Hike in excise duty on petrol and diesel, three times in quick succession, will help the government garner an additional Rs 10,000 crore in the fiscal and partly make up for the shortfall in disinvestment receipts and direct tax collections.
But for the excise duty hike, petrol and diesel would be selling at around Rs 49.05 and Rs 35.06 per litre, respectively (in Delhi). Petrol currently costs Rs 59.35 per litre in Delhi while diesel is priced at Rs 45.03 a litre.
The higher realisation will come handy to the government to maintain fiscal deficit at 3.9% of GDP in current financial year ending March 2016, notwithstanding poor showing with regard to stake sale in state-owned companies.
Although the government has targeted to raise Rs 69,500 crore from PSU disinvestment in current fiscal, so far only Rs 12,700 crore has been raised and the likelihood of any major stake sale in the remaining three months of 2015-16 is bleak.
Finance ministry officials have admitted that there would be a shortfall of around Rs 50,000 crore in disinvestment proceeds and about Rs 30,000-40,000 crore in direct taxes, but he expressed optimism that higher realisation from indirect taxes as well as non-tax revenues will make up for the deficit.
The Ministry is also insisting on higher dividends from the state-owned companies in a bid to garner more non-tax revenue.
The government has raised excise duty on petrol and diesel three times in last two months and by seven times since November 2014.
The three excise duty hikes this fiscal, totalling Rs 2.27 per litre on petrol and Rs 3.47 a litre on diesel, will yield the government Rs 10,000 crore in additional revenue during the remainder of current fiscal.
Taken together with four excise duty hikes between November 2014 and January 2015, levies on petrol has gone up by Rs 10.02 a litre and that on diesel by Rs 9.97 per litre.
According to the data, fiscal deficit position has shown a marked improvement at the end of November 2015.
The deficit stood at Rs 4.83 lakh crore, or 87% of the Budget Estimate (BE) for the whole 2015-16. This is much better compared to 98.9% deficit recorded in the same period last year.
During April-November, indirect tax collections grew by 34% to Rs 4.38 lakh crore, as against the projected growth of 19.47%.
In case of direct taxes, the growth in first eight months of current fiscal works out to be 12.63% at Rs 3.69 lakh crore, as against the budgetary projection of 13.09%.
The government had budgeted to collect Rs 36,174 crore by way of dividend from the public sector enterprises, higher than last year’s realisation of Rs 28,423 crore.
It has already received a dividend of Rs 65,896 crore from RBI, which is higher than this year’s budget projection of Rs 64,477 crore.