Arun Jaitley is perhaps one of India's smartest FMs. What he did to achieve FY 15 fiscal targets will tell you why!

So have you been wondering how Finance Minister Arun Jaitley plans to achieve the steep fiscal deficit he has set for himself and the Government to achieve? Actually it isn’t rocket science, but a very simple calculation of how he has divided the revenues to be collected from tax collections in India, basis the new tax structure that he announced during the February 2015 budget.

With some smart expenditure and revenue management in the past month, the government has scaled the steep fiscal-deficit target set for 2014-15. And, by the time the final numbers come in, the gap could even be narrower than the goal of 4.1 per cent of gross domestic product reported The Economic Times.

A shortfall in direct tax collections was offset by higher indirect taxes, and telecom companies ensured some last-minute proceeds to the coffers by paying part of the price they have committed in the recently concluded airwaves auction. While these helped, the government tightly monitored expenditures and revenue to make sure that there were no slippages.

"Fiscal deficit would be within 4.1 per cent," a senior finance ministry official told ET, indicating that the government could even overachieve the goal.

"Imaginative expenditure management" helped the government to compensate for revenue shortfall and stick to the fiscal deficit target, even after ensuring that there were no cuts in rural employment schemes and disruption in welfare spending, another top government official said.

Direct tax collections are now expected to be about Rs 10,000 crore short of the latest estimates, though the final number is yet to be worked out. There were expenses that stretched government finances, such as Rs 11,000 crore in sales tax compensations that the Centre released to states in order to get the goods and services tax plan moving. It also made payments to Andhra Pradesh and Telangana under the state bifurcations agreement said ET.

Anticipating the shortfall and additional outgo for sales tax compensation, North Block had initiated some steps to mop up revenue and rationalise expenditure, said the finance ministry official. The second official said there were some reductions in IT spending and a marginal cut in defence, but no changes in the procurement programme.

"When the budget was presented and fiscal deficit was budgeted at 4.1 per cent, the number was actually difficult (to achieve)," said DK Pant, chief economist at India Rating to ET. "There was a chance of slippage, but they were able to manage as payments, such as telecom, came in time." The government gotRs 10,700 crore as upfront payment for spectrum, despite the auction ending just before the year-end, as telecom companies made part payment before March 31 following a request from the government.

Even as direct taxes missed the target, indirect taxes, including excise duty, customs duty and service tax, exceeded the revised estimate of Rs 5.42 lakh crore by Rs 4,000 crore, according to official data released on Thursday. Raising taxes on fuels, using room provided by a fall in crude prices, also helped.