Amid fears of the government missing the deficit targets for the year, finance minister Pranab Mukherjee on Thursday said the government could exceed its direct tax collection target by around Rs 10,000 crore given the trends so far.

But the bad news is that with the government also facing pressure on increasing spending to account for higher subsidies and the fiscal deficit target of 4.6% of gross domestic product (GDP) is seen to be under strain. Mukherjee acknowledged that it would be difficult to meet the target but he had not given up yet. He is again betting on spectrum to bail him out. "Hope Goddess Luck smiles on me again as it smiled (last year) on 3G spectrum ," the minister said.

But the higher than budgeted tax collections could come handy. Between April and July 20, gross direct tax collections increased by 26% and finance ministry officials believe the industrial slowdown is unlikely to significantly impact revenue collections. Mukherjee also sought to draw comfort from the over 30% rise in customs and excise collections. "Service tax collections have made a strong recovery and the growth is 34% so far," the minister said.

The government has budgeted to mop up Rs 9.32 lakh crore by way of tax collections and several economists and policymakers fear the Centre could miss the target given the slowdown that is already visible in segments such as automobiles.

Along with taxes, the minister was also bullish on exports , especially due to the diversification of the export and product basket. Exports have been rising close to 40% though the government acknowledges that the pace would moderate in the second half. The other positive in the government's assessment is the rise in foreign direct investment inflows. FDI inflows in April-May , 2011 rose 77% to $7.79 billion from $4.39 billion a year ago and with several deals in the pipelines, such as Cairn-Vedanta and Reliance BP, this number is only going to rise.

However, the overall economic growth is a concern, with the government lowering the projection to 8.6%, compared to suggestions of over 9% expansion just two months ago.