The government is likely to borrow in the next three months as avenues for revenue collection dry up and it has demands that need to be met, senior finance ministry officials said. While they did not reveal the quantum of extra borrowings, they said this will be over and above the Rs 52,872 crore extra borrowings the finance ministry announced in September.

In the borrowing programme announced in September, the total funds to be raised through dated securities during October-March 2011-12 was estimated to be Rs 2,20,000 crore, instead of the originally planned Rs 1,67,128 crore. This increased the quantum of total borrowing by almost 13 per cent to Rs 4.7 lakh crore from Rs 4.17 lakh crore as per the original Budget estimate.

Sources said that direct tax collection is set to fall short of the target. With the growth in advance tax payment in the third quarter almost flat, the Income-Tax department expects tepid collections in the last quarter with the economy slowing down further. Though indirect taxes have grown 16.8 per cent during April-November, a huge shortfall in disinvestment proceeds has upset the governments calculation of total receipts. In the current fiscal, the government could raise only Rs 1,400 crore from stake sale in Power Finance Corporation.

"Meeting the fiscal deficit target is out of question," said a senior finance ministry official, who did not wish to be quoted. "Additional borrowings will be required to bridge the deficit, the official added. The government has projected a fiscal deficit target of 4.6 per cent of GDP for the current fiscal. But the combined impact of a lower GDP growth rate of 7 per cent (against the Budget estimate of 9 per cent), sluggish tax collections and increased expenditure demands, will likely push the fiscal deficit to cross 5.5 per cent of the GDP, or even settle at 6 per cent, another finance ministry official said.