Excise duty collections for September drops first time in 16 months

NEW DELHI: The government's excise duty collections fell for the first time in 16 months in September, confounding analysts and policy makers alike while raising hopes this might compel the central bank to put its monetary tightening on hold. 

Collections from the excise levy - a tax imposed on goods at factory gate and considered one of the few accurate gauges of industrial activity - dropped 8% year on year in September, finally catching up with the trend of slowing industrial production. 

Excise mopup had held up all these months even in the face of mounting evidence of a slowdown in the broader economy, rising 9.2% year on year even as recently as August. 

"I am surprised at the variation in the data from August. You can't take these excise numbers as an extreme validation of the slowdown story... What happened in September could be because of some institutional reason," said Abheek Barua, chief economist with HDFC Bank

The chairman of the Prime Minister's Economic Advisory Council, C Rangarajan, also advised waiting a bit longer before pronouncing judgment. 

Overall indirect collections up 6%: 

"We have to see if this is one flash in the pan... We need to wait for one month for a clear picture on the trend," he said. 

Overall indirect tax collections rose 6% year on year in September, flattered largely by a 31.4% jump in service tax collections that rose to Rs 8,698 crore. Customs collections rose 7.2%, but this was largely because of a more or less similar depreciation in the rupee. 
Name-Deepak kumar jha
Pgdm(2010-12) 3rd