New Delhi: India’s fiscal deficit will be narrower than the revised budget estimate of 3.5% of gross domestic product (GDP) in 2017-18, government officials said on Monday, amid concerns that the government may overshoot the target.

The statement comes ahead of the Reserve Bank of India’s monetary policy committee meeting to review policy rates, scheduled for 4-5 April.

In this year’s budget, finance minister Arun Jaitley had revised the fiscal deficit target for FY18 upwards to 3.5% of GDP or Rs5.94 trillion from 3.2% of GDP or Rs5.46 trillion. Buoyant direct tax collections and record divestment proceeds exceeding Rs1 trillion have helped the government in meeting its fiscal deficit.

“With almost all of revenues and expenditure accounted for (some minor accounting adjustments remaining), I can confirm that both fiscal deficit and revenue deficit are lower than the revised estimates for 2017-18," Subhash Chandra Garg, secretary, department of economic affairs, wrote on Twitter.

Revenue deficit was revised upwards to 2.6% of GDP from 1.9% in the budget. 

Separately, finance secretary Hasmukh Adhia said buoyant tax collections, especially on the direct tax side, have helped in meeting the fiscal deficit target. “It was a year of uncertainty in revenues. We have broadly met our targets both on the direct tax and indirect tax side," said Adhia.

And this has been achieved without any major expenditure cuts. “There were no major expenditure cuts but there were some natural savings as some departments were not able to spend the money allocated to them by 31 March."

Direct tax collections in FY18 are estimated at Rs9.95 trillion and this number is expected to be revised upwards to more than Rs10 trillion as the final figures come in, said Sushil Chandra, chairman of the Central Board of Direct Taxes.

The improvement in tax collections has been accompanied by a major improvement in compliance. The tax department has managed to add nearly 10 million new taxpayers, said Chandra.

While growth in corporate tax collections was 17%, it was 19% for personal income tax. Further, 68.4 million returns were filed in 2017-18 (of which 67 million were through e-filing), as against 54.3 million returns in the previous year. 

Adhia said the trend in goods and services tax (GST) collections also shows an upswing. He said compliance has improved under the new indirect tax regime. 

GST collections have been at 98% of the revised estimates, he said.