The hike in excise duty on petrol and diesel – three times in quick succession – will help the government garner an additional Rs. 10,000 crore in the fiscal year and partly make up for the shortfall in disinvestment receipts and direct tax collections.
But without the excise duty hike, petrol and diesel would be selling at around Rs. 49.05 and Rs. 35.06 per litre, respectively (in Delhi). Petrol currently costs Rs. 59.35 per litre in Delhi while diesel is priced at Rs. 45.03 a litre.
The higher realisation will come handy to the government to maintain fiscal deficit at 3.9 per cent of GDP in current financial year ending March 2016, notwithstanding poor showing with regard to sale of stakes in state-owned companies.
Although the government has targeted to raise Rs.69,500 crore from PSU disinvestment in current fiscal year, so far only Rs. 12,700 crore has been raised and the likelihood of any major stake sale in the remaining three months of 2015-16 is bleak.
Finance Ministry officials have admitted that there would be a shortfall of around Rs. 50,000 crore in disinvestment proceeds and about Rs. 30,000-40,000 crore in direct taxes, but he expressed optimism that higher realisation from indirect taxes as well as non-tax revenues will make up for the deficit.
The ministry is also insisting on higher dividends from the state-owned companies in a bid to garner more non-tax revenue.
The government has raised excise duty on petrol and diesel three times in last two months and by seven times since November 2014.
The three excise duty hikes this fiscal year, totalling Rs.2.27 per litre on petrol and Rs. 3.47 a litre on diesel, will yield the government Rs. 10,000 crore in additional revenue during the remainder of current fiscal year.
Taken together with four excise duty hikes between November 2014 and January 2015, levies on petrol has gone up by Rs. 10.02 a litre and that on diesel by Rs. 9.97 per litre.
According to the data, fiscal deficit position has shown a marked improvement at the end of November 2015.
The deficit stood at Rs. 4.83 lakh crore, or 87 per cent of the Budget Estimate (BE) for the whole 2015-16. This is much better compared to 98.9 per cent deficit recorded in the same period last year.
During April-November, indirect tax collections grew by 34 per cent to Rs. 4.38 lakh crore, as against the projected growth of 19.47 per cent.
In case of direct taxes, the growth in first eight months of current fiscal year works out to be 12.63 per cent at Rs.3.69 lakh crore, as against the budgetary projection of 13.09 per cent.
The government had budgeted to collect Rs. 36,174 crore by way of dividend from the public sector enterprises, higher than last year’s realisation of Rs. 28,423 crore.
It has already received a dividend of Rs. 65,896 crore from the Reserve Bank of India (RBI), which is higher than this year’s budget projection of Rs. 64,477 crore.
