The government would not reduce indirect taxes to tackle the drought-like situation and reverse the slowdown, finance minister Pranab Mukherjee said here today.
Cuts in indirect taxes reduce prices, and pressure is mounting on the government to provide such relief.
Already, the countrys indirect tax revenue has fallen 28 per cent in the April-July period because of previous duty cuts and falling imports. I am not thinking of giving any tax concessions. Therefore, I am not concerned with that part, Mukherjee said.
The minister, however, made it clear at a meeting with the commissioners of customs and excise that he expected the tax targets to be met.
In its budget, the government has set a revenue target of about Rs 2,70,000 crore from indirect taxes excise, customs and service taxes during the current fiscal.
Tax receipts, so far, have reflected the overall slowdown of the economy and the effect of stimulus measures such as reduction in duty rates.
Mukherjee said collections should improve from the December quarter when the economy was expected to pick up tempo and grow at rates above 6 .1 per cent.
According to official data, indirect tax receipts stood at Rs 59,110 crore in the first four months of 2009-10, against Rs 79,660 crore in the corresponding period last year.
The government has cut excise duty rates by 4 percentage points in two stages and clipped the service tax rate to stimulate demand in a slowing economy.
Besides, the higher spending to beat the slowdown has widened the fiscal deficit to 6.2 per cent of the gross domestic product in 2008-09 which is projected to widen to 6.8 per cent in 2009-10. The fiscal deficit is on the higher side but the government is determined to revert to the path of fiscal consolidation at the earliest, said the finance minister.