The excise duty collection has seen negative growth on major consumer goods like refrigerator, air conditioner, textile, car and two-wheelers in the current financial year, a sign of sluggishness in consumption and production.
According to the finance ministry data, there has been a negative growth of 4% to R2,556 crore in excise mop-up from motor cars till October in the current financial year, while the collection from iron & steel sector dipped 6.75% to R6,930 crore. The tax mop from two-wheelers declined 4.6% to R229 crore in the same period.
The excise collection from consumer goods like refrigerator and air conditioner declined 21% to just R94 crore during April-October compared with the corresponding period in the last financial year. There has been a slowdown in the textile sector, which manifests in the negative growth of 5.8% in excise revenue from this labour-intensive industry to R239 crore. The worst hit segment of this industry has been ?man-made fibres and yarn,? where a de-growth of 17% in excise mop-up was witnessed.
According to Ernst and Young tax partner Saloni Roy, the negative growth in excise duty collection in these sectors shows strains in the economy. ?The economy is slowing down and its impact can be seen in many sectors,? she said.
The median excise duty is levied at 10.3%, including education cess.
Those sectors that have beaten slowdown are cosmetics, tobacco, cement and public transports. The excise duty collection from cosmetics till October in the current financial year rose 28% to R267 crore, while the mop up from public transport vehicles increased 39% to R571 crore. The cement sector has also performed well as the duty collection from it jumped 16% to R4,610 crore during the period.
The production activities in pharmaceutical sector have increased in the current fiscal as excise mop up from these products rose 85% to R366 crore, while the growth was 108% in the case of television receivers and 23% (to R750 crore) on chewing tobacco. Slowing of growth in revenue and industrial production has been a cause of concern for the government in the current financial year. The excise duty collection for November contracted 6.5% to R11,761 crore compared with the year-ago period. This was the second month in this fiscal when excise growth had turned negative. For the first time in 16 months, the excise duty fell 8% in September.
Besides, in October this year, factory output in India contracted 5.1% as tightening of domestic interest rates and slowing exports took the numbers to their worst performance in more than two years, since March 2009.