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'Govt can impose CESS on retail sales of diesel to cut price arbitrage'   Sources - 5th march 2013, Indian Express

The government could levy a cess to block diversion of bulk diesel by companies trying to take advantage of price arbitrage.

Arvind Mayaram, secretary, department of economic affairs of the finance ministry said, "It is not that difficult to control. Further, diesel prices are being corrected anyway and if the difference between bulk and retail is eliminated, then how does it matter where you buy from?"

Speaking to The Indian Express in a post-Budget interview, Mayaram said the oil marketing companies can track sudden surges in off take from petrol pumps.

"Also,every state has allocations. IOC, for instance , knows that the state road transport corporation is a bulk buyer and has an estimate of how much diesel they consume." He said the government is confident that reforms on petroleum subsidies will result in savings of Rs 45,000 to Rs 50,000 crore in 2013-14.

"A Re 1 hike in diesel roughly helps save Rs 8,000 crore. So in the next six months, we could easily earn about Rs 45,000 crore from diesel and the savings from capping the subsidised LPG to nine cylinders," Mayaram said.

Targeting a fiscal deficit of 4.8 per cent of the GDP in 2013-14, the Union Budget slashed the petroleum subsidy bill by 32 per cent to Rs 65,000 crore as against the revised estimate of Rs 96,879.87 crore for 2012-13.

Mayaram also indicated that though the expenditure on the planned Food Security Bill is still being worked out, there could be some savings for the exchequer. "The public distribution system will be subsumed under the Act. There will be no cash transfer for food but digitisation of beneficiaries will clean up the list. To that extent there will be lesser expenditure on food subsidy," he said. In 2013-14, the government has budgeted Rs 90,000 crore for food subsidy including Rs 10,000 crore for the Food Security Bill.

Revenue challenge for 4.8 per cent fiscal deficit: "We have kept Rs 40,000 crore from spectrum in 2013-14. Though this fiscal, we don't require more revenue for a 5.2 per cent fiscal deficit, the issue is next year. Revenue will come not only from 2G and 3G auction but also from 800 FM radio stations to be auctioned.

Residual stake sales: "Our stake in SUUTI could fetch about Rs 40,000 crore and the sale of government holdings in Balco and HZL will bring Rs 15,000 to Rs 16,000 crore. But we are targeting a much lower sum of Rs 14,000 crore. So we are not saying that we will disinvest the whole of SUUTI."

Measures for capital markets: "The idea is to move towards a single Know Your Customer norms for all entities across the Sebi platform first. The next step is to attempt a single norm across all the financial sector regulatory jurisdictions. Our effort is not to make investing in India easier but investing per se easier. The entire platform of investments, whether it is taxation or entry points should be made easier. If FIIs still feel they are at a disadvantage, then we are open to looking at them and clarifying those."

Distinction between FII and FDI based on holding: "A committee will be set up on the issue. Today, there is confusion among investors; for instance there are sectoral caps for FDI. So if there is a cap of 26 per cent for a sector does that encapsulate FII and FDI? How do we regulate buying and selling of shares that could change the percentage of FII holding in a company? Essentially these call for a clarification on what should be treated as portfolio investment."