The Department of Industrial Policy and Promotion is expected to release the Index of Industrial Production for September on Wednesday. But if you go by the indirect tax collections reported by the finance ministry for October, the country?s industrial growth scenario going forward looks pretty grim. Excise and custom duty collections have fallen by 5% in the month for the first time in several years.

Incidentally, when IIP growth shrunk to 1.3% in August, indirect tax collections were still seeing positive growth of 4.8%. While indirect tax collections have fallen into negative territory only in October, excise duty collections ? a direct indicator of India?s manufacturing output ? have seen negative growth for the second month in a row.

Excise collections in October dipped by 8.7%, after a 3.8% dip in September. The Central Board of Excise and Customs had in fact been hopeful that collections from the tax would pick up in October when the festive season kicked in

A finance ministry official said, ?There is not much growth in production and so excise collections are bound to decline.? The exchequer collected only Rs 9,399 crore from excise, compared to collections of Rs 10,293 crore October 2007.

Mahesh Purohit, director Foundation for Public Economics and Policy Research points out: ?Excise collections are related to production and sales. With production and demand both declining, duty from the tax will also fall.?

Mirroring the 15% decline seen in India ?s exports in October, collections from customs duty shrunk by 0.9% to Rs 9,265 crore in October 2008 compared to Rs 9,353 crore a year ago.

Imports have also gone down, note experts. ?There is a distinct contraction in demand by the domestic industry for raw materials which has led to the decline in imports,? Rajiv Dimri partner BMR Advisors pointed out.

Reflecting a slowdown in economic activity, collections from customs and excise duties fell to Rs 18,664 crore in October this year as compared to Rs 19,646 crore in October 2007, as per official figures released on Tuesday.

Overall collections from customs and excise duty between April to October 2008 too have slowed to register a growth of 7.5% to Rs 1,31,943 crore. The CBEC netted Rs 66,621 crore from customs duty in the period, a rise of 15.2% over the Rs 57,833 crore in the same period in 2007. Excise collections between April-October 2008 were up a meagre 0.6% to Rs 65,322 crore.

Service tax collections, data for which is available only till September 2008, have also slowed down. Collections from the tax rose by 18% to Rs 5,766 crore in September 2008, up from Rs 4,888 crore in September last year. In the first six months of the fiscal, collections from service tax registered an increase of 28.7% to Rs 29,867 crore. They stood at Rs 23,204 crore in the same period a year ago.