Benefiting from lower duties

Written by Pradip Kumar Dey | Updated: Apr 25 2011, 09:13am hrs
Over the years, public sector units (PSUs) have contributed significantly to the central exchequer by way of payment of taxes, duties, dividend payment and interest on government loans. However, there has been a decline in some PSUs contribution to exchequer in recent years, primarily on account of customs & excise duties.

The contribution of the 58 central and state sector companies (excluding banks and NBFCs) decreased by 7.7% to R89,640 crore during 08-09 from the level of R97,123 crore during 07-08 and decreased further by 1.1% to R88,648 crore during 09-10, according to a FE study.

And the ratio of exchequer to total income decreased from 11.59% during 07-08 to 8.94% during 08-09 and increased thereafter to 9.19% during 09-10. This indicates that the public sector enterprises are not better off in terms of performance.

The contribution to the exchequer normally includes excise duty, sales tax, wealth tax, income tax, fringe benefit tax and deferred tax. However, dividend and interest are not considered for this study.

A comparative study has been made for 58 public sector units excluding banks and NBFCs from 07-08 to 09-10. The companies aggregated excise duties decreased by 6% to R56,024 crore during 08-09 from the level of R59,594 crore during 07-08 and decreased further by 7.9% to R51,581 crore during 09-10.

A steady decline in excise duties was seen in the case of SAIL, BPCL, CPCL, IOC, Bhel, GAIL and National Aluminium. The excise duties of SAIL steadily decreased by 11% to R5,534 crore during 08-09 from the level of R6,217 crore during 07-08 and decreased further by 38.9% to R3,383 crore during 09-10.

The income tax of these PSUs also decreased by 9.9% to R26,130 crore during 08-09 from the level of R29,021 crore during 07-08 and increased thereafter by 9.5% to R28,624 crore during 09-10.

An increase was registered during 09-10 from the level of 07-08 in the case of BPCL, IOC, Oil India, NMDC,GAIL,Bhel and Engineers India. The income tax payment by Engineers India steadily increased from R108 crore during 07-08 to R250 crore during 09-10.

The top five PSUs according to contribution to exchequer during 09-10 are IOC, ONGC, BPCL, HPCL and SAIL. Among these top five, ONGC ranked highest in terms of contribution to the exchequer as a share of total income.

ONGCs contribution to the exchequer decreased by 1.5% to R14,684 crore during 08-09 from the level of R14,907 crore during 07-08 and decreased further by 2.1% to R14,382 crore during 09-10.

So ONGCs contribution to the exchequer as percentage of its total income declined from 22.9% during 07-08 to 21.27% during 08-09 and increased thereafter to 22.38% during 09-10.

A steady decrease in exchequer in total income ratio was seen in the case of Bhel, MOIL, Indraprastha Gas, SAIL, Hind Copper, GMDC and National Aluminium. National Aluminium's contribution to the exchequer as a percentage of total income decreased from 23.69% during 07-08 to 18.93% during 08-09 and decreased further to 10.81% during 09-10. Similarly in the case of Bhel, the ratio steadily decreased from 17.78% during 07-08 to 10.44% during 09-10.

Bhel contribution to the national exchequer decreased by 5.2% from R3,811 crore during 07-08 to R3,612 crore during 08-09 and increased thereafter by 1.7% to R3,674 crore during 09-10.