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Customs collections dip despite surge in oil imports

Hema Ramakrishnan

NEW DELHI, Sept. 13

A SURGE in oil prices combined with the depreciation of the rupee vis-a-vis the dollar would have in any normal year shored up customs revenue and provided some cushion to the Finance Ministry to rein in fiscal deficit. This does not seem to be the case so far in the current fiscal.

The rate of growth in cumulative customs collections has slowed down in the first five months to around 5.81 per cent as compared to the 11.1 per cent growth witnessed in the first quarter of the current fiscal.

The revenue forgone on account of a slew of export promotion schemes combined with the modest growth in non-POL imports largely explains the deceleration in customs collections.

``The revenue loss on account of these schemes -- particularly the DEPB, EPCG schemes and enhancement in the duty drawback rates -- has dwarfed gains arising from the surge in oil prices and the depreciation of the rupee vis-a-vis the dollar,'' said Mr B .P. Verma, the Chairman, Central Board of Excise and Customs (CBEC).

Exports during the first four months of the current fiscal registered a near 25 per cent growth to touch $13.85 billion compared to $11.04 billion during April to July, last year. Oil imports grew by a whopping 98 per cent and stood at $5.46 billion. Non -oil imports registered only a 6.95 per cent growth.

Many of the export promotion schemes were broad-based this year including the EPCG scheme where exporters are permitted to import capital goods by paying a customs duty of five per cent. The concessional import duty facility has been thrown open to the s ervice sector.

The Finance Ministry has estimated a revenue outgo of close to Rs 15,000 crores on account of the various export promotion schemes. A substantial chunk of the revenue loss is accounted for by the DEPB and the duty drawback scheme, followed by the 100 per cent EOU and the QBAL scheme.

In fact, over the years, the total revenue forgone on account of export promotion schemes has been on the rise and is estimated to be a whopping 40 per cent of the net customs duty collection (NCDC) at the end of the current fiscal.

As compared to this, the total revenue forgone as a percentage of NCDC stood at around 38 per cent at the end of 1998-99. The burden would, perhaps, be eased at the end of 2002 when the DEPB scheme will be phased out.

Officials reckon that if the surge in exports continue, the revenue forgone may even surpass the levels originally estimated by the Finance Ministry. And this is bound to impact customs collections.

Customs collections during April-August touched Rs 19,203.60 crore as compared to Rs 18,149.97 crore in the same period, last year. The mop up in August stood at Rs 3,997.06 crore as against Rs 4,678.32 crore in the same month, last year.