A marginal increase in tax collections coupled with austerity measures to control expenditure helped government to limit fiscal deficit to 34 per cent of the budgeted target by August this year compared to 44 per cent in the comparable period last year.

Economic advisor to the finance ministry Ashok Lahiri exuded confidence that deficit would be limited to 5.6 per cent of GDP (or Rs 1,53,637 crore -- Rs 1,536.37 billion), as envisaged in the budget, even though he admitted that divestment target of Rs 13,200 crore (Rs 132 billion) may be missed during the fiscal.

Giving details of the government finances, Budget secretary D Swarup said gross tax collection was up by over 10 per cent at Rs 85,000 crore (Rs 850 billion) till August this fiscal compared to Rs 77,000 crore (Rs 770 billion) in the same period last fiscal.

However, after taking into account hefty refunds, net tax collections was up marginally to Rs 62,491 crore (Rs 624.91 billion) in the first five months compared to Rs 62,325 crore (Rs 623.25 billion) in the same period last fiscal.

The Centre's fiscal deficit came down to about Rs 52,237 crore (Rs 522.37 billion) till August from Rs 52,518 crore (Rs 525.18 billion) till July.

"The fiscal deficit till August was 34 per cent of budgeted estimate for 2003-04, compared to 44 per cent in the same period last fiscal," D Swarup said.

The revenue deficit in the first five months was slightly higher at 54.5 per cent of the budget estimate compared to 52.5 per cent in the year-ago period, Swarup said.

Finance ministry officials also said there could be some negative impact of the Supreme Court judgement to halt divestment in oil PSUs HPCL and BPCL, and there might be shortfall in attaining divestment target of Rs 13,200 crore during the current fiscal.

"There can be various measures to meet the shortfall from the divestment receipts and in fiscal deficit," Swarup said, referring to better tax administration and compliance.

Government had shortfall from sell-off proceeds in the last two years but was able to contain the deficit.

The Centre failed to meet Rs 10,000 crore (Rs 100 billion) sell-off target in 2001-02, and again could not meet Rs 12,000 crore (Rs 120 billion) target last fiscal.

Swarup said the government would be able to mop a substantial amount if the infrastructure PSUs pay 30 per cent dividend, while other state-owned companies contributed 20 per cent of their profits.

"Whether the Supreme Court judgement would affect the government's budget targets is too premature to say," Lahiri said.

Moreover, he said the passage of Fiscal Responsibility and Budget Management Act would enable the government to contain the deficit further.