Govt to decide tomorrow on fuel price hike

The Cabinet, headed by Prime Minister Manmohan Singh, is likely to meet tomorrow to consider raising petrol and diesel prices necessitated due to a surge in international crude oil prices.

"As of now, the Cabinet is scheduled to meet at 4 pm tomorrow," a senior government official said.

Petroleum minister Murli Deora is, however, opposed to even a marginal increase in fuel prices and is instead seeking a cut in excise duties on petrol and diesel.

The official said the Cabinet will have to decide between raising of fuel prices that has the backing of Finance Minister P Chidambaram and cutting duties as desired by Deora.

Four of the seven-member Group of Ministers (GoM) on fuel prices, headed by External Affairs Minister Pranab Mukherjee, had met on Thursday last week and decided to leave the final decision to the Cabinet.

The GoM was understood to have narrowed down to two options - raising petrol price by Rs 4 or Rs 2 a litre and diesel by Rs 2 or Re 1 per litre.

Deora and Mukherjee, along with Agriculture Minister Sharad Pawar and the Finance Minister, had dropped the idea of raising domestic cooking gas (LPG) prices and instead asked the Finance Minister to cut excise duties.

To effect a minimal price hike, Chidambaram was asked to cut customs duty on crude oil and petroleum products and Re one a litre excise duty reduction on petrol and diesel to avoid the around Rs 71,000 crore loss on fuel sales expected by the state oil firms in 2007-08 fiscal, sources had said.

Indiabulls to go ahead with insurance JV

Indiabulls' tie-up with Sogecap for the life insurance business is on and the Indian firm is going ahead with its plans in spit of the problems faced by the latter's parent company.

Sogecap is a subsidiary of French bank Societe Generale, which is reeling under a recent massive fraud of $7 billion by a trader.

"I have spoken to SogeCap CEO and the tie-up is on," Indiabulls CEO Gagan Banga, CEO, Indiabulls, told PTI.

On December 31, Indiabulls informed the BSE that it had entered into a Memorandum of Understanding (MoU) with Societe Generale Insurance for a life insurance joint-venture.

As per the MoU, Societe Generale, through its life insurance company Sogecap, would own 26% of the JV.

Indiabulls has received RBI's approval to invest in the JV. The total investment in the insurance company will be $250 million for the next 2-3 years, into which Indiabulls will be putting around $100 million with the rest brought in by the foreign partner.

"Life insurance would be a key focus area for Indiabulls. We are currently undergoing regulatory approval process with Insurance Regulatory and Development Authority,"Banga said.

"There is a four-stage process to get Insurance Regulatory and Development Authority's (IRDA) approval. Indiabulls is at stage one. It may take a little longer to launch," he added.

Govt may amend Securities Act to curb price manipulation

n a move which could be aimed at curbing possible price manipulation in the Indian capital markets, the government has proposed amendments to the Securities Contracts (Regulations) Act. The government said large public float of companies will broadbase the stakeholding and help achieve this objective.

A listed company must, at all times, have a minimum of 25% stake held by the public. If the publicly held stake falls below 25%, then the company will be given three months to bring the stake back to the minimum level, failing which action including delisting can be taken.

For this purpose, both the government and non-government companies will be treated at par. Powers of the stock exchanges as well as Sebi to relax listing requirements should be withdrawn.

The proposed amendment will take into account, not the promised offer to the public, but the actual number of shares allotted to the public. Standards for initial and continuous listing should be uniform.

Explain price hike, Paswan to steel firms

The government today asked the steel industry to justify the frequent price hikes and said that failure to do so could attract a price regulatory mechanism. The warning comes a day after major domestic steel makers raised prices of their products,

Steel Minister Ram Vilas Paswan said today.the usual alibi given by steel makers for raising the prices was an increase in rates globally.

"We will meet the steel companies within a week to seek a justification for frequent price hikes. If it's not justified, we will ask them to cut prices,”

“The per capita steel consumption of 45 kgs in the country is much lower compared to that in most developed nations. Prices should be reasonable to increase our consumption”, the minister said.

The cement industry had also drawn the same reactions from the government when they increased prices after last year’s Budget. The government had then termed the hikes unwarranted.

Paswan, however, gave the steel industry something to cheer about by saying that the ministry has proposed reduction in import duties of some critical inputs consumed by the steel producers.

The ministry has proposed reduction in customs duty of iron ore from the current level of two per cent for the next budget. It has also proposed complete abolition of custom duties on coking coal and scrap.

Currently, coking coal attracts a duty of five per cent while scrap has a duty of three per cent. Exuding confidence that the steel sector was moving forward, Paswan pointed out that if the capacity-expansions announced by the steel major fructify in time, India was likely to have a steel production of around 124 million tonnes (mt) by 2012 and 275 mt by 2019-20.

He said steel demand was likely to grow 10 per cent in the next few years. The Planning Commission's Working Group on steel has projected a demand of 70.34 mt for finished steel and 80.23 mt for crude steel by the end of the 11th Plan.

According to a steel ministry note, the country is likely to rope in investment to the tune of Rs 2,76,880 crore by 2012 and Rs 8,70,640 crore by 2020 in the sector.

On the contentious issue of iron ore export, Paswan said ore export should only be allowed after meeting the domestic requirement.