The finance ministry believes that the government is on course to meet its deficit targets during the current financial year despite data painting a picture that shows government finances in poorer state than last year. It has ruled out further increase in its borrowing programme.

Data released by the Controller General of Accounts on Friday estimated the Centre's fiscal deficit during April-August this year at Rs 2.7 lakh crore, which is over 66% of the budget estimate for 2011-12 . In contrast, the level was 40% of the BE during April-Aug last year.

Officials, however, said this was in line with past trends and last year was an exceptional situation given that the government raked in over Rs 1 lakh crore by auctioning spectrum for third generation ( 3G) mobile services . "If you look at the fiveyear moving average, the fiscal deficit was 60.5%. So, we are not completely off the mark. We have not completely deviated from the past trends," said a senior finance ministry official.

The general view in North Block is that the situation looks even worse this year due to the huge tax refunds . During the first five months of the financial year, thanks to electronic processing of tax returns, the government has refunded around Rs 64,000 crore to taxpayers . In the past, this amount used to be Rs 20,000 crore to Rs 22,000 crore.

As a result, the net tax revenue is 21.8% of the budget estimate for the current fiscal. "As you see the effect tapering off, we will be back on course at least on the revenue side," another official said. Till the end of September , direct tax collections grew by around 23.5%, while indirect taxes rose 25.5%. In fact, officials said the government may end up exceeding the direct tax collections by around Rs 10,000 crore, while the effect of revenue lost due to lower duties on fuel would be made up as service tax collections were buoyant. In case of disinvestment , where the government had budgeted to mop up Rs 40,000 crore, the finance ministry is working on an alternate plan. So far, it has managed to raise Rs 1,100 crore.

There have been worries in recent weeks over government missing its deficit targets as it announced additional borrowings of Rs 53,000 crore during the second half of the year.