Tue, Jul 15 12:25 AM
The government saw its indirect tax revenue grow 11.5 percent to Rs 54,341 crore during the April-June quarter, according finance ministry data released on Monday, but analysts said a sluggish growth in excise collections was a cause for concern as it reflected a worsening slowdown in industrial production. Excise collections totaled Rs 25,882 crore in the fiscal's first quarter, up just 2.8 per cent from the same period a year ago, while customs revenues rose 20.9 per cent to Rs 28,459 crore.
Much of the rise in customs revenues could be attributed to a surge in oil import bill because of higher global crude prices. The update from the finance ministry didn't give a breakup, but experts said revenues from non-oil imports could have also seen a much slower growth.
The only good news rested with services tax collections that grew a robust 33.6 per cent during the April-June period. The drop in growth of excise collections, down from 6.8 per cent in the April-June period last year, underscore the slowdown in growth of factory output, which fell to a six-year low of 2.5 per cent in May.
"Going forward, we expect the current slow growth phase to continue due to rise in the cost of production and also due to slackening of demand. In addition to this, there could also be some cyclical factor that is pulling the growth," said a recent report by the New Delhi-based Institute of Economic Growth.
Analysts also attributed the low growth in excise duty collections to recent duty cuts in petroleum products to prevent total pass-through of skyrocketing global crude oil prices in domestic retail prices. The government has abolished customs duty on crude from 5 per cent, reduced customs duty on diesel and petrol to 2.5 per cent from 7.5 per cent and reduced excise duty on both the transport fuels to Re 1 a litre from the existing Rs 4.60 and Rs 14.35 per litre early last month.
It also slashed import duty on other petro products by half to five per cent.
