Tax mop-up, exports data portend weak IIP estimates
A day after the finance ministry delivered a stern warning to tax evaders on payment of advance tax dues, data issued by the government on Tuesday showed that the gross direct tax collection was up just over 7 per cent in the first eight months of the year, with corporate tax collection growing merely 3 per cent at Rs 2.05 lakh crore.
The figure corroborates the finance ministry's theory that a sizeable number of assessees are withholding details regarding their true income, which, combined with the slowdown in the broader economy, has dented corporate earnings and, consequently, tax collections.
The slowdown is further reflected in the November trade data released today. Exports contracted by 4.17 per cent to $22.3 billion — the seventh consecutive month of decline — while imports grew 6.35 per cent at $41.5 billion, resulting in a widening of the trade deficit at $19.28 billion during the month. Worried over the slowdown, the government is likely to announce a booster dose for exporters by the end of the week, a senior government official said.
"There has been a slight improvement ... hopefully the government is now coming out with a new package for boosting exports in the last quarter which the minister will be announcing towards the end of the week," commerce secretary SR Rao said adding that the export growth is likely to pick up in the last quarter of the fiscal. During April-November this fiscal, the exports contracted by 5.95 per cent to $189.2 billion.
Both the tax collection and exports figure show that the other macro indicators of the economy, including the upcoming Index of Industrial Production (IIP) numbers, could also reflect the ebbing of investment sentiments. The IIP shrank 0.4 per cent during September and the numbers for October are due on Wednesday. The index contracted 4.9 per cent last October. Though the government has taken a slew of reforms to boost the economic growth, response to these policy measures are still to unfold. During the second quarter of the fiscal, GDP growth grew by 5.3 per cent as against 5.5 per cent in the first quarter and a 6.7 per cent expansion during the same period a year ago, pulled down largely by the manufacturing and agriculture sector.
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