26 billion in another 5 years.These “discoms’ don’t have money to pay the private producers of power even with an electricity deficit.With India’s electricity market a tangle of red tape,losses and government control the situation looks bleak for all the business groups deciding to enter the power sector.
Investing in the Indian Stock Markets is like navigating your way through a minefield with innumerable instances of fraud,unethical actions and disregarding the interest of the retail investor.The SEBI which is India’s stock market regulator remains mostly toothless and a blind spectator to the whole stock market fraud schemes like pump and dump.Most of the IPO’s that come in the Indian markets are blatantly manipulated by the market operators,promoters and shady investment bankers.However SEBI has not taken any action so far which would make one speculate that the regulator is itself compromised.The pump and dump schemes continue unabated in the market which remains quite shallow despite the more than one trillion dollar capitalization.Mid cap and small cap corruptions scams happen with alarming regularity and even top MNCs defraud the retail investors using legal loopholes.
China has been rewriting its renewable energy plan in the wake of the Fukushima Nuclear Energy Disaster in Japan.Note there has been a strong global backlash against nuclear energy around the world and 7 nuclear plants in Germany have been closed all but in name.Other countries like South Korea,Italy,Switzerland are rethinking of what do about their nuclear reactors giving the massive tail risks with nuclear generation.China had a target of only 20 GW of solar by 2020 has decided to raise the target by 150% to 50 GW according to the country’s leading energy planning authority NRDC.Note China installed more than 15 GW of Wind Energy in 2010 alone becoming the world’s largest Wind Energy Market by far.Solar Energy strongly lags Wind in China despite China having the biggest solar panel manufacturing industry in the world.Its Golden Sun and other Solar Subsidy programs have been small in absolute terms compared to its huge electricity capacity.
CBI which is India’s leading investigate agency controlled by the government at the centre has been known to be a pawn in the ruling party hands.It selectively investigates cases against the opposition and the ruling alliance repeatedly messing up intentionally cases of graft against government ministers at the state and federal level.The Ruling Party has often used CBI as a powerful tool against both alliance parties as well as the opposition parties.This blantant manner of corruption had made the Supreme Court directly take the supervision of CBI in the 2G Telecom Scandal investigation which has thrown top corporate and politicians in jail.Now CBI has started acting tardily in the Adarsh Housing Scandal in which top Congress ministers in Maharashtra,bureaucrats,retired generals and admirals had conspired to usurp real estate land worth crores of ruppees.
The Tata Group which is known in India for high standards of corporate governance and doing business ethically in a country steeped in corruption too seems to have fallen.Ratan Tata appeared blemished as tapes of his conversations with the now disreputed corporate lobbyist Nira Radia were published in the media.He was caught at least listening and agreeing the the open manipulation of the Indian ministries in government formation if not the architect.Tata Teleservices which was a major beneficiary of the second round of 2G Telecom Auction during Raja’s tenure has now again appeared in the news for the wrong reasons.Despite denials by the Tata Group honchos,the Tata companies seem to be complicit in the billion dollar scam that has shaken the political and business roots of India.
Grantham has made a famous call that the rise in commodities is not a cyclical phenomenon but a secular long term one.He says that the rise in commodity prices is different from the past.Note Grantham has done an extensive study of bubbles and is one of the leading minds in the investment community.While every time in the past,the statement “this time is different” has led to a crash,Grantham’s call cannot be taken lightly.He says that the rise in population,shortage of resources,the growing consumption power of massive chunks of prosperous citizens in India and China will lead to a continued surge.Note commodity prices have declined secularly in the last century and since 2000 have managed to erase all their losses to form new peaks.Grantham also says there is a possibility of a massive short term decline which will give a historic opportunity to load on commodities.Jim Rogers is the most famous commodity bull and now Grantham has joined him.Note famous hedge fund managers have already made huge bets on gold and are winning currently.Note CIA and German Military are already on the record for calling Peak Oil which would lead to a drastic fall in living conditions worldwide as the global growth fueled by cheap fossil fuels sees an end