Judges worry that lack of understanding about the scheme among common people, could lead to them feeling cheated, as in the Harshad Mehta scam
New Delhi: The Supreme Court today asked the Securities and Exchange Board of India (SEBI) to proceed with its probe into the Sahara group’s Optionally Fully Convertible Debentures (OFCD) scheme, saying that investors might not have proper knowledge about the product and could get cheated as in the Harshad Mehta scam.
“We are of the view that on the question of OFCD, it requires the decision of (market regulator) SEBI. Let SEBI hear and pass an order,” the court said, during the hearing of a case related to the OFCDs issued by two Sahara group firms, reports PTI.
Hearing the case, a three-judge bench headed by chief justice SH Kapadia observed that the order of SEBI would not be operational till the court gives further directions on it. “The order would not apply... We want to see the order of SEBI on OFCD,” the judges said.
The court also allowed the Allahabad High Court to proceed with its hearing of a petition in which the Sahara group has challenged SEBI’s direction to produce details about its investors.
The Court also sought to know from Sahara, the law under which it was operating the OFCD scheme. The Sahara counsel tried to explain the OFCD scheme, but the judge was not satisfied and said: “Till today, I do not know what is OFCD. How can some investors know. We want SEBI to decide.”
“We want to know on what basis you were calling for investment in OFCD,” the judges said. The judges said that the scheme was meant for rural people who would not know much about it. “Investors are not aware of OFCD. At the end of the day, they would come and say that they were cheated... You know the Harshad Mehta case; same modus operandi was there. Investors were not aware of the scheme.”
The decline in food inflation is seen as a breather for the government, as the rate of price rise has stubbornly remained high despite its fiscal measures and the RBI’s monetary tightening steps
New Delhi: Food inflation fell to an 18-month low of 7.7% during the week ended 30th April on the back of declining prices of pulses and vegetables, prompting the government to predict further moderation in prices due to record production of many food items, reports PTI.
The government, however, warned that the price rise of non-food items would continue to pose problems in the days ahead.
Food inflation, as measured by the Wholesale Price Index (WPI), was 8.53% in the previous week. It had stood above 21% in the last week of April 2010.
"The current trend in food inflation is welcome and we hope to see further moderation in food inflation in the coming weeks... However, there are concerns on price momentum in non-food articles," finance minister Pranab Mukherjee said.
India is estimated to have achieved record foodgrain production of 235.88 million tonnes in the 2010-11 crop year (July-June). This is on the back of all-time high output of wheat, pulses and maize. Apart from foodgrains, the country has produced a record quantity of oilseeds-30.25 million tonnes.
His reaction came in response to the decline in food inflation numbers to their lowest level since separate data for the segment was introduced in late 2009.
During the week under review, prices of pulses declined by 9.05% year-on-year, while vegetables became cheaper by 3.64%. Potatoes also came down by 3.58%.
"Sustained high non-food primary prices are creating cost-push inflationary conditions in the manufacturing sector.
Thus, even though food inflation is declining, concerns on higher core inflation remains," Mr Mukherjee said
He, however, exuded hope that recent monetary policy measures like the Reserve Bank of India's (RBI) hike in policy rates, would help in addressing the issue.
The RBI had hiked interest rate by 50 basis points earlier this month to tame demand and control inflation. It was the ninth hike in short-term lending and borrowing rates made by the central bank since March 2010.
Headline inflation was 8.98% in March, much above the government's comfort zone of around 5%. In its monetary policy for 2011-12, the RBI had projected inflation to average 9% during the first half of this fiscal before moderating to around 6% by the year-end.
Though rising food prices were the main contributor to inflationary pressure in 2010, recent months have witnessed a rise in prices of core (non-food) items. Core inflation was above 7% in March.
During the week under review, inflation in non-food primary articles was 28.62% during the week under review.
Fibre prices rose by almost 86% and minerals by 11.95%. Fuel and power were up 14.91%.
Core inflation is expected to grow further in the near future as the government is likely to soon announce a hike in retail prices of petroleum products.
"Fall in food inflation is on expected lines and the rate will remain moderate unless the coming monsoon fails. But global commodity prices, especially of oil, and their impact in the country have to be monitored," Crisil chief economist DK Joshi said.
Global oil prices continue to hover around $100 per barrel on account of the civil war in Libya, a major exporter and OPEC member, though it is down from the two-and-half high of over $120 per barrel touched in April.
While pulses and vegetables showed a moderation in prices during the week ended 30th April, other food items became more expensive year-on-year.
Cereals became dearer by 4.54% while fruit prices were up by over 35% on an annual basis. Onions grew 12.42% more costly on an annual basis.
Milk was also costlier by 4.3% in the week ended 30th April as compared to the corresponding seven-day period last year. Eggs, meat and fish were also up by 4.62%.
"The food inflation rate is gradually showing a trend toward normalisation. While this is encouraging, it is important to monitor the movement going forward. Usually rate spikes are seen in the post-monsoon period due to seasonality of agricultural output and supply side inefficiencies," Deloitte, Haskins & Sells director Anis Chakravarty said.
Factory output in March also witnessed lower growth of 7.3%, compared to 15.5% expansion in the same month a year ago. However, the performance in March was an improvement from the 3.6% growth registered in February this year
New Delhi: Poor performance of the manufacturing and mining sectors pulled down overall growth of industry to 7.8% in 2010-11 from 10.5% in the previous fiscal, reports PTI.
Factory output in March, as measured in terms of the Index of Industrial Production (IIP) released today, also witnessed lower growth of 7.3%, compared to 15.5% expansion in the same month a year ago.
However, the performance in March was an improvement from the 3.6% growth registered in February this year.
The manufacturing sector, which accounts for almost 80% of the index, saw its annual growth fall to 8.1% in 2010-11 from 11% in the previous fiscal.
The sector has also shown poor performance in the month of March, with meagre growth of 7.9% compared to the 16.4% expansion in the same month last year.
The mining sector also saw a decline in growth to 5.9% in 2010-11 from 9.9% in the previous fiscal. For March, the sector’s growth was a mere 0.2%, compared to 12.3% in the same month of 2009-10.
The capital goods segment was among the most affected as it grew by just 9.3% in 2010-11, compared to a robust 20.9% in the previous fiscal.
In March this year, the growth in capital goods production slowed to 12.9% from 36% in the same month of 2010.
During the last fiscal, growth of the electricity sector slowed to 5.6% as against 6% in 2009-10.
During March, the sector reported a growth of 7.2%, compared to 8.3% in the corresponding month of 2009-10.
Overall, 13 out of 17 industry groups achieved positive growth in March this year.
Production in the consumer non-durables segment went up by 2.2% during the 2010-11 fiscal, as against 0.4% in 2009-10.
The consumer durables segment grew by 20.9% in 2010-11, down from 24.6% expansion in 2009-10.
Overall, consumer goods output reported a rise of 7.5% last fiscal, as against 6.2% in 2009-10.
Intermediate goods reported a rise of 8.8% during 2010-11, down from 13.6% in the previous fiscal.