India has stepped up enforcement of tax collections as it looks to raise revenue to help plug its fiscal deficit.
Chidambaram said this on Tuesday (February 05), while addressing the investiture ceremony of the Central Board of Excise and Customs (CBEC).
“This year has been difficult for tax collections too as the economy slowed down inputs have slowed down. Manufacturing remains subdued and therefore, collections have been affected. Nevertheless, I have urged the board and through the board all officers and ranks of the Custom and Excise Department to continue with their efforts to achieve the budgeted targets,” said Chidambaram.
Chidambaram last month met with investors in Hong Kong, Singapore, Frankfurt and London in a push to attract investment to India as he looks to shore up the country’s finances and stave off a credit rating downgrade.
The government is gearing up to unveil this month its federal budget for the fiscal year starting in April, which analysts see as a key test of commitment to shoring up finances.
Chidambaram also said that collecting taxes is a challenging task.
“Customs and Central Excise is a committed service and many young men and women aspire to join the service. It’s a challenging service. Collecting taxes is not always easy and collecting taxes under extremely difficult conditions is part of the challenges faced by members belonging to the Custom and Excise services,” he added.
India’s economic growth, which was close to hitting double-digits before the global financial crisis in 2008, has been stuck below 6 percent for the past three quarters. In the fiscal year ending March 2013, the economy is expected to expand by about 5.5 percent, the worst pace since 2002-03.
Growing economic pains are making it tougher for Prime Minister Manmohan Singh to fund flagship welfare programmes ahead of a national election due by mid-2014.
To revive investor sentiment, Chidambaram has delayed until April 2016 controversial tax changes meant to combat evasion, after the new rules slowed capital inflows.
He has put welfare, defence and road projects on the chopping block to hit a tough fiscal deficit target of 5.3 percent of GDP by March.
India expects to raise $70 billion from corporate tax and $37 billion from individual tax payers in the current fiscal year that ends in March, according to finance ministry estimates. Net corporate tax collections for the first nine months were up 10.6 percent, compared with a 15 percent target.