Signalling a pick-up in the economy on the back of a good festival demand, the Centres excise duty collections inched up in October to Rs 8,952 crore. This represented a 4 per cent increase over the Rs 8,591 crore collected in September.

The excise duty collections had shown positive growth trend from July on a sequential basis. However, the October 2009 performance was still substantially lower than the Rs 9,740 crore collected in the same month last year.

On the Customs duty side, there has been an improvement in collection in October 2009 at Rs 7,505 crore when compared to previous months collection of Rs 6,654 crore. Customs duty collections in October 2008 stood at Rs 9,265 crore.

The Finance Minister, Mr Pranab Mukherjee, had last month noted that he expected an improvement in indirect tax collection receipts in the third quarter (October-December) on the back of improved industrial activity and higher domestic demand.

For April-October 2009, the excise duty revenues of the Centre are down 18.8 per cent on a year-on-year basis. The global economic downturn and consequent fall in imports have clearly hit customs duty collections, which declined 31.8 per cent in April-October 2009 on a year-on-year basis.

The excise duty collections this fiscal till October 2009 account for about 50 per cent of the Budget estimate of Rs 1,05,000 crore for 2009-10. In the case of Customs duty, 46 per cent of the Budget Estimate of Rs 98,000 crore has been achieved till October. Owing to the global economic downturn, the Centre had for 2009-10 substantially reduced the Budget Estimates for both excise and Customs duty collections.

Policymakers are convinced that unless there is a pick up in the economic activity in the developed markets such as the US and the EU, it would be difficult for the country to increase its merchandise exports and return to the 9 per cent GDP growth levels in the next few years.

Already, the Government has indicated that the fiscal stimulus given in December 2008 and in early 2009 would be wound down in 2010. This will also help bolster the Centres indirect tax revenues through increased .tax rates.