Govt may raise excise by 1%, hike fuel prices in budget

With the fiscal deficit rising, analysts are expecting the government may levy a 1 per cent social spend oriented corporate tax surcharge or 1 per cent excise duty hike in the upcoming budget. There is also a possibility of a fuel price hike covering diesel, cooking gas and kerosene on budget day itself, according to a note by Bank of America Merrill Lynch. Bank of America Merrill Lynch expects the fiscal deficit to rise to 5.9% for fiscal 2012 as against the projected 4.6% by the government. The report says that Finance Minister Pranab Mukherjee is unlikely to present a draconian budget with rising global and domestic growth risks. A fiscal contraction of Rs 100 would reduce growth by Rs 150, the note points out. Still, Mukherjee is not likely to let the fiscal deficit careen out of control and therefore expectations of an across the board hike in taxes with the Uttar Pradesh polls advanced before the budget.

Source: Tribune India