Under impact of domestic demand compression and declining growth in exports, India's industrial economy is showing signs of slowdown, as evident from initial data on tax collection and export shipments released on Tuesday. .
While Eurozone crisis has begun biting the exports growth, indirect tax collections dropped because of slowdown and cut in customs and excise duties on petroleum products.
Factors like high inflation and rising cost of borrowing weighed on industrial demand.
Exports grew by 10.8 per cent year-on-year to $19.9 billion in October, the lowest in the last two years, according to preliminary figures.
From a peak of 82 per cent in July, export growth has been slipping to 44.25 per cent in August, 36.36 per cent in September and 10.8 per cent in October.
"In any sector, it is the lowest in the last three months, deceleration is uniform," Commerce Secretary Rahul Khullar said adding events in Eurozone have had their impact on the Indian shipments.
Indirect tax collections in October dropped by 2.5 per cent to Rs 30,278 crore mainly on account of a slowing economy and cut in customs and excise duties on petroleum products a few months back.
Indirect tax revenue comprising customs, excise and service tax was at Rs 31,058 crore in October 2010.
"Indirect taxes are in sync with economic activities and a decline clearly signifies slowdown," CRISIL Principal Economist D K Joshi said.
In a report, Ficci expects the country's economic growth to moderate to 7.5-8 per cent this fiscal from 8.5 per cent in 2010-11.
"Our forecast shows that the industrial growth will moderate significantly in the coming months," the Ficci's Economy Watch for October said.
It said that government finances continue to remain under strain. The chamber expects slippages in government's fiscal deficit beyond 4.6 per cent as targeted for the year.
According to it, the fiscal deficit may go up to 5.4 per cent of GDP.
General inflation remains close to double digit, while the food inflation has crossed 12 per cent. The central bank has hiked interest rates by 375 basis points since March 2010 in its bid to contain price rise.