New Delhi, June 2: The Centre is planning to borrow less than the targeted amount this year in an effort to control its fiscal deficit further.

“By design as well as compulsion, we will have to compress our borrowings this year... The fiscal deficit performance in the last financial year was much better at 4.1 per cent of the GDP. We are happy, but we have to be cautious and do better,” Union finance minister P. Chidambaram told reporters here today. Hence, the fiscal deficit has to be either equal or lower this year, the minister added.

According to the recommendation of the Twelfth Finance Commission, Chidambaram has set a target of reducing the fiscal deficit by 0.3 per cent in the budget for 2005-06.

Hence, overall borrowings would be much less than expected, he said.

The Centre’s gross borrowing is budgeted at Rs 1,39,467 crore in 2005-06. Net borrowing at Rs 1,00,836 crore is 42 per cent higher than Rs 54,201 crore in the last financial year.

The government is expecting industrial growth to be 7-7.5 per cent, which will swell the tax kitty. This, in turn, would fund its ambitious infrastructure growth plans and rein in deficits.

However, these plans would also depend on the monsoon, which is crucial to the farm sector.

If the monsoon is not up to the expectation, it could well prick the growth balloon that Chidambaram believes will save his budget.