Slowdown fears grow as tax receipts, exports growth slip

Under impact of domestic demand compression and declining growth in exports, India's industrial economy isshowing signs of slowdown, as evident from initial data on tax collection andexport shipments released on Tuesday. .

While Eurozone crisis has begun biting the exports growth,indirect tax collections dropped because of slowdown and cut in customs andexcise duties on petroleum products.

Factors like high inflation and rising cost of borrowingweighed on industrial demand.

Exports grew by 10.8 per cent year-on-year to $19.9 billionin October, the lowest in the last two years, according to preliminary figures.

From a peak of 82 per cent in July, export growth has beenslipping to 44.25 per cent in August, 36.36 per cent in September and 10.8 percent in October.

"In any sector, it is the lowest in the last threemonths, deceleration is uniform," Commerce Secretary Rahul Khullar saidadding events in Eurozone have had their impact on the Indian shipments.

Indirect tax collections in October dropped by 2.5 per centto Rs 30,278 crore mainly on account of a slowing economy and cut in customsand excise duties on petroleum products a few months back.

Indirect tax revenue comprising customs, excise and servicetax was at Rs 31,058 crore in October 2010.

"Indirect taxes are in sync with economic activitiesand a decline clearly signifies slowdown," CRISIL Principal Economist D KJoshi said.

In a report, Ficci expects the country's economic growth tomoderate to 7.5-8 per cent this fiscal from 8.5 per cent in 2010-11.

"Our forecast shows that the industrial growth willmoderate significantly in the coming months," the Ficci's Economy Watchfor October said.

It said that government finances continue to remain understrain. The chamber expects slippages in government's fiscal deficit beyond 4.6per cent as targeted for the year.

According to it, the fiscal deficit may go up to 5.4 percent of GDP.

General inflation remains close to double digit, while thefood inflation has crossed 12 per cent. The central bank has hiked interestrates by 375 basis points since March 2010 in its bid to contain price rise.