The Finance Ministry believes that fears about the fiscal deficit getting out hand during current fiscal 2011-12 are unwarranted.

The Government estimates the fiscal deficit to be 4.6 per cent of the GDP but various rating agencies like Moodys' think it would be around 5 per cent. Some fear that it may even be in the 5.5-6 per cent range.

Analysts sounded the alarm when the Government announced an additional borrowing of Rs 52,872 crore for the second half of the current fiscal starting October 1. Some analysts feared that the additional borrowing could touch Rs 1 lakh crore.

The Government currently aims to borrow Rs 4.70 lakh crore as against the budgeted Rs 4.17 lakh crore

A senior Finance Ministry official told Business line, There is no alarming picture. All the parameters are according to trend.

He said that in the last five years, during the first five months of the fiscal, the average fiscal deficit has been 61 per cent of the Budget estimate. This year it is 66 per cent.

The official said, We are almost in line with the past, especially when it needs to be noted that there was no Rs 1.06 lakh crore (through the auction of spectrum) additional earning this fiscal.

Tax collections
Talking about tax collections, despite heavy front-loaded refunds, the official said net direct tax collection has turned positive.

The Income-Tax Department, during April-September, refunded Rs 64,000 crore. Despite this gross direct tax collection, which includes income tax, is estimated to have grown by 23.5 per cent during April-September.

We think that with such a growth rate, direct tax collection may exceed the Budget target by Rs 8-10 thousand crore, the official added. The Government fixed a target of Rs 5.33 lakh crore for the direct tax collections in the Budget.

Indirect tax collection has grown by 25 per cent.

This is despite duty cuts on crude oil and petroleum products, the official said. According to the Budget estimates, the Government aims to mobilise Rs 3.99 lakh crore during current fiscal.

The official also claimed that expenditure is on the projected track.

However, analysts say that the relatively high global oil prices and rupee depreciation will cause the Government's oil subsidy to surpass initial estimates. Interest payments, which account for over 20 per cent of the total Government expenditure, may also exceed Budget projections.