Group of ministers increases diesel price by Rs3 a litre, kerosene by Rs2 and domestic LPG by Rs50 a cylinder. Government also reduces excise duty on diesel from Rs4.60 a litre to Rs2 litre
New Delhi: The government on Friday hiked the price of diesel by Rs3 a litre, kerosene Rs2 a litre and cooking gas by a steep Rs50 a cylinder, seeking to raise Rs21,000 crore, but slashed customs and excise duties on petroleum products to give up Rs49,000 crore annually. The hike comes into effect from midnight tonight.
The Empowered Group of Ministers (EGoM), headed by finance minister Pranab Mukherjee, met today and took this decision, which oil minister S Jaipal Reddy said was done to cut down on the burgeoning under-recovery of oil marketing companies. The under-recoveries which stood at Rs1,71,140 crore will now come down by Rs21,000 crore.
Petrol prices that were increased by Rs5 a litre about a month back, were left unchanged today, reports PTI.
Mr Reddy told a news conference that the price of diesel would be raised by Rs3 a litre, the price of kerosene supplied through the public distribution system by Rs2 per litre and domestic LPG by Rs50 a cylinder. He described the increase as "very modest and minimal".
Explaining details of the duty restructuring, Mr Reddy said the meeting decided on elimination of 5% customs duty on crude oil and all petroleum products , that will result in a revenue loss of Rs26,000 crore for the government for the full fiscal year.
The excise duty on diesel has been reduced from Rs4.60 a litre to Rs2 a litre which will entail a revenue loss of Rs23,000 crore during 2011-12. He said it could not be cut any further as the special excise duty and the additional excise duty have been earmarked for the central road fund and the educational cess. On both these accounts, the government will incur a loss of Rs49,000 crore.
The latest price hike would lead to an increase in inflation by around 50 basis points, said D K Joshi, chief economist, Crisil. Inflation now is hovering at around 9%. The government last increased the price of kerosene by Rs3 litre a year ago.
Kerala, said to be the country’s most literate state, is flooded with numerous ‘get-rich-quick’ or ‘earn-huge-return’ schemes offered by money swindlers. While the state director general of police has admitted noticing frauds amounting to over Rs1,000 crore, the worrying factor is that even a few policemen have been found to be involved in these MLM schemes
Following the hue and cry from a number of investors, the Kerala police has started investigations into several multi-level marketing (MLM) companies, two prominent names among these being Tycoon Empire International Ltd and Bizarre group of companies, and has arrested some of the promoters. Many of these cases have inter-state ramifications and have been handed over to the Crime Branch in Kerala.
Media reports have quoted Jacob Punnose, director general of police (DGP), Kerala, as saying that these investigations would be completed within five to six months. Chennai-based Tycoon Empire International had collected Rs370 crore from 50,000 investors, while Bizarre group collected Rs55 crore from depositors. Besides these two names, one other MLM company cheated people of around Rs300 crore. It operated 14 accounts in a private bank, using false names and addresses, and the Kerala police will report this to the Reserve Bank of India (RBI), he said.
Earlier this month, the Kerala police arrested Abdul Arshad, managing director of Kochi-based Bizarre group, which has allegedly duped about 1.65 lakh people in Kerala alone. According to reports, Bizarre (which is created from the initial letters of Bold, Intelligent, Zealous, Ambitious, Responsible, Rich and Efficient) collected about Rs55 crore from one lakh investors through a money circulation scheme, and over Rs53 crore from 65,000 people as investment in the company's super market chain. Sulthan Bathery police has so far arrested 15 people associated with Bizzare, including its executive director, PT Kunjumuhammed, and seven business promoters.
Last week, police also registered cases against Bizarre and Tycoon Empire International. They were to find that one of their colleagues, a sub-inspector, was acting as chief executive of the Bizarre group. Police are now searching for KT Gopinath, the sub-inspector from Thrissure Armed Reserve Force who is absconding.
Bizarre would collect Rs14,250-Rs5,500 as membership charges and Rs8,750 for 8,000 shares in the company's super market. It promised to give discount cards worth Rs10,000 for buying goods from its stores. Bizzare officials created an image that the company was doing good business, by claiming that it aimed to enter the real estate and hospitals segments, and that it even planned to list on the Bombay Stock Exchange (BSE). However, the Bizarre management could not keep its promises and investors began to register complaints against it, which led to the arrest of top officials.
According to a blogger, Kerala is flooded with numerous MLM schemes that are duping gullible people across the state. The netizen says, "The interesting fact is that most of these (MLM) companies are headquartered outside Kerala, but the number of agents in those areas is almost nil. Obviously, Kerala is becoming the easy place to trap people in these scams."
Take the example of Tycoon Empire International. The company's owners are from Chennai, but it has promoters from Kerala. According to media reports, the Kozhikode police has intensified investigations into alleged money swindling to the tune of Rs370 crore by Tycoon. Police said the company had collected money under the pretext of products, and that its claims to be an ISO certified company are false.
"The company, in its latest bid to regain the faith of investors, claimed to have ISO certification, but it turned out to be false. The Geneva-based organisation has denied issuing ISO certificate to Tycoon," PP Sadanandan, deputy superintendent of police, was quoted as saying.
Tycoon offered Rs10,000 per month, besides a commission for enrolling new members, to anyone who could invest Rs1 lakh. According to media reports, most of the people duped by Tycoon are from Payyoli and Vadakara regions and Palakkad and Thrissure districts of Kerala. A majority of those duped are police personnel, government employees and teachers.
