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April-Aug excise kitty down 25%
September, 19th 2009

Successive stimulus packages have pulled the central excise collections for the first five months (April-August) of the current financial year down by over 25 per cent.

According to data from the Central Board of Excise and Customs (CBEC), excise kitty in the five-month period stood at Rs 33,602 crore, against Rs 45,079 crore in the same period last year.

The huge shortfall may force the government to revise downwards the total excise duty collection target of Rs 1,09,127 crore, set for 2009-10.

However, the signs of the manufacturing sectors recovery have reflected in the monthly central excise collection. The total collection for August 2009 stood at Rs 8,979 crore, against Rs 7,332 crore in July, and Rs 5,548 crore in June this year. The total excise kitty in August 2008 stood at Rs 9,846 crore.

While the effect of subsequent stimulus packages is being reflected in the excise collections, we hope to meet the target as the manufacturing sector seems to be improving. However, there are periodic reviews of the excise collections, and excise collection target is also being discussed, said a senior government official.

In fact, the Index of Industrial Production (IIP) went up by 6.8 per cent in July this year.

In general, there has been an almost 44 per cent reduction in the rate of excise duty in most items between April 2008 and April 2009, according to the government official.

Recently, Finance Minister Pranab Mukherjee hinted that the stimulus packages would continue, as an exit strategy was not desirable now.

On a quarterly basis, the excise collection in the first quarter (April-June) of the current financial year stood at about Rs 17,200 crore, against about Rs 25,000 crore in the first quarter of 2008-09.

In December 2008, the government had reduced the general rate of central excise duty for all products, except petroleum products, from 14 to 10 per cent. In February this year, as part of another stimulus package, the government had cut the general rate of central excise duty further to 8 per cent.

Also, the 4 per cent across-the-board excise duty cut was extended to the present financial year. In the Budget 2009-10 also, there were several proposals on excise duty, like reduction in the excise duty of petrol driven trucks from 20 per cent to 8 per cent and a cut in specific excise duty on large cars of engine capacity 2,000 CC and above by Rs 5,000.

The 2009-10 Budget has estimated combined collection from Customs, excise and service tax at Rs 2.69 lakh crore. The total mobilisation in first quarter was down by almost 29 per cent, to Rs 44,692 crore.

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