Target set high despite shortfall

BUDGET & GOVERNMENT

EXCISE: Impost to contribute 17 paise in every rupee to exchequer

Finance Minister P Chidambaram plans to increase excise collections in 2007-08 to Rs 1,30,220 crore, an 11.04 per cent hike over the revised estimate of Rs 1,17,266 crore for 2006-07. In the next fiscal, excise is expected to contribute 17 paise in every rupee to the exchequer.

However, the central government fell short of its excise duty collection estimate by 1.45 per cent. While the Budget estimate for 2006-07 was Rs 1,19,000 crore, the revised estimate for 2006-07 stood at Rs 1,17,266 crore.

The oil and gas sector is expected to contribute Rs 1,05,558 crore of the excise duty collection in 2007-08, a 10.81 per cent increase over the revised estimate of Rs 95,256 crore for 2006-07. Rs 12,530 crore will come from education cess.

Finance Minister P Chidambaram has proposed additional cess of 1 per cent on all taxes, by retaining the 2 per cent cess.

"The revenue generated from the cess will be used to fund secondary and higher education, and expand capacity by 54 per cent for reservation, for the socially and educationally backward," the finance minister said during the Budget session.

The excise collection will also include Rs 1,125 crore and Rs 1,150 crore, as arrears of the central excise duties have been included in the revised estimate for 2006-07 and Budget estimate for 2007-08.

The Department of Revenue and other government departments are expected to collect Rs 13,782 crore in excise duty for 2007-08, compared with the revised estimate of Rs 11,410 crore for 2006-07.

The tax-GDP ratio is set to increase to 11.8 in the Budget estimate for 2007-08, compared with 11.4 in the revised estimate for 2006-07.

The 1 per cent National Calamity Contingent duty levied on pan masala and certain specified tobacco products, has also been extended to polyester filament yarn, motor car, two-wheeler and multi-utility vehicles.

It is expected to contribute Rs 2,140 crore in 2007-08, as against Rs 1990 crore in 2006-07. The surcharge on motor spirit, and pan masala and tobacco products is expected to contribute Rs 7,890 crore and Rs 850 crore, respectively, in 2007-08.

On February 15, 2007, the central government reduced the prices of petrol and diesel by Rs 2 per litre and Rs 1 per litre, respectively, and absorbed part of the revenue loss.

Going a step further, the finance minister has proposed to reduce the ad valorem component of excise duty on petrol and diesel from 8 per cent to 6 per cent.

Chidambaram also raised the exemption for small scale industry to Rs 1.5 crore from Rs 1 crore.