In other case, police arrested three officials of Verizon Builders, another money circulating company. According to police, they were running an MLM scheme in the name of Verizon Builders and Developers Ltd and Encode Financial Services Pvt Ltd for the past three years. They would collect Rs6,000, including Rs5,000 as membership fee and Rs1000 as share in the business, under the pretext of real estate investment. In addition, the members were promised Rs1,000 for every pair of new joiners they brought with them. Besides real estate investment, Verizon also offered products like insurance and ULIPs.
The MLM companies not only targeted residents from Kerala, but also trapped people from overseas, especially people employed in Gulf countries. In the case of Apple A Day Properties, also an MLM company, after numerous complaints, Kerala chief minister Oommen Chandy conducted a video-conference with victims from Gulf countries. The company has cheated people in the state to the tune of over Rs100 crore, under the pretext of real estate projects and buying flats. Last week, Apple A Day Properties' promoters, Saju Kadavilan and Rajiv Kumar Cheruvara surrendered, and they are in police custody till 30 June 2011.
Other companies who have cheated gullible people in Kerala include names like Nano Excel, UniPay2u, RMP, Visarev. The case of Nano Excel is very interesting. While the company has allegedly looted Keralites of over Rs100 crore, the company has itself complained of cheating by one of its directors. On 16 April 2011, Nano Excel issued a notice informing its distributors to stay away from the director, saying "This is to inform that Patrick Thomas who was director in the company is terminated due to mis-appropriation of funds and management administration. Those distributors still in communication with him, personally or officially, do so at their own risk. We now have our new administration team in our headquarters New Delhi, streamlining all defaults of Patrick Thomas executed so far, and our new administration will be a promising team to service you better from now ,sorry for the inconvenience."
The Kerala police has also warned hotels, restaurants and convention centres across the state, not to allow money-chain companies to hold any meetings on their premises.
Moneylife has consistently warned people about MLM scams, and yet finds the 'get-rich-quick' frauds spreading across the spectrum, from millionaires to the penniless and from the uneducated to the highly qualified. The Kerala example underlines the desperate need to spread financial literacy across the country.
A short-term bounce, subject to dips
The market extended its gains today as the International EnergyAgency's (IEA) decision to release substantial crude stocks eased worries about higher inflation for the time being.
With the retreat in global oil prices overnight, following the IEA's move to release two million barrels a day for 30 days, to make up for supplies choked off by an armed rebellion in Libya, the domestic market opened higher. The Nifty opened 23 points up at 5,343 and the Sensex resumed trade at 17,805, a rise of 78 points over its previous close. The opening figures on both the benchmarks were their intra-day lows today. PSU, IT, banking, metals and auto stocks supported early gains.
Extending yesterday's gains, the benchmarks regained their psychological levels of 5,400 and 18,000 on the Nifty and Sensex respectively after a gap of six days, and continued their journey northward. The market rallied after the oil minister clarified that there was no specific proposal to hike fuel prices.
Gains in three key European indices, following the approval by the European Union and the IMF of Greece's austerity initiatives, also supported the gains in the post-noon session. The market rose to its intra-day high in the closing minutes of trade, as the Nifty touched 5,478 and the Sensex scaled 18,269.
The indices ended marginally off those levels, with the Nifty settling 151 points higher at 5,471 and the Sensex soaring 513 points to close at 18,241. The Nifty closing figures is an eight-day closing high. Yesterday, we had mentioned that the Nifty has to go beyond 5,355 to make the bounce meaningful. The Nifty is up for a small rally up to 5,556.
The advance-decline ratio on the National Stock Exchange was a splendid 1312:371.
Among the broader indices, the BSE Mid-cap index gained 2.26% and the BSE Small-cap index rose 1.80%.
Barring the BSE Consumer Durables index (down 2.24%), all other sectoral gauges settled higher. The top gainers were BSE Realty (up 3.76%), BSE Metal (up 3.40%), BSE IT (up 3.37%), BSE Capital Goods (up 3.32%) and BSE Bankex (up 3.25%).
The top Sensex gainers were Hero Honda (up 6.07%), State Bank of India (up 5.95%), Jaiprakash Associates (up 4.55%), HDFC (up 4.46%) and Larsen & Toubro (up 4.25%). Reliance Infrastructure (down 0.84%) and Reliance Industries (down 0.03%) were the only losers on the index.
The major gainers on the Nifty were Sesa Goa (up 6.10%), SBI (up 5.91%), Hero Honda (up 5.71%), Ranbaxy (up 5.15%) and HDFC (up 4.65%). The laggards on the index were Reliance Infra (down 0.91%) and RIL (down 0.23%).
Markets in Asia, with the exception of the Taiwan Weighted, settled higher on the last trading day of the week, as the IEA's move was seen as a relief for the region's economies which are struggling with spiralling inflation. Easing of debt-related tensions in Greece also supported the gains.
The Shanghai Composite jumped 2.16%, the Hang Seng surged 1.90%, the Jakarta Composite gained 0.65% the KLSE Composite added 0.09%, the Nikkei 225 climbed 0.85%, the Straits Times advanced 0.73% and the Seoul Composite finished 1.70% higher. Bucking the trend, the Taiwan Weighted was down 0.40%.
Back home, institutional investors-foreign and domestic-were net buyers in the equities on Thursday. While foreign institutional investors pumped in funds amounting to Rs229.21 crore, domestic institutional investors put in funds worth Rs241.95 crore.