A day after the finance ministry announced austerity measures, Finance Minister Pranab Mukherjee today said the governments borrowing in the current year would not exceed the target of Rs 4,17,000 crore, which will leave enough liquidity in the system for the private sector.

I am not going to expand borrowing and I will plan my borrowing in consultation with the Reserve Bank of India (RBI) in a manner to ensure that the private sector is not elbowed out of the borrowing market, Mukherjee told reporters after the board meeting of National Bank for Agriculture & Rural Development (Nabard) today.

Last year, the government had borrowed Rs 4,47,000 crore. The government would borrow Rs 2,50,000 crore in April-September, which is 60 per cent of the total budgeted market borrowing of Rs 4,17,000 crore for 2011-12.

The finance minister also reiterated that the government would be able to meet the revenue collection targets for 2010-11. The government is expecting gross tax revenue of Rs 9,32,000 crore this year.

I am not worried on the revenue front because there is revenue buoyancy and it is moving on the expected line, he explained, and added the higher tax refunds in the first quarter caused temporary cash flow problem, but that did not alter the net kitty that will be available by the end of the year.

The governments net indirect tax receipts recorded 32 per cent increase to Rs 76,499 crore, while gross direct tax collections rose about 23 per cent to Rs 1,03,000 crore in the first quarter ending June 2011. Net direct tax receipts, however, showed about 17 per cent dip to Rs 57,000 crore on account of about 200 per cent increase in tax refunds.

Mukherjee justified the austerity drive measures saying those were intended at curbing wasteful expenditure and containing fiscal deficit. The government has fixed a target to keep the fiscal deficit at 4.6 per cent of the GDP in 2011-12.

I sent a note and prime minister has approved in certain areas where I considered that wasteful expenditure should be avoided and that money should be deployed for developmental work, he said.

Talking about Nabard, he said it should deploy new technology, innovate and create financially viable models that can take forward the process of financial inclusion.