November was a cruel month for tax receipts
The downturn in the country’s industrial sector, which saw output in October contract for the first time in 15 years, appears to have got worse through November, reports Gaurav Choudhury.delhi Updated: Dec 17, 2008 00:35 IST
The downturn in the country’s industrial sector, which saw output in October contract for the first time in 15 years, appears to have got worse through November.
Official data released on Tuesday showed November revenues from excise duty, which is levied as goods move from the factory to the market, contracted by 15 per cent from a year ago. Worse, revenues from customs duty imposed on imported goods fell by 0.8 per cent, pointing to a possible deceleration in demand for capital goods.
Service tax, imposed on 100 services, grew by 15.9 per cent in October, lower than the budgeted growth estimates of 30 per cent.
“Clearly, the impact of recession in developed countries on India is much deeper than anticipated,” Suresh Tendulkar, chairman, Prime Minister’s economic advisory council, told Hindustan Times.
Excise and customs duty collections, which together account for more than 75 per cent of indirect tax receipts for the government, declined by 8.3 per cent in November. Direct tax collections -- consisting mainly of corporation tax and personal income tax -- fell by 36 per cent in November, reflecting poor corporate performance. “The fall in excise duty collections means that industrial output would remain low through November,” said N.R. Bhanumurthy, economist at the Institute of Economic Growth, a Delhi-based think-tank. Industrial output contracted by 0.4 per cent in October, while exports fell by 12 per cent during the month as demand for Indian products from foreign companies shrank. Tendulkar said the economy’s fundamentals were strong, but a “fear factor” driven by what was happening in the advanced countries had impacted investor and consumer sentiments in India.