NEW DELHI: The government is all set to extend the 4% across-the-board cut in excise duty beyond March 31 this year to help industry battle
slowing demand through price cuts.
However, it warned some sections of the industry that have not passed on the benefit of excise cuts to consumers. The government may instruct the Central Board of Excise and Customs to goad industrial units to do so, a government official said.
“The duty cuts are aimed at boosting demand. If companies do not pass on the benefit of duty cut, the whole purpose would be defeated,” said the official who asked not to be named.
The official said some sectors such as automobiles hiked prices after the excise duty reduction. However, no tough action is being contemplated against such sectors. The government plans to nudge them and drive home the point that prices need to be reduced to spur demand.
Hit by the global slowdown, Indian economy is expected to grow at 7% as per various estimates. There are apprehensions that the first quarter of the financial year, which is when the general elections would take place, could be particularly tough. The government, which did not announce any fresh tax measures in the interim budget, wants to ensure that the impact of the steps taken by it in the past is felt to some extent in the intervening period.
There are also expectations that the Reserve Bank of India will complement the government’s efforts to fight economic slowdown by bringing down key short-term policy rates.
Source : The Economic Times