The Finance Ministry may start the first phase of fiscal withdrawal in the forthcoming Union Budget 2010-11. The Cenvat rate for excise duty is expected to rise by 2 percentage points. Indian economy has been showing the signs of growth revival lately, and hence Union Finance Minister Mr. Pranab Mukherjee might headstart the stimulus rollback.
Raising the excise duty would be the first step towards mending the fiscal deficit.Earlier, in order to overcome the global economic crisis, government had slashed the Cenvat rate for excise duty from 14 to 8 per cent. Now, since the economy is recovering from the global slump, partial rollback of such tax concessions has become necessary. The government considers the 2 percentage point increase in excise duty quite moderate. Industries like consumer durables and automobile has registered a remarkable growth in the recent past, hence, the excise hike is expected to be absorbed easily.
