Indian Companies Pay More Tax, Suggesting Faster Recovery Pace
September, 22nd 2009
Taxes paid by Indian companies more than doubled in the three months through September, suggesting growth in Asias third-biggest economy may be strengthening.
Advance taxes paid by local companies rose to 440.1 billion rupees ($9.15 billion) in the July-September quarter from 207.2 billion rupees in the previous three months and 14.7 percent more than the same quarter last year, said a finance ministry official who declined to be identified. Companies make advance payments once every three months, based on their estimates of income for the quarter.
Reliance Industries Ltd., Indias most valuable company, paid 11.6 billion rupees in advance taxes in the quarter to Sept. 30, 69 percent more than the April-June period, the finance ministry official told reporters in New Delhi today. State Bank of India paid 18.3 billion rupees, Oil & Natural Gas Corp. provided 17.96 billion rupees and Indian Oil Corporation Ltd. paid 11 billion rupees, he said.
Record-low interest rates and tax cuts are providing stimulus which policy makers estimate are worth more than 12 percent of Indias gross domestic product, reviving demand for cars made by Maruti Suzuki India Ltd. and Hyundai Motor Co. Economic growth may average about 8.6 percent over the next 10 to 15 years, UBS AG economist Philip Wyatt said today.
The tax numbers indicate that the worst is behind us and all the leading indicators including industrial production suggest that non-farm GDP will gain further ground, said Sonal Varma, an economist at Nomura Securities Co. in Mumbai. This is a clear sign that things are improving.
Increased spending on consumer goods and automobiles has driven tax payments higher, the official said. Advance tax payments declined 3.7 percent in the April-June period, he said. The cement sector also improved, he said.
ACC Ltd., Indias biggest cement maker, paid 1.5 billion rupees in taxes in the three months to September, more than three times 420 million paid in the previous quarter, the official said. Bharti Airtel Ltd. paid 4.84 billion rupees in taxes, compared with 1.5 billion rupees in the previous period.
Finance Minister Pranab Mukherjee said Sept. 19 Indian policy makers need to keep borrowing costs at a record low to aid a nascent economic recovery. At this point of time I cannot accept dear money policy or credit curbs as it will have an adverse impact on growth, Mukherjee said.
The central bank cut benchmark interest rates six times from October 2008 to April 2009 and said the $1.2 trillion economy will grow 6 percent in the fiscal year to March, slower than the average 8.7 percent in the previous four years.