To shore up revenues: April-Nov ‘09 tax receipts fell 21%.
Pranab Mukherjee A first step towards withdrawing the post-crisis fiscal stimulus may be taken in the Union Budget for 2010-11, with an increase in the Cenvat rate for excise duty by 2 percentage points. Encouraged by signs of growth revival and desperate to reduce the fiscal deficit Union Finance Minister Pranab Mukherjee is expected to take this step when he presents his Budget to parliament on 26 February.
The government had reduced the Cenvat rate for excise duty from 14 to 8 per cent — in two rounds, by four percentage points in December 2008 and two percentage points in February 2009. The proposal for a partial rollback of these tax cuts has been revived following the advance estimates for gross domestic product (GDP) pegging the growth rate for 2009-10 at 7.2 per cent, up from 6.7 per cent in 2008-09 (quick estimates).
What has also emboldened the government to consider a rollback of the excise duty cut is the healthy growth in sales of consumer durables and automobiles in recent months. In January, for instance, the automobile industry's sales went up by 32 per cent over the same month in 2009, while the consumer durables industry is expecting to grow 15 per cent during 2009-10.
Source : Business Standard