The government aims to bring down fiscal deficit - the gap between expenditure and revenue collection - from 5.9 per cent of GDP in 2011-12 to 5.1 per cent or about Rs 5.13 lakh crore in current financial year.
"The fiscal deficit target for the current financial year will be reassessed after mid-year review depending on the pace of expenditure and resource position of the government," Finance Minister P Chidambaram said in Rajya Sabha.
He said the reduction in the fiscal deficit is designed with a mix of reduction in total expenditure as percentage of GDP and improvement in gross tax revenue.
The government has taken several steps including 10 per cent mandatory cut on non-plan expenditure and economy measures like rationalisation of expenditure and optimisation of available resources.
Also, the government endeavours to restrict expenditure on central subsidies.
"Similar steps are expected to be continued in the coming years to contain the fiscal deficit," Chidambaram said.
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The Indian economy is facing slowdown with the economic growth touching a nine-year low of 6.5 per cent in 2011-12.
Industrial production in June declined by 1.8 per cent from a growth of 9.5 per cent in same month last year due to poor show by manufacturing and capital goods sectors. The factory output in the April-June quarter too contracted by 0.1 per cent against an expansion of 6.9 per cent in the similar period last fiscal.