Finance Minister Pranab Mukherjee today said he took a risk of facing inflation in raising excise duty across the board for mobilising resources, but expressed confidence that the impact would be absorbed.
This would have an inflationary impact of 0.41 per cent on wholesale price index
which would be absorbed in due course of time, he said.
"I do agree that my tax proposals (excise duty increase from 8 per cent to 10 per cent on non-oil products) will have some inflationary ingredient. It will be about 0.41 per cent. But in course of time it will be absorbed," he said at an interaction with members of industry chambers.
But, Mukherjee said the purpose of the duty hike was to raise additional resources and, therefore, he took the "risk of having a little inflationary pressure".
He said wholesale price inflation, currently at 8.56 per cent, is primarily because of rise in prices of wheat, sugar pulses and rice, which could be tackled not through monetary policy but by improving supply.
To a suggestion from an industrialist that he was disappointed that the limit for savings under income tax exemption was not raised to Rs. 2 lakh from the present Rs. 1 lakh, Mukherjee said this could be considered next year.
"This suggestion I may consider next year, I may consider at the appropriate time. But I cannot give a commitment on the level," he said.