New Delhi, Mar 12: With a little over two weeks to go for the current fiscal's closure, estimates predict a shortfall of over Rs 10,000 crore in the centre's excise and customs collections.Senior customs and excise officials said the shortfall at the end of February was over Rs 11,000 crore. It is expected to be reduced to Rs 10,000 crore by the end of this month.
Excise collections are likely to to fall short of the target by about Rs 4,000 crore and customs revenue by more than Rs 6,000 crore.
In the Delhi circle alone, comprising Delhi, Gurgaon and Faridabad, collective-excise realisation till February-end was about 15 per cent short of the approximate Rs 3,700-crore target, said sources.
The 1997-98 budget had assumed countrywide excise collections to rise by 13 per cent to Rs 6,010 crore and import duties by 19 per cent to Rs 8,415 crore. As per official figures, the indirect-tax collection target is Rs 1,04,750 crore with customs expected to contribute Rs 52,550 crore. Excise collection was set at Rs 52,200 crore for the fiscal.
Sources said the calculations have proved to be wrong, slowdown in the economy being the key reason. Other factors include cutbacks in excise and import duties. These, however, helped in checking the inflation rate in 1997-98. Excise duties were restructured, introducing three new rates of 8 per cent, 13 per cent and 18 per cent, replacing 10 per cent and 20 per cent. The effective duty was reduced by 2 per cent to 7 per cent and items of mass consumption were charged 8 per cent as against 10 per cent previously.
On the import front, the peak-import tariff was reduced from 50 per cent to 40 per cent and duties on capital goods were cut from 25 per cent to 20 per cent. There were similar reductions in levies for chemicals, computers and peripherals, among others. With lower revenue from indirect taxes, the fiscal deficit, already under strain after the the pay-commission award, would rise. The deficit, as a proportion of gross domestic product (GDP), would also get inflated.
Direct-tax rates have also been lowered, led by personal income tax. This should have given a fillip to domestic demand and triggered a rise in industrial production. Revenue officials sounded optimistic that tax collection would improve in March, narrowing the shortfall for the whole year.
A lot also depends on the success of the department's dispute-clearance drive. An estimated Rs 8,000 crore is locked up in adjudications at various levels, said sources. The Central Board of Excise & Customs (CBEC) chairman R Gopalanathan said the department would try to complete adjudication of pending cases by March to increase collections.
Insight
Tough task for new government
The new finance minister will have to handle a hot potato. The budget for 1997-98 is slated to close with a larger deficit than expected. The problem is not only the larger outgo on account of the pay-commission award. Revenue collections are falling short of targets by a wide margin, principally because of economic slowdown.
But economic activity should have revved up after several cuts in excise duties, import duties and in taxes on corporate and personal income. The array of tax-reliefs did not, however, give a boost to the economy. More than the budget, fiscal deficit and revenue shortfalls, the new finance minister's problem will be the languishing economy.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
