NEW DELHI: Encouraged by buoyant growth in customs and excise duty mop-up in the April-June quarter — which is expected to boost the indirect tax kitty by at least 60% — the government is thinking of continuing with the current duty structure without tinkering with the stimulus packages announced earlier.
A top finance ministry official said with indirect tax collections very much on target, a further hike in excise duty was not warranted as low tax rates were helping industry grow at a rapid pace. With the economy expanding more than 8.6% in the last two quarters, the government hopes lower duty will help in further consolidation of industrial production, and, aided by a good monsoon, overall growth could surpass 9% by the end of this fiscal.
Even a hike in the indirect tax target from Budget estimates of Rs 3.15 lakh crore is possible, a senior official of the Central Board of Excise and
Customs said.
Excise Budget estimate is at Rs 1.32L crore
In the Budget for 2010-11, the government had hiked excise duty by 2%. This was a partial withdrawal of the stimulus package it had announced after the financial meltdown hit India in September 2008. The government had in late 2008 and early 2009, through stimulus packages, brought down the excise rate to 8% from a high of 16%. To protect the industry from onslaught of cheaper imports, the government had, however, retained customs duty at 10% for some time.
"We are not even talking about any further reversal of stimulus when the going is good both for the industry and the exchequer," the CBEC official said. The Budget estimates (BE) for excise in 2010-11 has been set at Rs 1.32 lakh crore as against the revised estimates of Rs 1.02 lakh crore of 2009-10. The BE for customs this year is Rs 1.15 lakh crore against Rs 84,000 crore collected in the previous year.
During a briefing on inflation, chief economic advisor Kaushik Basu had said government's fiscal management had ensured growth in the right direction. The latest industry data suggested robust expansion in capital goods and consumer durables sectors. Growth in capital goods and consumer durables sectors reflects confidence of the people and industry in future economic expansion. While a surge in capital goods industry shows the production line is being expanded in anticipation of higher demand, growth in consumer durables indicates people are assured about their incomes in the near future.
Source : Times of India